Ventura County Star
Shifting into neutral
Auto sales slow as consumers appear to be ‘shopped out’
By Roger Harris, email@example.com
December 15, 2002
Michael Lewis doesn’t have to offer buyers cash-back incentives, zero
percent interest or other special deals to get them interested in his cars.
Buyers come from all over the country to buy the classic Mini Coopers and other vintage cars offered by his Ventura dealership. Some buyers drive from other states to spend $20,000 on a 25-year-old car.
Others wait patiently for Lewis to arrange for a customized classic Mini to be shipped direct to them from England.
“It’s a longing for the good old days, the memories, that brings them in,” said Lewis. “It’s the whole retro thing. People who want a Mini are willing to do what it takes to get one.”
Lewis won’t say how many cars he’s sold since his first sale four years ago, but he characterized business as brisk and climbing.
Mainstream car dealers only wish they could attract customers the same way.
Ventura County sales have slowed noticeably this year despite the
never-ending incentives offered by automakers.
Nationally, the sales drop was even more precipitous in November compared with the same month a year ago. General Motors saw domestic sales drop 18 percent, Ford was down 20 percent and the combined market share for all U.S.
automakers fell to a record low.
In Ventura County, 3,588 cars and trucks were sold in November, down 25.2 percent from November last year, according to John Masterson, president of Western Automotive Consultants in Ventura.
The future offers little sign of a quick comeback.
Westlake Village market analyst J.D. Power and Associates recently lowered its estimate of next year’s light-vehicle production in North America to 16.1 million units.
“With a slowdown in sales going into 2003 being the primary driver, we
expect production to be down nearly 350,000 units, or 4 percent, in the
first half of the year compared with the same period in 2002,” Jeff
Schuster, director of North American forecasting at J.D. Power, said in a recent report.
Analysts and car dealers say sales are slow because of the sluggish economy and consumers who are “shopped out” after more than a year of non-stop incentives offered by car makers.
“I expect to see sales in the county definitely down from a year ago,”
Sales last year and the first part of this year were strong for many Ventura County dealers because automakers offered a number of incentive packages to entice reluctant buyers. The incentives, including the return of zero percent interest and zero down payments, brought out tons of customers, but dealers now are starting to pay the price for that increase, Masterson said.
Jeff Sukay, vice president of Kirby Jeep Oldsmobile Suzuki in Ventura,
called sales about average. Robert Gregory, owner of Paradise Chevrolet in Ventura said this year’s sales will be about the same as last year.
“The theory is that anytime you offer incentives, you’re robbing sales from the next month or the month afterward,” Masterson said.
Automakers don’t seem worried about the theory.
Earlier this month, the Big Three automakers –Ford, General Motors and DaimlerChrysler –upped their incentive offers in an effort to boost year-end sales.
GM, for example, extended its so-called “Zero, Zero, Zero” program to offer no down payment and no interest loans for five years on 13 sport-utility vehicles.
Chrysler is offering either a $2,500 rebate or zero-percent financing for up to five years on minivan purchases through Jan. 2.
Ford lengthened the term for interest-free loans from three years to five years on the Explorer, and it boosted cash-back offers to as much as $3,000 on some models.
In years past, automakers would stop the incentives after a few months and sales totals would cycle back to normal levels. But automakers have piled on the incentives for more than a year. Eventually, the incentives will lose their effectiveness, Masterson said.
“The day of reckoning is coming. At some point the manufacturers will reach their limit and have to pull back,” Masterson said. “The question is who gives out first: the buyer or the manufacturer?”
It may be consumers. Buyers already are “becoming numb” to incentives that average $2,000, Schuster said.
“(Incentives) definitely aren’t having the impact they used to,” said Steve Cavanagh, vice president of Vreeland Cadillac-Pontiac in Oxnard.
The benefit of incentives is inconsistent, Sukay said.
“I can’t tell you that it’s driving traffic,” he said. “Some days we see it, and some days we don’t see what we saw last year.”
Although it’s impossible to say what the future is for automakers’ incentive programs, some car dealers say they are here to stay.
“I assure you the manufacturers will continue to do incentives. … There’s absolutely no way to get out of them,” Gregory said.
Copyright 2002, Ventura County Star. All Rights Reserved.
Photo Credit: James Glover II / Star staff
Photo Caption: Michael Lewis, owner of MiniGuy/Lewis Motors, has turned a one-time hobby involving these tiny British cars into a nationwide business of obtaining and then selling the unique vehicles. His sales showroom is in downtown Ventura.