Easier credit, better economy, aging vehicles drive 2012 auto sales
BY SANDRA GUY Sun-Times Media January 3, 2013 7:10PM
Sales consultant Rocco Santana clears snow off a Dodge Charger Super Bee at Bozak Chrysler Jeep Dodge Ram in Merrillville, Ind. Friday December 28, 2012. | Stephanie Dowell~Sun-Times Media
Updated: February 5, 2013 6:38AM
An improving economy, freer-flowing loans and a pent-up demand for more fuel-efficient, tech savvy vehicles to replace old clunkers drove Americans to buy more new cars and trucks in 2012 than they had since 2007.
And Chicago area auto dealers and some industry experts expect 2013 to be even better.
Sales of new cars and trucks reached 14.5 million last year, an increase of 13 percent from 2011, U.S. automakers reported Thursday. While a great improvement over the dark days of 2008, when GM and Chrysler sought bankruptcy and bailouts, the total is still nearly 10 percent below sales in 2007, as the recession was just beginning, and the peak of 17 million reached in 2005.
“Business is up for a real simple reason,” said Dan Feeny, owner of Feeny Chrysler Jeep Dodge in Elgin. “There’s a lot of older cars on the road.”
Though the Chicago area’s growth appears to have lagged the national surge, prospects look bright for another healthy year, said Dave Sloan, president of the Chicago Automobile Trade Association. Chicago area sales gained 7.7 percent through November 2012 — the most recent data available.
Chicago typically is slow to exit the car-buying downturn, Sloan said.
Auto research firm Polk predicted even stronger sales this year, forecasting 15.3 million — if Congress can resolve spending cuts and debt limits.
Kelley Blue Book is less optimistic, and forecast sales will slow again in 2013 as consumers get hit with higher Social Security payroll taxes — a temporary break that lawmakers let lapse.
Americans know how to put off shopping. When the economy slowed, owners made do with their vehicles.
The average age of cars and light trucks is at an all-time high of 11.2 years, according to Polk.
Motorists have held on to their new cars and trucks twice as long, on average, than prior years — six years at the end of 2012 versus four years at the end of 2011, the Polk report showed.
Buyers had a number of motivations, however.
“Some like to take advantage of low interest rates, some just wanted to update, some had to update, and we had our share of people who just wanted to have fun,” said Cary Bosak, co-owner of the Bosak Auto Group in Northwest Indiana, who saw new-car sales start to pick up late in the first quarter of the year.
After the recession, lenders eased up on credit, said Lonnie Miller, Polk’s vice president of marketing and industry analysis.
“Lenders started allowing 72-month loans at a relatively low interest rate,” Miller said.
Some automakers also offered good deals on leases.
“More than half of my new-car business is leased,” said Michael Hall, salesman at Perillo BMW at 1035 N. Clark St. in Chicago. BMW offered 36- to 39-month lease deals that covered maintenance and retained the warranty for the entire lease period.
Hall said shoppers looked for new cars that offered fuel efficiency, safety and new technology — such as an app that enables the car to “read” aloud the driver’s e-mail and text messages.
Terry D’Arcy, owner of three Joliet dealerships, said many trade-ins had 150,000 to 200,000 miles on them, so people were ready to shop for fresh features.
“It’s just time to get into something newer,” he said. “People get tired of looking at the same dashboard after 10 years.”
Region’s sales soar
Northwest Indiana car dealers are still tallying the numbers from year-end sales, but early numbers show 2012 was a good year and car sales sales look to continue to increase in 2013.
Through November, new vehicle registrations were up 7.7 percent and used-vehicle registrations dropped 4.2 percent compared to the same period in 2011, according to the Chicago Automobile Trade Association. New cars led the trend with 10.8 percent.
About 40 percent of December’s new-vehicle sales occur in the last eight days of the month.
Bosak said Chrysler has been a strong performer — up 27 percent from last year — and Jeep “took off like a rocket,” Bosak said.
Bosak said he expects sales to continue increasing, but uncertainty out of Washington about tax rates could dissuade some customers from buying.
The top-selling brand was Scion, closely followed by Chevrolet, Ford and Honda. A mix of American and European brands sold well in 2012; Chrysler, Land Rover, Jeep, Ram, Volkswagen and MINI new retail registrations increased by more than 21 percent.
Dan Brubaker, general manager of Team Chevrolet in Valparaiso, said sales have been consistently good over the past four or five months. Brubaker said popular models included the Cruze, Malibu and Equinox.
Brubaker said the dealership saw an uptick in sales once U.S. Steel and ArcelorMittal settled their contracts with the United Steelworkers in early September.
“Employees can’t go ahead and purchase until a contract is settled,” Brubaker said. “But once they had their sign-on bonuses from the contract they came in to buy cars.”
Contributing: Jenette Sturges, Christin Nance Lazerus, Cindy Wojdyla Cain, Dan Moran, Mike Nolan, David Sharos