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Wednesday, Jul 24, 2024

Car Sales as Barometer

With the economy humming along, new car sales in California have a quick start out of the gate this year. According to the California Auto Outlook, published by Auto Outlook Inc., in Malvern, Pa., on behalf of the California New Car Dealers Association, the forecast is for new car sales to reach about 2 million this year, the fourth year in a row the state has reached that number. It is, however, a slight decrease from last year, when new car sales hit 2.05 million. In the San Fernando Valley region, dealerships were mixed with some having increases and others decreases for sales last year, according to the Business Journal’s list of Automotive Dealers. The No. 2 dealer on the list, Galpin Ford, sold the largest number of cars last year at 7,188 new cars sold, a decrease of 8.2 percent from the previous year. On the other hand, the North Hills dealer sold 4,500 used cars last year, an increase of 82 percent. Keyes European, the No. 1 dealership on the list, sold fewer units but recorded more revenue, according to Business Journal estimates. Economic metric Joe Molina, president of JMPR, a boutique public relations agency in Woodland Hills with clients in the auto industry, said that car sales are a bellwether to how the overall economy is doing and how confident the buyer feels. “Nobody goes out and buys a car if they are not confident,” Molina said. “So as long as car sales are at a high level, we are OK in the present.” For the first quarter of this year, the state outlook said total registrations for cars and light trucks numbered 487,741, or a decrease of 3.8 percent from the 506,830 in the same period a year earlier. Car registrations dropped by 11 percent to 226,057 in the first quarter, while light truck registrations increased by 3.7 percent to 261,684. The Honda Civic was the best-selling car in the state in the first quarter, with more than 21,000 registrations. It was followed in popularity by the Toyota Camry and Corolla, Honda Accord and Ford F Series full size pickup. Brian Maas, president of the Sacramento dealers association, said that in terms of overall quality, safety features and fuel economy, domestic and import vehicles have never been better. “The product is so much better than it was just a few years ago,” Maas said. “Consumers can find pretty much any car that is going to meet their transportation needs. Whether you need a pickup truck or an (electric vehicle), they are out there.” With car sales plateauing at 2 million this year, Maas called it a solid number. However, he said that if sales drop in the next six to 12 months it would be a sign that the economy is starting to slow down. “We don’t foresee that happening but that is the kind of thing to watch,” Maas said. Trade war worries Also, the auto industry is watching whether tariffs will be put in place that could affect the price of imported cars and parts. On July 25, the Trump Administration announced that it was backing off a 20 percent tariff on imported cars and auto parts from the European Union as it engaged in talks with the 28-nation pact. Still, consumers want stability and predictability when it comes to car prices, Maas said, adding, “the problem with rumored tariffs is that you don’t know what the price is going to be.” Unlike 40 years ago when the Big Three automakers made cars exclusively in the U.S. and all Japanese cars came from Japan, that is no longer the case. The highest domestic content car produced in the U.S. is a Honda and many General Motors Co. trucks are made in Mexico, Maas said. Uncertainty over tariffs can wreak havoc on the market and could result in people putting off the purchase of a car or deciding on a different brand that may have a lower or no tariff attached to it, he added. “They are going to switch purchases based on news accounts or rumors or tweets or who knows what. That could wreak havoc,” Maas said. “From our perspective representing the car dealers, we prefer stability,” he continued. “A trade war is the opposite of stability.”

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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