LOS ANGELES – A new brand of auto shopping apparently is emerging in California, where consumers are willing to make purchases again, but have been left tempered by the recession.
“A lot of them come with their arms folded,” says Chrysler-turned-Kia salesman Alabama Lovett, who works for the Car Pros dealership in Carson. “They want to buy, but they’re cautious buyers…there’s a lot more questions that need to be answered.”
Today’s customers, Lovett says, seem much more knowledgeable about the auto industry than ever before.
“People do more comparative shopping now before they get to the lot,” he says. “This is probably the sharpest car-buying public that I’ve seen – they’re not lay-downs.”
The California New Car Dealers Assn., based in Sacramento, is calling for a slight boost in statewide registrations in the fourth quarter and an even bigger jump of at least 10% in the new year.
New-vehicle registrations fell to 284,214 in the third quarter in the country’s single-biggest market, down 25.3% from the 380,275 filings in like-2008, and an even bigger 38.5% comparative decline was recorded in the second quarter.
There were 775,075 new-vehicle registrations in California in the year’s first nine months, according to Experian Automotive’s AutoCount report, down about 35% from the nearly 1.2 million year-ago.
Yet, analysts believe the Golden State’s economy is on the rebound and consumer activity will expand, despite a still-growing unemployment rate expected to hit 12.7% by month’s end.
“All that we see depends on what is going to happen with our economy and the job market with these kids,” says Nikki Johnson, publisher of the Glow on the Go Auto & Travel Guide.
“Because I know of so many young people that have degrees, that have no jobs, that are taking mediocre jobs, I don’t know where we’re headed with this,” Johnson says.
Jobs are also in the sights of Gino DiCarro, vice president-communications for the California Manufacturers & Technology Assn. He says tens of thousands of assembly line and supplier jobs across the state could be lost due to the upcoming closure of Toyota Motor Corp.’s New United Motor Mfg. Inc. plant in Fremont, formerly a joint venture with General Motors Corp.
The plant operation will leave numerous smaller companies unable “to operate in California any longer,” DiCarro says.
Data from the state lieutenant governor’s office shows 4,700 direct NUMMI jobs will be lost. In addition, the plant has contracts with about 1,186 supplier companies, all but five of which are in California.
Despite the bad news out of Fremont, Jerry Nickelsburg, senior economist for the University of California at Lost Angeles’ Anderson Forecast, says California is, in fact, on the road to economic recovery, even if it’s a slow and still painful one.
He predicts a rise in both home sales and construction throughout the state now that the housing market has settled into a slow but steady growth pattern over the last few months and “prices have adjusted to levels that make existing homes more affordable.”
Nickelsburg also sees a resurgence in trade and manufacturing and signs “the collapse of hospitality, retail, wholesale and transportation employment may be coming to an end.” He’s “optimistic” about the state’s continuing growth as a leader in auto technology and innovation.
Lovett, the Kia salesman, says the federal government’s “Cash for Clunkers” program seemed to tap some pent-up desire to shop.
“Before the Clunker deal,” he says, buying a vehicle was the “last thing people were thinking about.” But since then, more customers have been trolling the car lots.
Clunkers was a similar success for Craig Van Ettan, sales director at South Bay Ford Mercury Lincoln in Hawthorne, the area’s top-selling dealership and No.1 service dealer in the nation.
Like Lovett, Van Ettan says smaller, lower-priced models have kept foot traffic coming to his showroom.
Interest has been high for the Ford Fusion midsize sedan, recently named Motor Trend’s Car of the Year, and Fiesta small car, unveiled at the L.A. auto show and scheduled for delivery in 2011.
Van Ettan figures the auto market’s recovery at home and elsewhere will depend on “consumer confidence. When consumers are confident to start spending again, it helps the ball go around.”
California, says Jim Cherry, an automotive analyst for the online news site Examiner.com, has long been an “almost avant-garde market in terms of accepting state-of-the-art and envelope-pushing vehicles.”
He predicts the state will be the first to accept electric cars such as the Chevrolet Volt, the first plug-in hybrid to be sold commercially, which Cherry says represents a “bold and courageous move” by GM.
Ron Cogan, editor and publisher of Green Car Journal, which sponsors the L.A. auto show’s annual Green Car of the Year Award for automotive environmental achievement, notes “California has historically led the nation in automotive trends and environmental innovation” but currently is a market in transition, where consumers are caught between their need for greater fuel economy and desire for attractive rides.
Cogan, who lives on California’s Central Coast, says he’s pleased with the automotive industry’s current attention to green and more economical designs because it represents a shift in thinking that necessarily happened years ago.
He’s less happy with the California public, who may see the need for better gas mileage when times are bad, but tend to forget such issues after crisis episodes pass.
“The days when gas was four and five dollars…have faded,” Cogan says.
Nevertheless, the California-L.A. market is “a microcosm” for the rest of the auto industry, he says, and auto companies must realize vehicles they deliver to Southern California or any other place must address fuel economy but also provide the same functionality and style people want.
“If not,” Cogan says, “market share is going to go away, and somebody else who’s smarter and more adept is going to capture that.”
