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Local dealers optimistic on 2012 car sales

Posted by Bill Griffith  February 17, 2012 04:09 PM

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George Washington’s Birthday, which used to be celebrated on Feb. 22, was synonymous with automotive open houses in the Greater Boston area as far back as any living driver can remember.

Most people credit Peter Fuller with creating the festive occasion. In those days, his Cadillac-Oldsmobile dealership across from the Boston University Bridge anchored Boston’s automobile row, which stretched up and down Commonwealth avenue.

Actually the tradition had begun a generation or more earlier when Fuller’s father, car dealer and later Massachusetts Governor Alvan T. Fuller, hosted “Washington’s Birthday Open Houses.”

Times—and the dates—have changed. Since 1971, we’ve celebrated Presidents’ Day as the third Monday of the month, making it a three-day weekend and an even bigger sales festival at dealerships are all over the area. Other areas of the country have adopted the tradition, but local dealers feel theirs is the bigger event.

“The Red Sox make a big deal of their opening day every year, but our opening day is February 1,” says Pat Brown, chief operating officer of the Colonial Motor Group, which sells 14 brands at 15 locations from Greater Boston to Central Massachusetts.

A confluence of events makes this year’s Presidents’ Day Weekend particularly promising.
1. The product on dealer showrooms never has been better. The Japanese brands—Honda, Nissan, and Toyota—have recovered from the devastating natural disasters that crippled supply lines back home and the new products are strong. The same goes for their upscale siblings—Acura, Lexus, and Infiniti.
2. Domestics are on an even playing field now. Ford has strong product. Chrysler and Jeep, which were in the deepest depths two years ago, have made a huge rebound. A leaner GM—Buick, Cadillac, Chevrolet, and GMC—features a number of first-class vehicles including Buick’s effective eAssist system that boosts performance and economy.
3. The Germans—Audi, BMW, Mercedes-Benz, and Volkswagen—have been busy gaining market share. Audi’s Super Bowl ad that concentrated on its cars’ LED running lights was a model of branding. All the German manufacturers have new vehicles and growing market share.

Auto dealers, by nature, are optimists as well as entrepreneurs who have a weather eye on the business climate.

Herb Chambers, whose dealership group is inching close to 50 stores again, saw all the signs that the tide was turning, but the payoff came while he was watching the Super Bowl.

“When I saw that two-minute commercial about American workers and saying Detroit’s back, I got goosebumps. When they finally put the logos up and I saw that it was Chrysler, I called both my Chrysler managers to ask, “Did you see that?” I felt so good for Chrysler. Detroit’s back and they’re hiring more people.”

At the height (actually depth) of the economic downturn, Village Automotive Group president Ray Ciccolo was opening a new Hyundai dealership in Danvers. He said at the time, “Real Estate speculation might have gotten us into this economic mess, but it will be the auto industry that gets us out of it.”

It might be happening a year later than he predicted, and the reason likely is because of the product’s quality. People are holding onto their cars longer because the cars themselves are lasting longer, helping delay replacement during an uncertain economic times.

Every dealer we’ve spoken to in recent months has pointed out that trend, which was confirmed in a recent study. An R.L. Polk & Company survey found that the average age of passenger cars currently on the roads in the United States was 11.1 years during the July 2010 to July 2011 period, compared to the 1995 figure of 8.4 years. On the truck side of the ledger, the average was 10.4 years versus 8.3 years in 1995.

Says Chambers, “In the past we wholesaled out a lot of the cars we took in trade. If a car had more than 65,000 miles, we’d typically sell it at auction and let some other dealer have it. But cars are so much better today than even 10 years ago. It used to be that 100,000 miles brought you to the entrance to the junkyard. Now you see a car with 100,000 miles, and it’s still good for another 100,000.

“But now cars don’t rust out, and mechanically they’re just so much better. We regularly take cars in trade with 100,000 miles. Take a Lexus, for example. The leather seats are still in good shape, it’s mechanically sound, and the car still has a long way to go.

“We’re making a conscious effort to run them through the reconditioning shop, servicing them and getting them ready for retail instead of auction.”

That’s a trend echoed by Colonial’s Browne. “We’re seeing a greater number of trades that are older and higher mileage,” he says. “We’re fortunate in our organization that 55-60 percent of our business is from repeat customers, and the majority of those customers service their cars with us, too.

“One of the benefits of that loyalty is that we know the car, have its service record, and we can put a greater value on it because we know it’s been well-maintained.”

Sales of trucks and SUVs are rebounding, too.

“Back before the economic crunch, the split was more like 55-45 percent in favor of trucks and SUVs over cars,” says Browne. “Then it swung the other way when gas prices spiked. There was more emphasis on hybrids and smaller, fuel-efficient vehicles. Now it’s back to 50-50.”

When people ask Chambers which car he likes better, he typically responds, “What flavor of ice cream do you like better? Find the car that you like.”

Chambers isn’t surprised that the pure electric cars that are hitting the market aren’t taking off the way many expected.

“They don’t have any track record yet of durability and residual values. We don’t know where that’s going. Chevy has the Volt that’s kind of an interesting concept, but it’s got to be proven over time.

“When a person buys a car from us, they hope—and we hope—the resale is going to be good. That’s how you keep customers. Sometimes the best advice is to lease the car. That way, the residual is the factory’s problem, not yours. After three years, you turn it in, and it’s not your worry.”

The weather forecast for the weekend—at least five days out—is for our almost snowless winter to continue. Bare ground helps the car-buying process. After all, who wants to buy a shiny new car and have it covered with road salt and slop before you get it home.

Meanwhile, the sales forecast is strong, too.

Chambers’ group always tries to beat its prior year numbers. Last year, Presidents’ Day meant about 2000 sales; this year, he’s hoping for 2,600.

“It’s a terrific weekend to purchase a vehicle,” says Colonial’s Browne. “We’re going to be aggressive with pricing and in reaching out to customers.”

A bit of advice: Get there early. Chambers laughed when he was reminded that his companies’ slogan is “We’ve got it.”

The other half of that is “We want to sell it,” he says.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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Clifford Atiyeh is an automotive writer and car enthusiast . He has spent his entire life driving cars he doesn't own.
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