Business & Real Estate

California new car boom helping push U.S. sales to expected all-time record

New vehicles are displayed in Kuni Chevrolet Cadillac last week. California’s sales surge is helping drive sales numbers toward an annual threshold never before seen in the United States – 18 million in a calendar year.
New vehicles are displayed in Kuni Chevrolet Cadillac last week. California’s sales surge is helping drive sales numbers toward an annual threshold never before seen in the United States – 18 million in a calendar year.

California’s 2015 new car sales boom is helping drive national numbers toward a level never before seen in the United States – approaching 18 million units in a calendar year.

Northern California dealers and their colleagues statewide have been prospering amid a 2015 sales rush not seen in the state for nearly a decade.

Unless sales take an unexpected December dive, statewide new vehicle registrations are on track to crack 2 million by the end of this year, a threshold last reached in 2006. The Sacramento-based California New Car Dealers Association is projecting 2.03 million sales by the end of 2015.

The all-time statewide record of 2.15 million new car sales was set in 2005.

The health of the auto market is far removed from the recessionary doldrums of 2009, when statewide sales totaled only 1.04 million, the lowest volume since 1975. The current buying spree is helping push national sales numbers to record levels.

Analysts believe a strong year-end sales push – which major automakers such as Toyota, Volkswagen, Ford and General Motors market heavily – could push 2015 nationwide new car sales as high as 18 million, easily topping the 17.4 million peak seen in 2000. The recessionary low for U.S. sales was 10.4 million in 2009.

Although sales of VW cars fell 25 per cent in the U.S. last month – following revelations of devices designed to cheat in emissions tests of its diesel engines –Volkswagen has bombarded television with commercials touting its non-diesel models available through the “Sign Then Drive” promotion. VW also claims that its November U.S. sales were impacted because it stopped selling some models affected by illegal software.

The current boom is no surprise to Sacramento-area auto dealers, most of whom are seeing sharply improved sales this year.

Brian Castonguay, general manager of Kuni Chevrolet Cadillac at Fulton and El Camino avenues, said new vehicle sales through November this year were running nearly 100 percent above year-ago totals. And while he noted that an improving economy, relatively low interest rates and decreasing unemployment were helping, he said other factors have contributed to the buying spree.

“The momentum that’s been going on for the past several years continues,” Castonguay said. “Part of it is that we’ve seen an increasing number of aging cars on the road, cars 10 years old or older. Somebody needs a new car eventually, and that continues to drive the market toward new.

“I also think that buyers who have been out of the market for some time are amazed at the features that are in the current new models, particularly safety features. That’s also building momentum.”

David Rodgers, senior vice president and general manager of the John L. Sullivan Automotive Group, which includes John L. Sullivan Chevrolet and Roseville Toyota in the Roseville Automall, said new car sales are up 20 percent in 2015 compared with 2014.

“It has been steady the whole year,” he said. “On the domestic side, it has been very strong, with higher inventory.”

Most encouraging for dealers is that sales have been strong across most vehicle segments throughout 2015.

The subcompact Honda Civic was the best-selling new vehicle in California through the third quarter this year, with 58,559 unit sales, nearly 14 percent better than a year ago. The Honda CR-V compact sport-utility vehicle had nearly 28,000 unit sales through September, about 12 percent ahead of 2014.

Rick Niello, president of the Sacramento-based Niello Co., which oversees more than a dozen mostly high-end car dealerships throughout Northern California, said “we’re doing well with our brands this year, but it’s nothing compared with the tsunami that is going on in the truck world right now.”

The CNCDA said statewide new vehicle registrations of all light trucks – a segment that includes pickups, SUVs and vans – totaled almost 630,000 through September this year, a whopping 19.1 percent increase over the same period a year ago. CNCDA statistics showed more than 7 million light-truck sales nationwide over the nine-month period, up nearly 11 percent over 2014.

Pickup trucks, which suffered along with big SUVs during the recession, have been a particularly hot item.

The state’s historically top-selling pickups are seeing significant year-over-year gains through nine months this year: Ford F-Series sales totaled 32,457, up 8 percent from 30,053 in 2014. Chevrolet Silverado’s 28,664 sales are running 28 percent over the 22,353 of last year. Toyota’s 23,367 Tacoma sales are up 14 percent over a year ago; the Dodge Ram is rolling 26 percent higher than January-September 2014, with 2015 sales of 21,089.

Nationally, all four of those models saw year-over-year gains through November. By Dec. 31, projects that the full-size pickup segment leader, Ford’s F-Series, will amass 750,000 sales for 2015. Four General Motors-made trucks are projected to amass of a total of 900,000 unit sales.

Castonguay said consumer interest in the Chevy Silverado on his Fulton Avenue lot has been “up substantially.”

He added: “Lower gas prices have helped, and again, there’s an aging population of trucks out there. … Pickups aren’t what they used to be. People come in and say ‘This pickup feels like a luxury car.’ ”

Len Brewster, a Detroit-based auto industry analyst, agrees that U.S. consumers are being lured by a wide range of high-tech comfort, convenience, communications and safety features built into 2015-16 models.

“People who have been out of the car-buying market for, say, 10 years or so, are blown away with what they can get in a car now, and they’re standard offerings” Brewster said. “There are so many entertainment and automatic car-control features to start with. … It’s understandable that some buyers can’t believe how much things have changed in just a few years.

“And in California, that applies to thousands of alternative-fuel cars, with plug-ins, hybrids, electrics and now hydrogen-fueled vehicles.”

November sales figures reported by automakers indicate there’s no end in sight for momentum generated early this year. Ford’s 2.37 million U.S. new car sales from January through November were 5 percent ahead of 2014. South Korean automakers Hyundai and Kia reported their best November ever. Mazda had its best November in 21 years.

“I think the momentum will carry into 2016, which I believe will be another strong sales year,” Brewster said.

CNCDA Chairman Dave Moeller, who oversees City Toyota and South Bay Honda in the Bay Area, agrees: “We’ve doubled the market from the low point reached in 2009, and we’re likely to sell even more cars next year.”

Mark Glover: 916-321-1184, @markhglover

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