Used cars take larger share of market
Nevada Appeal News Service
With new car sales plummeting throughout much of the state ” statewide, taxable sales of motor vehicles in November were off more than 34 percent from the same period in 2007 and dropped 23 percent for fiscal year 2008 ” many consumers are eyeing lower-priced used vehicles as the best value for their money.
Ken Jochim of Michael Hohl Chevrolet in Carson City said they have seen sales of used cars picking up in comparison to new cars, and they are getting more aggressive in the used car market.
“We are having to go outside the area to find good quality used cars,” Jochim said. “New cars are steady, but not at the numbers we would like them to be.”
The state Department of Taxation reports that for the month of November automotive sales in Carson City were off almost 30 percent, while in Churchill County they were down 50 percent. Elko County dropped 23 percent, Lyon County 22 percent and Storey County 54 percent.
Dealer incentives also are bringing an increase in automotive sales at Carson City Jeep Nissan, said Jeff Woodward, owner and general manager. The dealership saw a decline in new car sales starting in September, but business rebounded in January and February with the strongest sales in four months.
“It is specifically driven by the large incentives the manufacturers have out there,” Woodward said. Used car sales, he notes, are stable with 2007 numbers.
Ryan Dolan, general manager of Reno Toyota, said that despite sales figures that have dropped across the board, sales of used cars are trumping new vehicles.
“Used cars are staying steady; we actually have sold more used than new, but all sales have dropped,” Dolan said. “I think people perceive better value in used cars with the economy and everything else going on in the world.”
Dolan says Reno Toyota typically averages about a one-to-one ratio in new and used cars sales, with a 1.5-to-1 ratio of new to used when times are good. Lately, though, with new car sales curtailed, used car sales are keeping pace.
“We are a little ahead in used,” Dolan said. “Nothing major ” used cars aren’t exactly flying out of here ” but they are staying steady with numbers of last year. I think that trend will continue with the perception of value. It is all doom and gloom in the news, everybody is going out of business, and folks think they hold all the cards and can get the best value possible and think that best value is in a used car.”
Dan Nichols, general sales manager for Winkel Motors in Reno, said used and new car sales are fluctuating month to month. One month, two-thirds of the dealership’s sales will be used cars. The next month, two-thirds will be new vehicles.
“It’s been really crazy the last four or five months, and I am not sure what to attribute that too,” Nichols said. “But our inventory, the mix of vehicles we have, contributes to that.
“It is business as usual except for quantity is reduced, but I think we haven’t dropped off as much as others.”
Nichols says much of the business at 67-year-old Winkel comes from repeat customers, and the majority of deals done today are being financed through local credit unions rather than Winkel’s traditional lending sources.
Dolan says sales figures will continue to be down until more consumer lenders loosen up. “Until that kind of frees us up I don’t see a jump happening anytime soon,” he said. “It all rides on the financial institutions. Once that consumer confidence is back and people have confidence in the economy and everything else, I think it will start to turn.”
Jochim said they are seeing more traffic recently, and lenders are making financing easier.
“It’s been easier to get people financing in the last week or so,” Jochim said. “As soon as people find that out, they’ll be back buying cars. We are real positive about March.”
With the sharp decline in fuel prices over the past six months, sales of light trucks and sport utility vehicles have increased. Dolan said when gas averaged more than $4 a gallon, small cars were flying out the door, but now small cars are lingering on the lots and trucks and SUVs are selling.
“It has been a roller coaster of what consumers want,” Dolan said. Vehicle valuation experts at Kelly Blue Book report sale prices of trucks and SUVs unexpectedly increased nationwide early this year.
Although values typically increase during winter months, some of the rise can be attributed to significantly depressed prices in mid-2008.
– Kirk Caraway contributed to this story.