Oklahoma City metro auto dealers hope to see a recovery in new-vehicle retail sales in 2010, but after a year of sales dropping monthly, that hope is tentative.

“The auto industry’s sales declined in 2009, just like the rest of the country,” says Peter Hodges of the Oklahoma City Metro Auto Dealers Association. “Dealers had to cut expenses to remain profitable, and despite the tough year, dealers have done pretty well, considering the circumstances.”

Yet other dealers are predicting a banner year for new car and truck sales, perhaps better than 2008.

SHAKY SALES

According to Hodges, total new car sales in the metro were down on average 20% a month in 2009, with the exception of July and August. March 2009 saw an estimated 42% drop from 2008, the lowest of the year.

“People were still buying cars in 2009, but they bought only 70% of what they usually buy,” Hodges says. “The car sales industry will not go to a catastrophic level, because transportation is an important need. However, the demand for a new car wasn’t as strong. More consumers opted to hold off on new car purchases, relying on repairing existing vehicles.

“Now people are beginning to buy new cars again, and they are tired of repairs,” he says. “The clock is ticking for a recovery. The amount of new car sales may be lower now, but we are prepared to meet the demand if it recovers.”

But dealers won’t cut out what works. Hodges says advertising budgets will remain, as will special-event expenses such as the annual OKC Auto Show, slated March 3-7.

“You don’t abandon the things that help consumers make a decision about purchasing a new car,” he says.
The federal Cash for Clunkers program resulted in a limited boost in new car spending, but “was rife with problems,” Hodges says. “The federal government showed a level of incompetence, and it was very difficult for dealers to work with them. They really did not know what they were doing.”

However, new car sales did spike briefly, up 4.73% in August 2009 for total new vehicle sales. New car sales increased 29% over the previous year.

“That was a big jump,” Hodges says. “Overall, truck sales were still down about 16% from the previous year, but total new sales were up almost 5%.”

WARY OPTIMISM

David Patel, manager of Edmond Hyundai, sings a different tune.

“2010 will be 20% better than 2008, and 2008 was a great year,” Patel says. “For Hyundai, 2009 wasn’t a bad year at all. We were up 40% in sales as a franchise.”

In January, only 15 days into the new year, Edmond Hyundai saw a 25% increase in sales over 2009 and 2008 numbers.
“I think people are in a good mood,” Patel says. “Banks are lending again, and people are ready to buy.”
He also predicts another round of Cash for Clunkers, a program he was happy with.

“It was the most successful program conceived. We got paid by the government, we got paid on time, and we moved 300 cars in August alone,” he says. “Average is 150 cars, so we doubled our sales.”

Nationwide, the automotive market experienced some recovery from its low point in March 2009, and has been outperforming expectations since October, according to J.D. Power and Associates, which gathers real-time transaction data from more than 8,900 franchisees across the country.

With a surprisingly strong December close, 2009 sales were expected to come in higher than predicted, with total sales at 10.4 million units and retail sales at 8.7 million units, the company announced in January.

“While the industry hasn’t yet received a clean bill of health, fixed costs have been trimmed at all levels, allowing for profitability – even at a reduced selling rate,” says Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “The industry has an opportunity in 2010 to build on a series of small victories – such as improved pricing and appropriate inventory levels – to drive a stronger recovery.”

The firm announced a 2010 forecast at 11.5 million units for total sales and 9.5 million units for retail sales. In the U.S., December 2009 saw a 15% increase in new car sales, it reported.

“2010 looks like it will be a little stronger than 2009 in sales, but we just don’t know what the economy is going to do,” says Hodges.