Newsday.com
LI car dealers facing tough times
BY TOM INCANTALUPO
October 22, 2007
The following story was posted on www.leasetrader.com.
As traffic often does on the Long Island Expressway, new car sales have slowed this year in Nassau and Suffolk for most automakers. But there are no overhead signs to tell dealers, their employees or bargain-hunting shoppers just how long the slowdown will last.
The pain is spread unevenly, according to new vehicle registrations for Long Island compiled by Newsday: Toyota and Honda have scored such strong sales gains on the Island this year through August that the market overall is up 1 percent from a year ago, to 136,260 new cars and trucks.
But economist Pearl Kamer of the Long Island Association, this area's largest business group, isn't impressed, noting the numbers are due in part to the heavy discounting of leftover '07 models in recent months. Honda, for example, offered price cuts and leasing deals on '07 Accords, and the result was a 19 percent
increase in new registrations of the Island's bestselling model.
Though the total sales so far this year are higher than in the corresponding period for 2006, early this year, the local market was trailing last year's figures.
Kamer said she expects sales of big ticket items such as cars, furniture and appliances to be soft into next year. "Going forward, I think you'll see a slump in car sales simply because the purchasing power is not there," she said. Consider:
While the majority of homes on Long Island are not in foreclosure, the numbers that are, or facing it, are on the rise. And home values have weakened in most areas. Economist Kamer says those developments have left households with less equity on which to borrow for major purchases.
The collapse of the subprime mortgage market and the rise in foreclosures nationally have led some lenders to tighten up on all kinds of credit, including auto loans. Locally, some dealers say they haven't seen much change. "Considering all the publicity over subprime, I had expected more," said Paul Conte, who runs the Chevrolet and Cadillac dealerships in Freeport that bear his name.
Others, though, say lenders are demanding larger down payments, better credit scores and more documentation. "I used to be able to get anybody [financed]," said Brett Saslow, whose family runs Smith Haven Dodge, Chrysler, Jeep and Saturn of Smithtown, both on Middle Country Road in St. James. "If they were breathing, I could get them [financed]. Those days are over."
Oil hit a record $89 a barrel last week, and some forecasters predict $4 a gallon gasoline by the spring. That's likely to hurt sales of high-profit sport utility vehicles and pickup trucks, which use more fuel - and likely to leave less disposable income for major purchases.
As will higher heating costs expected this winter. Heating oil, which warms most Long Island homes, has risen from an average of about $2.60 in early January to a record-breaking $2.963 last week. Gasoline averaged about $2.87 a gallon on the Island last week. "I can see [a barrel of crude] oil at $100," said dealer Mark Calisi, who sells Chevrolets, Chryslers and five other brands at Eagle Chevrolet and the Eagle Auto Mall on Route 58 in Riverhead. "After that, all bets are off."
Many consumers were stretched thin even before the housing slump and the latest hike in oil prices, Kamer said. "Housing has become so unaffordable," she said, "that even credit-worthy buyers with conventional mortgages have huge monthly payments and huge tax payments." The median closing price of a house on Long Island was $430,000 last month.
Used cars are selling
Locally used car sales picked up some of the slack, according to a report issued last month by a market analysis company working for the Greater New York Automobile Dealers Assocation; it said new registrations of used vehicles sold by dealers and private parties rose by 2.4 percent this year through July over the same period a year earlier in the nine-county area that includes the five boroughs, Long Island and the northern suburbs. So, as a new model year, 2008, begins, experts say selling cars has never been tougher.
That's especially true now in the family car arena - the largest single segment, where the longtime leader, the Toyota Camry, is coming under renewed attack this fall by General Motors' Chevrolet division with a redesigned Malibu and Japan's Honda with an equally new Accord.
The Malibu is a mechanical relative of the Saturn Aura introduced for '07, and GM is hoping with both to win more customers like insurance broker Frank Bagatta of Smithtown, who swears by his 2008 Aura. "It looks like it should be $47,000, not $27,000, and it rides as well as my wife's Cadillac," said Begatta, 54.
Overcoming the Japanese
Analyst Jesse Toprak of the auto information company Edmunds.com says he has driven an '08 Malibu and was impressed, but GM, Ford and Chrysler must overcome the loyalty to Japanese models in this and many other areas of the country. "When you sit inside this [Malibu], the interior rivals that of a $40,000 Lexus," he said, noting the Chevrolet's under $20,000 starting price. "That's no small accomplishment. But it's still going to have the usual challenges in terms of stealing away loyal Japanese car buyers."
And that's no small task on Long Island. Even in a soft market, registrations of Toyota Camry, the bestselling car nationally and third most popular here, rose in Nassau and Suffolk by 16 percent through August over a year earlier, helped by special leasing deals. Registrations of the second most popular model, the Nissan Altima, increased by 10 percent.
OF INTEREST
Sales of used vehicles in the metropolitan area have picked up some of the slack, rising 2.4 percent from January to July over last year
NEW CAR REGISTRATIONS
January-to-August retail vehicle registrations in Nassau and Suffolk
2006 Change in '07
Toyota/Scion 16,964 7%
Honda 15,394 10%
Nissan 13,891 -1%
Ford 8,844 -2%
Chevrolet 8,661 -16%
Hyundai 5,934 17%
Mercedes-Benz 5,674 -4%
BMW 5,318 15%
Jeep 5,291 13%
Lexus 4,983 -4%
Dodge 3,589 2%
Acura 3,315 -5%
Chrysler 3,253 -21%
Infiniti 3,118 1%
Cadillac 2,753 -7%
Volvo 2,533 -13%
GMC 2,505 -4%
Volkswagen 2,429 -6%
Mercury 1,870 -7%
Mazda 1,772 25%
Subaru 1,772 -14%
Audi 1,684 25%
Lincoln 1,453 34%
Pontiac 1,393 -14%
Kia 1,082 24%
Suzuki 1,068 -38%
Land Rover 1,049 15%
Saturn 1,010 1%
Buick 935 -24%
Saab 735 -22%
Hummer 709 -17%
Mitsubishi 695 7%
Jaguar 669 -29%
Porsche 582 -6%
Mini 477 14%
Bentley 87 48%
SOURCE: R.L. POLK
---------------------------------------------------------------------------------------------------------
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com.
Print | posted on Monday, October 22, 2007 2:03 PM