Patriotism Push Helps Get Auto Sales Rolling Again
In a turnaround apparently motivated by exhortations from politicians to go out and buy something to help prop up the economy--if not by substantial cash-back and zero-interest offers from auto makers--consumers pushed sales of new cars and trucks to near-normal levels over the weekend.
It is too soon to tell whether the sales spurt will continue. Analysts still believe that new-vehicle sales for the final quarter will be down 5% or more as consumers pull back in the wake of the Sept. 11 terrorist attacks in New York and at the Pentagon. Sales plunged by as much as 30% to 50% in the days immediately after the attacks.
But sales surveys released Monday by J.D. Power & Associates and CNW Marketing/Research showed that consumers were responding to suggestions that one good way to stand up to terrorism is to get back to normal as quickly as possible.
Agoura Hills-based J.D. Power, drawing on daily sales reports by more than 5,000 dealers in key markets around the country, said sales Saturday and Sunday increased to within 11% of sales in the four weekends preceding Sept. 11. Preliminary Monday numbers show a 14% drop for the day, said economist Van Bussmann, Power’s head of global forecasting.
CNW Vice President Art Spinella said his company’s surveys showed that floor traffic at dealerships across the U.S. this weekend returned to 90% of pre-Sept. 11 levels after nearly two weeks of 30%-to-50% declines. CNW, based in Bandon, Ore., found that dealers were selling cars to about 25% of those who came looking, a rate considered normal in the industry.
Zero-percent financing programs from Ford Motor Co. and General Motors Corp. had an effect, Spinella said, with 11% of Ford and GM customers saying they shopped primarily because of the incentives.
But the so-called Giuliani Factor also played well over the weekend.
“About 8% of all new-vehicle shoppers said New York Mayor Rudolph Giuliani’s recommendation to go out and buy something caused them to go shopping,” Spinella said.
That wouldn’t be unusual if CNW’s survey of 2,200 car shoppers and more than 1,000 dealers had been conducted only in New York. But Spinella said there were high rates of shoppers in Los Angeles, Seattle, Denver and other Western and Southern markets who credited Giuliani’s “buy something” encouragement.
The cheering isn’t universal. Ray Horth, sales manager at Don Steves Chevrolet in La Habra, said Monday that sales were still down about 25% and that there were more lookers than buyers over the weekend. News of GM’s zero-interest program hasn’t made it into Steves’ newspaper advertising yet, he said, “so people shopping here aren’t aware of it.”
John Paolucci, general manager at Toyota of Cerritos, said business “was close to normal.” Although Toyota Motor Sales USA Inc. has not applied new incentives since Sept. 11, the company has been promoting its annual year-end clearance since the beginning of the month, and special discounts and interest rate programs are available, Paolucci said.
“There’s been an overall uncertainty” about the economy, “but it seems to be fading,” he said.
That could be good news not only for auto dealers but also for the economy as a whole. New-vehicle purchases are a key indicator of consumer confidence and economic health.
“The lack of further deterioration, and even some signs of improvement in the face of a sharp drop in the stock market, is very heartening,” said Bussmann, the J.D. Power economist. “ . . . The U.S. economy is very robust and diverse, and even though personal losses for many have been incredibly high, the economic losses have been quite contained.”
Ron Pinelli, president of sales tracker Autodata Corp. in New Jersey, said he visited a number of dealerships in the New Jersey-New York area over the weekend and found that even in an region most directly affected by the terrorist attacks business was picking up.
