Slowdown in luxury car sales hurting Newport Beach’s finances

Fletcher Jones Motorcars in Newport Beach Wednesday
Fletcher Jones Motorcars in Newport Beach.
(File photo)

Mercedes models aren’t moving as fast as they used to in Newport Beach.

Sales tax collections in town appear to be ebbing this year, partly because of a tapering in sales of high-end cars such as Mercedes-Benz and Tesla.

City officials say it’s no cause for alarm — projected revenue is still growing year over year, just not as quickly as once expected.

In a report prepared this month for the Newport Beach Finance Committee summarizing the performance of the city’s top three revenue sources — property, sales and hotel bed taxes — city Finance Director Dan Matusiewicz said that overall, this fiscal year’s projected general fund revenue of $212.3 million is greater than the $210.2 million that was budgeted.


Projections for the city’s No. 1 source, property taxes, are $99 million, higher than the $97.1 million the city budgeted. If the projection holds true, it would be a 5% increase over last year’s $94.4 million, which was itself an increase over $88.8 million the year before.

But sales and bed taxes, though also growing, need downward revisions from budgeted amounts.

Sales taxes are projected to hit $34.8 million — above last year’s $33.7 million but below this fiscal year’s budgeted $35.9 million. The city report attributed that to a dip in luxury car sales, along with an increase in auto leases and the effects of online shopping.

Similarly, bed taxes, also known as transient occupancy taxes, are projected to hit $23.1 million — above last year’s $22.4 million but below this year’s budgeted $24.3 million.


The growth is slowing as hotel renovations take many rooms out of commission. The Resort at Pelican Hill and the Duke — formerly the Fairmont — recently started remodeling projects that will last through June. The Carlton — formerly the Radisson — has been under renovation for about a year and is expected to be finished in May.

Matusiewicz said the recent report was intended to give the Finance Committee incremental information for easy digestion.

Councilwoman Diane Dixon, the committee chairwoman, said the report enables prudent planning.