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January 16, 2012
www.usedcarnews.com
Car Sales Get Over Bumps In the Road By Ted Craig
New-car sales will continue improving in a strong 2012 as the industry moves back to normal. Economists speaking at the Society of Automotive Analysts outlook conference expressed general confidence about a stronger car market and a somewhat stronger economy. “It’s a better market,” said Paul Taylor, chief economist for the National Automobile Dealers Association. “Cars are on the move.” While new-car sales in 2011 were far below prior peaks, they showed a steady increase in both volume sales and dollar sales, Taylor said. The main factor holding back auto sales last year was a lack of inventory following the disasters in Japan. “You can’t sell what you can’t get,” Taylor said. That shouldn’t be a problem this year, although nobody predicted an earthquake and near meltdown
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last year. Or a string of revolts in the Middle East, either. G. Mustafa Mohatarem, chief economist for General Motors Co., said the industry proved it can meet these unexpected challenges. “Those have big impacts, but we work our way through them,” Mohatarem said. That said, Mohatarem couldn’t resist a joke about the Mayan calendar, which shows the world ending this year. The return of Japanese production could kick off a new round of incentives as manufacturers fight for marketshare, Taylor said. The improving economy will lift sales barring any unforeseen events, Taylor said. Key among the economic factors is increasing employment. Mohatarem said new-car buyers are returning to work, although many used-car buyers lag behind. Easier credit also helps auto sales, Taylor said. But he said finance companies seem uninterested in returning to the levels of subprime financing for new cars that drove sales to 17 million units. “We’re actually better off long term that that doesn’t happen,” Taylor said. Mohatarem said any talk of a “new normal” in car sales was nonsense. Americans still rank an automotive purchase before any new gadget or other expense. “At the end of the day, Americans want to buy cars,” he said.
Photo by Ted Craig SEER: G. Mustafa Mohatarem gives an optimistic forecast to attendees at the Societyof Automotive Analysts conference in Detroit. Mohatarem said chances were better for positive surprises than negative ones.
Bill Threatens Buy-Here, Pay-Here
A California legislator introduced a bill that would ban many of the basic practices of buy-here, pay-here. Assembly Member Mike Feuer (D-Los Angeles) introduced the legislation in response to a series of articles that ran in the Los Angeles Times last year. The bill would: • Require auto dealers to display the sales price of a vehicle on the vehicle. • Prohibit dealers from requiring buyers to make scheduled payments to the seller in person. • Following the sale of a vehicle, prohibits the seller from calling the buyer’s references, tracking the buyer’s vehicle with GPS technology or disabling the vehicle with ignition override technology. “This industry preys on people who have no other options for getting a car,” Feuer said in a release. “In many parts of our state, auto travel is the only way for parents to get to work on time, or to pick their kids up from school. Instead of helping Californians get back on their feet by providing needed transportation, these dealers are promoting an endless cycle of debt and joblessness.”
IN THIS ISSUE • Kelley Blue Book names the best vehicles under $8,000. – Page 3
• Salvage auctions see high prices due to high demand. – Page 8
• A commission dispute that got heated is in the courts. – Page 5
• Ex-dealer sent to prison for ripping off floor planner. – Page 21