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August 6, 2012
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Oil Boom Fuels Vehicle Sales By Jenny King
Rush - Dated Material
Once quiet North Dakota has become a bustling land of opportunity. Major oil discoveries in North Dakota and Montana the last couple of years have attracted thousands of job seekers to these northern plains states. The boom has resulted in sky-high wages, low unemployment, housing shortages, infrastructure headaches and inflation. Unprecedented numbers of consumers are looking for used cars and ways to finance them. Dealers say it’s a mixed blessing. One retailer said his business is so brisk, he didn’t want to talk and let the competition know how great things have been. Used pickups, he said, were selling at a rate of one a day. The second week in July he was down to only 11 trucks and looking hard for more. Dickinson, N.D., dealer Larry Heiser confirmed fig-
ures offered by colleagues: semi-skilled workers in the oil industry can earn over $100,000 a year and more than three out of four car loan applications are reportedly being turned down for various reasons. With two locations and increased sales in each of its 42 years in business, Heiser Motors Inc. today keeps a total of 160 vehicles in inventory. Heiser said 60 to 70 percent of sales are trucks and SUVs. While business is brisk, Heiser says working with tire-kickers is frustrating. “On their days off, some (of the newcomers) go out and bug dealers - you can see the same people on several lots looking at cars,” he said. Financing car sales is the tough part, Heiser reports. Many new to the area are behind on various payments and are sending money earned in oil back home. Dakota Motors Inc., another Dickinson operation, went into the buy-here, payhere business a couple of years ago. Dealer Brent Jordheim says he determines a down payment on an individual basis. Contracts are for two years and the staff bookkeeper oversees the process. “We have 280 contracts out now,” Jordheim says. “Over half our sales (20-40 per month) are buy-here, pay-here.” Dakota Motors keeps about 80 vehicles on the lot, generally priced $4,000 to $8,000. Credit unions tend to
Photo by William Kincaid GUSHING: Dealer Brent Jordheim, owner of Dakota Motors in Dickinson, N.D., shows off the keys for the dozens of cars he keeps on the lot these days to meet demand.
lend in nearby geographic areas but are not restricted by North Dakota, says Al Lentsch, executive at the Northland Independent Automobile Dealers Association in Burnsville, Minn. And there are no state regulations that affect a buyhere, pay-here operation such as a residency requirement, he said. “It’s up to the dealer,” Lentsch said. Consumers in many parts of North Dakota are facing inflated prices in goods and services and persons on fixed incomes are hard
hit, said David Flynn, who chairs the economics department at the University of North Dakota in Grand Forks. “There has been an enormous increase in wealth of all forms over the last several years,” Flynn said. The exceptions are people who won’t pay the higher prices for vehicles associated with dealerships in the oil field area, said dealer Gerald Rohrich, owner of Rohrich’s Auto Sales in Mandon, N.D. “Dealers in towns like Dickinson say when the
haulers come in, vehicles are sold even before they are unloaded,” Rohrich says. “If you miss the truck, you are out of luck.” Flynn said the current oil boom, with ups and downs, is projected to last some 20 years. However, a boom in the early 1980s failed and had a negative impact. “A key lesson is that there will be, at some point, a decline in oil prices that will adjust down the level of activity in the west, but not necessarily a complete cessation of activities,” he said.
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