Auto dealers see rising consumer confidence from November sales figures

November auto sales were up compared to last November for many Cape Girardeau auto dealers, a trend they attribute to improving consumer confidence.

Bob Neff, dealer at Ford Groves in Cape Girardeau, said November was a terrific month, one of the best since the Cash for Clunkers campaign.

Nationally, Chrysler, Ford, Nissan and Hyundai all reported double-digit gains this November, compared to last November. It's typically a lackluster sales month because of colder weather and holiday distractions, but improving consumer confidence in the economy and the need to finally trade in older cars motivated buyers, dealers said.

Industry sales rose 14 percent to 994,721, according to Autodata Corp. November also boasted the fastest sales pace since August 2009, when the government was offering big rebates to buyers with trade-ins.

December is typically a strong sales month with businesses trying to squeeze vehicle purchases into this calendar year for tax purposes and with lots of people off work and out shopping during the week between Christmas and New Year's.

"When you look at sales at the end of the year, there may not be the difference you thought there would be," Neff said.

But because of poor sales earlier this year, many local dealers do not expect to reach 2010 sales numbers.

According to reports filed by local dealers with the Missouri Department of Revenue, through the end of October, 4,783 new vehicles had been sold by 12 Cape Girardeau and Jackson dealerships, about 330 fewer than in all of 2010. Eight of the 12 dealerships have sold fewer new cars from January through October this year than during all of 2010. For many dealers, sales are down significantly enough that its unlikely they'll be able to catch up to last year's totals before the end of the year.

Total sales, including new and used vehicles, amounted to 9,719 vehicles as of the end of October, 1,137 fewer than were sold during all of last year. Some dealers are hopeful they'll close the gap with strong sales in November and December, but for others, reaching or surpassing last year's sales isn't feasible.

Dealers are optimistic they will slowly make their way back to prerecession sales volumes. Of the 11 Cape Girardeau County dealerships that were in business in 2007, sales are down 3,270 so far in 2011 compared to 2007.

New auto sales account for about 2 percent of total U.S. consumer spending, according to the Bureau of Economic Analysis. This year, nationwide, sales of new autos should hit about $200 billion, $20 billion more than last year.

"New autos sales can be a pretty good indication of what is happening in the economy, since the decision to buy an auto can be postponed when times are tough," said Dr. Bruce Domazlicky, director of the Center for Economic and Business Research at Southeast Missouri State University.

Domazlicky said he would have expected local figures to be higher, but there are many factors that contribute to auto sales, including manufacturers' incentives, the economy and the age of existing vehicles.

Some local dealerships were off last year's new vehicle sales totals by more than 160 vehicles with just two months left to go in the year, according to the Department of Revenue. Those that reported increased sales -- one with 110 more new cars sold last year -- are offering compact cars with high gas mileage at lower prices.

Compact cars will outsell midsize ones for the first time in more than two decades this year, predicts J.D. Power & Associates.

Just five years ago, automakers sold nearly 250,000 more midsize cars than compact cars in the U.S., but by 2015, J.D. Power expects compact and subcompact cars to make up 20 percent of sales while midsize cars will account for just 14 percent.

With gas prices at $3 and change this year, fuel economy is motivating buyers, said Rex Probus, general manager of Auffenberg Kia in Cape Girardeau.

"It doesn't get said out loud, but that's the reason they're here," Probus said.

Another reason buyers are taking a second look at small cars is that they're not the stripped-down boxes of the past. Compact cars now have many of the same features as larger cars.

Compact cars today start at lower price points but can be loaded up with leather seats, navigation systems, rearview cameras and more. They're also roomier than past models, dealers said.

Many Kia models all have high levels of technology that comes standard now, Probus said. "Their rides and noise levels are comparable to what people would think of in a luxury car."

Randy Ott, sales manager at Coad Chevrolet, with lots in Cape Girardeau and Jackson, said that while trucks used to make up 80 percent of the local market, now they're down around 65 percent.

One Chevy crossover SUV boasting 32 miles per gallon is so popular, Ott said, they just can't keep it in stock.

"All vehicles noted for better fuel economy go up in volume as gas prices go up and they go down in volume as gas prices go down," Neff said.

In the past month, as gas has hovered around $3 a gallon, sales of compact cars haven't been as strong as they were earlier this year, he said.

Neff agreed the gap between truck sales, traditionally the top seller in the Cape Girardeau area, is narrowing. In this market, however, trucks, SUVs and crossover vehicles still outsell passenger cars, Neff said.

Still, his dealership has sold more compact cars this year than last year due partly because Ford manufactured more compact cars this year, he said,

But in some cases they still couldn't meet buyer demand for compact cars and they were difficult to keep in inventory when gas prices peaked earlier this year.

mmiller@semissourian.com

388-3646

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Cape Girardeau, MO