Goshen News, Goshen, IN

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June 16, 2013

Car dealers’ delight

Dealerships, credit union notice bump in business this spring.

GOSHEN - Auto sales are going up nationwide and Elkhart County dealers are part of that rebound.

“Actually, I am well outperforming that trend,” said Scott Flake, general manager for Eby Ford in Goshen.

The trend Flake referred to is an improvement in sales nationwide that began in 2012 and for most months, continued through May. Autodata Corp., which provides statistical services to the auto industry, reported that vehicle sales in the United States were up 8 percent in May compared to May 2012. That percentage amounted to 1.4 million vehicles being sold. Of those, 173,972 were full-size pickups, according to Autodata.

Flake said Eby’s new vehicle sales were up 20 percent from May to May and are up 25 percent year-to-date. He credits the increase to the combination of an improving economy and Ford Motor Co. offering popular products.

“Ford has done a fantastic job of providing what people want to own instead of trying to sell what they want to build,” Flake said.

He believes the consumer trend is moving away from those who either have enough cash on hand not to worry about the slow economic recovery, or who have to buy a car because their current vehicle needs replaced.

“There certainly are people who are need buyers,” Flake said. “But with the quality of the vehicles today and the (incentive) programs available, people are taking advantage of the perfect buying storm.”

Low rates

A new car loan at Interra Credit Union in Goshen has an interest rate of as low as 2.49 percent. Such a low rate, plus an improving economy, has boosted the number of car loans at the credit union since mid-2012.

“We have seen a tremendous growth in auto loans,” said Phil Wiens, chief lending officer. “Not necessarily in the past couple months, but the past couple of years.”

He said the credit union had a 4 percent growth in auto loans in the first half of 2012, then the growth jumped to 7 percent in the second half. So far this year auto loan business has increased 8.73 percent, according to Wiens. The majority of those loans are for used cars, he said.

Why such growth?

“I think one of the biggest things is pent up demand,” Wiens said. “ They just delayed purchases.”

Elkhart County’s economy was devastated by the 2007 to 2009 recession. With about 40 percent of the county’s economy based on recreational vehicle manufacturing, when that industry teetered, thousands of jobs were lost.

Now the RV industry is rebounding, leading the county back to prosperity, and auto dealers believe the creation of RV factory jobs has helped build local consumer confidence.

“We are very optimistic,” said Dzung Nguyen, owner of Goshen Motors, a GMC, Buick and Hyundai dealership. “We don’t think the market is great, but it is much better than it was three to four years ago. The RV market is doing very well.”

He said his dealership’s sales gains this spring are close to the national figures and he is looking for qualified service technicians to fill openings.

“I wouldn’t say we are at pre-recession sales, but over the last two to three years it has tremendously improved,” Nguyen said.

He is optimistic about the future of local new car sales and is making a significant investment in modifying his dealership building to meet the new GMC facade and branding requirements.

And, he believes GMC’s new Sierra pickup, which has just gone into production, will be a big seller in coming months.

He said for automakers to introduce a new vehicle, such as the Sierra, they have to invest $1 to $2 billion.

“If your product is out more than three years without a refresh, you will be old,” he said. “It is no different than any other competitive business. You have to understand what your niche is and what your market is and you have to differentiate that.”

Like Flake, Mike Lowery at Lochmandy Motors in Elkhart, believes incentives from manufacturers are attracting customers.

“Part of the influx is the very competitive lease rates from manufacturers that we didn’t have before,” Lowery said.

And he said car loans are much easier to get than a few years ago.

Sales at the dealership have been about average, according to Lowery, but he has noticed an increase in interest in pickups.

“They (consumers) can pull their boats and RVs. That walks hand-in-hand with the RV market coming back,” Lowery said. “People who traded in their pickups trucks for higher mileage vehicles are perhaps rewarding themselves for what they went through a few years ago.”

 

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