Local Auto Dealers DRIVEN To Succeed
In the office of his McHenry Avenue dealership, Dave Halvorson peers over American Chevrolet’s latest ad while Na’an Stop—the reggae band that his son plays in—softly beats from the speakers of his computer. Asked whether things have changed for the better in the new car sales industry over the last couple of years, Halvorson folds the ad and gets serious for a moment. “Have things gotten better? Yes, absolutely. But are they good yet? No.”
Today, the new car sales industry is much stronger than it has been since the recession hit this area hard in 2008, and there’s no arguing that it’s well on its way back. So on this strip of McHenry—and all around the Central Valley—every owner speaks of the upturn with careful optimism.According to the National Automobile Dealers Association (NADA), which represents nearly 17,000 new car and truck dealers worldwide, auto dealerships across the United States are in the midst of a historic upward trend. New car and truck dealers are experiencing a resurgence in business as consumer confidence improves and the economy regains its lost momentum.
In 2012, over 14 million new cars were sold in the United States, which is a considerable bounce back from 2009’s low of approximately 10 million, though still lacking from pre-recession numbers. According to NADA, 2007—one of the best years in decades for auto dealers—averaged over 16 million sales. The monthly numbers during 2013 show that the new car industry continued to build sales, with an average of 10% growth over 2012’s figures.
Here in California, the last two years have seen an undeniable boom in new car sales. During 2012, the state’s 1,364 new car and truck dealers sold a combined $77.5 billion in light duty vehicles, which includes cars, trucks and SUV’s. These sales not only accounted for nearly 16% of total retail sales in the state but also made possible over 100,000 well-paying jobs for Californians.While the industry has bounced back nationally, the recovery hasn’t meant the same boom for dealers within the Central Valley. Part of this is owed to the fact that the Central Valley took a bigger hit in the recession than other areas in the state, so the recovery has more ground to make up.
“Dealers in the Bay Area are already back to levels higher than where they were before the Great Recession, but the Central Valley is still down approximately 30-40%,” said Halvorson. “It’s going to continue to get better, but we’re probably 2-3 years away from it being all the way back here.”
Tony Mistlin, owner of Mistlin Honda agreed that today’s market is an improvement. “It’s definitely better than it was a few years ago. At least now every month is a positive month,” said Mistlin, who recalled that in late 2008, he was doing everything he could just to stay afloat. “Do I think it will ever get back to the way it was? I doubt it. Too much has changed. The days of somebody walking onto the lot and going ‘I’d like to buy a car,’ are almost gone.”
Mistlin said that the lessons learned in the down economy—and the forward march of technology—have meant some tremendous shifts in the industry. “These days, every transaction that we make involves several visits—including financing—and requires a lot of expertise from our sales staff.” Plus, thanks to the internet, today’s customers now have unprecedented access to all the numbers about costs. Before they step foot onto the lot, they’re often much more educated about the process than customers have ever been before.
According to Ken McCall, speaking on behalf of Modesto Toyota, the 49-year-old dealership may have fallen on hard times, but its loyal base of local customers helped see them through the recovery. “We have made it through the rough times and now we are all improving together,” said McCall. “We still pride ourselves on our service, the relationships we’ve built with customers and on the vehicles we sell.”
On Mistlin’s part, the changes in the industry may represent a challenge, but it’s a challenge that he and other dealers are up to facing. “The recession has taught us to watch our pennies. We’re more motivated than ever before to do everything we can to please the customers.”One of the most visible changes in the industry lately has been the uptick in construction visible across many dealerships. According to Halvorson, these facelifts are mandated by manufacturers who require that dealerships keep their facilities upgraded.
Beyond the shiny new dealerships, this spate of new construction has given a boost to the local economy. From construction firms to material sellers, these new projects help keep local dollars circulating through local workers and retailers, which in turn keeps the Modesto area moving forward.
“Over the past two years we have asked our customers what they want in a new facility,” said McCall about new projects at Modesto Toyota. “The result is an $11 million, 80 thousand square foot, state-of-the-art complex. This is an investment in our community that will continue to grow and meet the needs of our customers.”
Modesto European—which recently rebranded to Mercedes Benz of Modesto—has also unveiled a floor to ceiling remodel and expansion of its McHenry Avenue facility. “We expanded our dealership to 43,000 square feet which includes a 20 car indoor showroom and complete climate controlled drive-in service facility, said Director of Operations Chris Godden. “The entire focus on the remodel and expansion was to provide a complete luxury vehicle experience to our clients.”
The improvements don’t end at remodels, though. Central Valley Automotive is set to break ground at a new Infiniti store at McHenry and Pelandale during the first quarter of 2014 and is poised to develop two parcels in the near future. In addition to the remodel of its existing facility, Modesto Toyota has also opened an additional new dealership location, according to McCall.
“The new facility allows us to partner with many non profit organizations for a healthier community,” added McCall, echoing sentiments from many dealers whose experiences during the Great Recession have motivated them to refocus attention on the local community.
According to Mistlin, this give and take between the local community and local auto dealers is a fundamental tenet of the business. “We’ve always been very community focused, but now that our customers have helped us make it through this rough time, we’re even more committed to helping the community succeed.”
Together, the local community and local auto dealers are driving their way back to a bright future.