Keffer's Corner: Rotary Club Meeting Overview: State of Automotive business

A couple weeks ago, I
spoke to our Fernandina
Beach Rotary Club, where
I have been a member for
12 years. The topic was the
automobile industry, which
is a
subject of relevance to
everyone. The front end of the
talk was local, national, and
worldwide car business dis
-
cussion, fol
-
lowed by Q
& A. Always
looking for
a topic, this
seemed
worth shar
-
ing with
you.
Locally,
Nassau
County
residents
bought 373
new and 412
used vehi
-
cles in July, per the Cross Sell
data. An average month has
been around 325 new and 375
used sales per month. In the
worst of times (2009),
new car
sales
dropped below 200. Our
industry
got its footing back
in
2012, and our local area did so
as well.
Nationally, U.S. sales are
headed for around 16.5 to 17
million units a year, where
they are projected to level out
for a few years. The average
vehicle on the American roads
is 11.5 years old. A decade
ago, it was more like 8 years
old. The downturn pushed
the number out, and better
cars have kept it there. Many
of the cabs operating in the
area have 300,000 or more
miles,
most being Dodge
Caravans. Trading at or
before 100,000 miles has
transitioned to 150,000 or
more miles for increasing
numbers of consumers. The
old adage “ I am going to
drive it to the wheels come
off” is taking longer to fulfill.
Trucks are enjoying a lot of
the momentum in the market
-
place, creating virtually all the
sales gains.
Internationally, VW,
Toyota and GM are the big
boys. VW, not a big U.S.
player, is leading the world
-
wide sales race in 2015. All
three of these manufacturers
are in the 8 to 10 million
worldwide sales league. Just
like airlines, consolidation
will likely continue. Nissan/
Renault and Fiat/Chrysler are
likely not the end of it. We
live in a “fewer and bigger”
world these days, for better or
worse.
Q & A was spirited after
a little market overview.
One question involved the
revenue breakdown at a
dealership. The assumption
was 70 percent was generated
by parts and service.
The typical breakdown of
revenue is 60 percent from
new and used cars sales and
40 percent from parts and
service. My take on Elon
Musk: a brilliant guy who has
figured out how to work the
U.S. government to get rich.
My question to the audience:
What percent of Chinese new
car buyers pay cash? Ninety
percent cash transactions in
the world’s biggest new-car
market.
We went on with a discus
-
sion until the bell tolled 1 p.m.
Most people like cars, and
talking about them. Rotarians
are no exception.
Again, it is model change
time. Inventories are going to
shrink, so shop now if a 2015
is on your radar. If it is a hot
item with limited or no incen
-
tive, and 2015s are scarce,
a 2016 may be an option.
Possibly an order, when
that option opens up. Most
models are available and
incentives peak at this time of
year. Lots of 0 percent offers
are out there. Don’t trust the
financial world to offer this
forever. Hint: If your vehicle
is older than 2005, get out
there and consider a new or
used car now. The rest of
you are invited also. I dislike
“now is the best time in the
history of the world to buy.”
I like “there is no time like
the present.” Come visit your
local new and used car dealers
soon.
Think of the mild winters
here as the sweat drips
down your brow. Have a good
week
Categories: News

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