New-vehicle sales at full speed
‘Younger buyers have to have all the bells and whistles,’ one dealer says
YEAR-end auto sales totals for new cars confirmed what dealers already knew; 2014 was a good year.
For the Houston region, it was a record year and the fifth straight year of increased newvehicle sales. The 2014 total of 373,998 was up 7.5 percent from 347,859 the year before and a hefty 71 percent over the 2009 recession-year low of 218,710 new vehicles.
“The first half of the year was very strong,” said Steve McDowell, owner of InfoNation, the publisher of TexAuto Facts. “We had a combination of oil and gas employment along with high construction employment. The last half of the year began to tail off a little, but the first half was so strong the result was an all-time high for the region.”
At Joe Myers Toyota, general manager Jerry Rocco was pleased.
“The Houston economy was fantastic in 2014, a lot of growth,” he said. “People have a little excess money now. The gas prices are helping us. I think 2015 will be better.”
High employment in construction and oil and gas also affected the mix of vehicles sold, Houston Automobile Dealers Association president Wyatt Wainwright said.
“In Houston we are weighted to trucks and SUVs over cars,” he said. “In all the in- dustry, oil and gas, trucks have just been the deal.”
The association counts 175 “rooftops,” rather than dealers, in a 10-county region around Houston. A single dealership that sold, for example, Ford, Subaru and Volkswagen would be three rooftops.
Among companies ranked in the TexAuto Facts report, the top three dealers in the region, all selling the same nameplate, remained in order. Fred Haas Toyota World on Interstate 45 in Spring was No. 1 for the third straight year with 6,525 in retail units sold. The second slot, also for the third year in a row, went to Sterling McCall Toyota on the Southwest Freeway, sell- ing 5,894 vehicles. Joe Myers Toyota, in northwest Houston on U.S. 290, ranked No. 3 for the second year in a row with 5,110 cars and trucks.
The far and away bestselling vehicle in the Houston area was the Ford F-150 pickup. TexAutoFacts keeps model sales comparisons for each year’s first quarter. Dealers sold 5,123 F-150s in that period last year, compared with 4,518 in the same period in 2015. That was followed by the Chevrolet Silverado with 2,893 in the first quarter last year, compared with 2,682 in 2015.
The trucks were followed by the top-ranked car, Toyota Camry, which sold 2,434 units in the first quarter of last year, compared with 2,234 in 2015.
Trucks and SUVs accounted for 59.1 percent of Houston region retail sales in 2014, at 217,868 units, up from 57.6 percent in 2013. Cars accounted for 156,130 vehicles.
The average truck or SUV retail sales price was $38,920 in December 2014. For other autos, the average retail price was $31,552.
“A lot of markets don’t have the ability to have a good mix of cars and trucks,” said Peter DeLongchamps, a vice president of Houston-based Group 1 Automotive, an international car retailer with 22 dealerships in the Houston-Beaumont area. “In Houston you have the ability to sell both.”
Luxury cars also sold well in Houston in 2014. Of Houston sales, 0.8 percent are for vehicles that cost more than $100,000, which McDowell called a large percentage.
“Primarily Lamborghinis, Porsches, Ferraris,” he said. “I think the highest-priced Porsche I saw was $965,000.”
Far more buyers sought lowpriced, entry-level vehicles. Some dealers said the current younger generation of entry buyer views cars as just basic transportation, but they want that basic transportation to have lots of cool tech.
“Oh, yes, the younger buyers have to have all the bells and whistles. “Bluetooth, Entune,” said Jerry Bush, general manager at Sterling McCall Toyota, referring to Toyota’s version of a technology dash array. “One thing about the younger buyers, they are very informed. They get on the Internet and know more than the seller. You have to train your folks better to stay up with that. They know what they want before they come in. They’ve done their homework and know what they want to pay.”
Bush says the cliché about the men making the car decisions is old and outdated.
“I think women are making the majority of the decisions,” he said. “We are constantly looking for female salespeople.”
Used-car sales are also very important, DeLongchamps said.
“The ability to retail used has a direct benefit on your ability to sell new cars. Everybody talks about U.S. (car sales) of 16.5 or 17 million. Well, there are 40-plus-million used cars sold every year. It’s a big part of our business, and something we pride ourselves on.
“Right now there are a sub-
stantial number of cars coming off lease, which is very good for us because at long last we have a nice supply of what we call lower-mileage pre-owned cars.”
He says Houston is a good place for used-car sales because dealerships in many parts of the country cannot get the room to display many used cars.
“We’re blessed to have land in Houston where we can have big pre-owned lots,” he said.
Despite early high sales and an anticipated good year in 2015, some factors temper dealer euphoria. Five years of car sales growth is the longest period in the region for 40 years, according to McDowell’s TexAuto Facts, which also points out that long periods of growth are usually followed by shorter periods of decline.
While 2014 was a record in fast-growing Houston, and a recent high-point in the United States with 16.4 million units sold, it’s been a long recovery from the 2008-2012 doldrums. From 1999 to 2005, U.S. sales topped 16.5 million every year, highlighted by 17.35 million in 2000. Considering the U.S. now has more than 40 million additional people than in 1999, 2014 sales seem far less spectacular.
DeLongchamps said he expects that nationally, “2015 will be the first year where the U.S. industry will actually track above trend, with probably 16.8 or 17 million in sales.”
At Joe Myers Toyota, general sales manager Lance Lewis still expects 2015 to be better than 2014.
“If we just do what we did last year, it will be a great year,” he said. “The Houston metro market is hot, it’s huge, it’s crazy.”