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Q4: Bradley McAreavy, president, Rochester Automobile Dealers' Association

Rochester Business Journal
April 19, 2013

Q: New-car sales in Monroe County were up roughly 5 percent for the first quarter this year, compared with the first quarter of 2012. To what do you attribute the increase?

A: We continue to experience the effects of several years of pent-up demand. In 2010 and 2011, consumers postponed purchases for various reasons. While the economy has not reached a "healthy stage" yet, consumers are willing to move forward with a car purchase. In addition, a combination of strong manufacturer incentives (rebates, low-interest financing and attractive lease payment options) in the marketplace and continued support from the consumer lending institutions has resulted in a growth period for the industry.

Q: On the other hand, used-vehicle sales here were down some 7 percent for the quarter. Is this a result of deals and incentives on new vehicles, and do you expect used-car sales to rebound?

A: The used-car market is definitely being influenced by the growing new vehicle market. As new vehicle pricing and payments become more competitive, consumers gravitate toward new vehicles for the benefits of extended warranties, lower maintenance costs and better fuel economy. The used-car market was undersupplied for several years due to declines in fleet sales (daily rental units) and a contraction in the use of leasing for retail consumers in 2008 through 2010. That short supply drove the prices of used-vehicles up. The supply-demand curve is now returning to a more normal level, interest rates remain low, so used-vehicle sales are expected to bounce back as the year progresses.

Q: Total sales for the year are relatively flat from 2012. Monroe County auto dealers sold 15,663 new and used vehicles from January to March this year, compared with 15,627 in the same period a year ago. Do you expect those numbers to pick up as the year continues?

A: The new vehicle industry as a whole, nationally, is expected to have a strong year, growth of 7 percent to 10 percent. I do not expect Monroe County to be at that level. Growth of 3 percent to 5 percent is forecast. Keep in mind, 2012 was the highest year for new vehicle sales since 2002. And used-vehicle sales recorded a similar level of performance. Monroe County is trending at very high levels right now, so continued growth will be steady but nominal. Needless to say we're very pleased with the direction things are going. The market is very competitive between brands, which is good for consumers. 

Q: How have the economy and high gas prices affected local car sales?
 
A: The auto industry is weathering the storm pretty well in terms of the economy. But 2009 and 2010 were very tough years, so we're benefiting from the bounce-back now. Gas prices undoubtedly influence buying decisions, but not to the point where it's the primary driver. What I like to point out is trucks and SUVs today get much better fuel economy than trucks and SUVs five to 10 years ago. So consumers do not have to abandon the vehicle they want or need to get better fuel economy. However, for those people that really want to avoid the gas pump as much as possible, there are more options than ever before-electrics, hybrids and traditional gas engine vehicles getting 40-plus miles per gallon.

4/19/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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