The New Car Makes A Comeback
The 2008 recession devastated new car sales across the country, and it hurt Massachusetts dealers, too.
While national sales numbers climb back from a steep 35-percent drop, Massachusetts dealers are also seeing improvement, although at a less exciting pace.
Things aren't back to normal just yet at area dealerships, but recent data provided by the Massachusetts State Automobile Dealers Association (MSADA) show sales here climbed 15 percent from 2009 to 2011 after suffering a 25-percent drop from 2007 to 2009.
Sales of new cars and trucks in Massachusetts are down 1.9 percent through April compared to the same period last year, but data show that sales for the state's auto industry have rebounded more than 15 percent since the recessionary trough in 2009.
Carla Cosenzi, owner of Patriot Buick GMC in Charlton, acknowledges that things are looking up at her dealerships, some of which are in Western Massachusetts.
"I think we really started to see an increase at the end of 2011 and that's continued in 2012," Cosenzi said. "It's not where it was prior [to the recession]. However, you can definitely see the climb."
Cosenzi said there was a time in 2009, when GM was going through its bankruptcy proceeding, when she and other dealers were worried they could lose their franchises.
Luckily for her, GM has rebounded and Cosenzi is looking forward to the summer selling season.
As of late, high-gas mileage and diesel vehicles are helping drive the growth at her dealerships.
"That kind of tells you where the auto industry is heading in the future," she said.
Framingham Ford owner Jerry Chase Jr. is also optimistic.
"It looks like the industry's turning around and we're all pretty excited about it," Chase said.
He noted that the local area didn't suffer as much as the rest of the country in the recession, so vehicle sales didn't dip as severely as they did in other parts of the country.
"New England and Boston, we didn't seem to get hurt as badly," Chase said.
The Vital Signs
National sales numbers from the major auto manufacturers have been hard to miss these past few months.
Sales exceeded 14 million cars in the first four months of 2012. As of May, more than 73 million vehicles had been sold to dealerships, compared to 65.1 million over the same period last year.
More than 15 million new cars were sold this February, according to the federal Bureau of Economic Analysis, approaching 2008 sales levels.
That number looks pretty good compared to previous February sales — 13.2 million in 2011, 10.4 million in February 2010 and 9.2 million in 2009, the lowest point of the recession for the auto industry.
In Massachusetts, the magic number seems to be 300,000 new vehicles per year. Annual sales were trending above that point in 2006 and 2007, but they fell to 289,000 in 2008 and 249,500 in 2009.
Sales began climbing again over the next two years, hitting nearly 288,000 in 2011, according to MSADA, which represents 410 franchised dealerships in the state.
Through April, Massachusetts dealerships sold 80,618 vehicles, down 1.9 percent from the same period last year.
Can The Recovery Continue?
Robert O'Koniewski, vice president of the auto dealers association, said there are a number of potentially problematic economic factors that could stifle further new-car sales growth in the state, including tighter financing, continued unemployment, a still-struggling housing market and uncertainty over the upcoming presidential election.
"Sure it's gotten better since the recession, but you still have a lot of uncertainty," O'Koniewski said. "I don't see us getting to the 350 mark any time soon."
That's troubling because the sector is an important piece of the state's economy. O'Koniewski said new-car dealerships employ approximately 25,000 people and represent 20 percent of the Massachusetts retail economy in dollars.
One positive stat is that the average car in the state is more than 10 years old, but he said some people who formerly purchased new cars are now buying used vehicles.
O'Koniewski cautioned that national sales numbers can sometimes be misleading. National monthly sales numbers don't necessarily translate to individual states. For example, when a major manufacturer has a particularly strong quarter, sales to dealerships may have been bolstered by the sale of fleets to governments or rental car companies as well as discounts to dealerships.
"GM turned a profit for the year, but their last quarter was bad and the sales didn't come from Joe Consumer," he said. "I think that sometimes gets lost in the stories."n
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