Despite Some Dire Projections, Dealers Having a Solid Year
No Slowing Down
Mike Lapointe said he considers himself an “outlier” in most respects when it comes to the automotive market and what’s happening within it.
He used that term in reference to everything from his ability to sell the generally older cars being traded in these days — a development he attributes to the market he serves as general manager of Lia Honda in Northampton (one with thousands of college students on tight budgets) — to the manner in which his dealership is defying what all the ‘experts’ projected as a somewhat down year for the industry.
“Our sales are up 130% as far as new-car business is concerned, so Honda is very, very happy with us,” he explained. “It was the opposite of what we expected; during the winter, we had record months, and in the summer, we ran into vacation season, and things slowed down quite a bit. But we’re maintaining above 100% of our new-car objectives.”
But while Lapointe may well be an outlier when it comes to those older used cars — many are a decade or more older and not retailable in most markets — that term doesn’t seem to apply to overall dealership performance, at least among the owners and managers we spoke with.
Indeed, while analysts were predicting that 2017 would be the year the bubble would burst in the auto industry — when a run of several successful if not record-breaking years would come to an end and the needle would starting moving in the other direction — that really hasn’t happened, at least not locally.
“We actually expected to start to see a downturn, and internally, we were trending for that,” said Carla Cosenzi, a principal with TommyCar Auto Group, which operates Country Nissan in Hadley, Country Hyundai in Northampton, and Northampton Volkswagen. “That was the rhetoric within the industry, but we’re not seeing that; we’re trending upward at all our locations this year.”
Don Pion, president of Bob Pion Buick GMC in Chicopee, the dealership started by his father, Bob, agreed.
“We’re having a very solid year — I can’t complain,” said the 40-year industry veteran. “Both Buick and GMC have good products out there right now, rates are still good, and all those things help us sell cars.”
With one voice, the dealers we spoke with said the forces that were supposed to bring an end to the auto industry’s fun ride, or at least pump the brakes — and they include everything from uneasiness over the scene in Washington (and around the globe, for that matter) to the fact that many of those older cars had already been replaced — are there. But they haven’t had the expected impact.
“We read all those reports … have we hit the bubble? Are we starting to trend down? Every possible thing that could affect the business in a negative way — that’s what they’re predicting,” said Pion. “You read all that, and you think, ‘what’s going to happen?’ But we haven’t seen it. People are still coming in, and they’re still buying cars.”
For this issue and its focus on auto sales, BusinessWest talked with area dealers about what they’re seeing — or not seeing, as the case may be.
The Ride Stuff
When asked how his dealership and others in this region have fared so well when the industry was supposed to take a step back — and still might; projections for the summer were especially glum — Pion paused for a moment.
“You would need someone smarter than me to answer that,” he said eventually, adding that he’s only doing what his father said needed to be done when the industry analysts’ predictions weren’t rosy — and also when they were.
“He always said that you read all that stuff, those industry projections, and you put it away for reference,” he told BusinessWest. “But you come to work every day ready to do business.”
Indeed, while Pion and the others we spoke with said they were, and are, well aware of the predictions for a slower year, all they can do is respond to what they see out their windows, in the showrooms, and on their books.
And the numbers do not reveal a slowdown of any kind.
“We sold 150 cars in February, 140 in March, and 160 in April,” said Lapointe, adding that the average for a typical year at his dealership is about 110, and ‘150-car months,’ as he called them, are solid, to say the least.
Meanwhile, Pion said, so far this year, his Buick sales are up 24%, GMC is up 30%, and used-car sales are up 20%.
Cosenzi, meanwhile, used more words than numbers to convey pretty much the same information.
“We’ve continued to see growth. And usually, we don’t see that across all brands at the same time, but we’ve seen that this year,” she explained. “Usually, one will take off a little more than another, or one will have a new-product launch or something else that will create a little more excitement. But we’ve seen growth across all three.”
What’s driving this better-than-projected performance? There are a number of factors, said those we spoke with, ranging from effective pricing (Lapointe cited this as a key to Honda’s continued solid performance) to seemingly ample amounts of confidence on the part of consumers, to quality products — especially SUVs of all sizes and shapes.
At his Honda store, Lapointe said the keys to success are having inventory that appeals to buyers in the Five College market — again, Millennials on tight budgets — and going the extra mile, whatever that may be, to clinch a sale.
“We have to find new ways to do business,” he explained. “Other dealer groups may not take a deposit over the phone; they might force you to come into the store. Other groups might not give you a trade over the phone. Those would be outdated strategies for me. We do whatever makes it easier for the customer to do business, because the next guy won’t do that.”
As for what’s selling, while car sales have been decent, said area dealers, SUV purchases and leases continue to fuel the numbers cited earlier. Each carmaker now has such vehicles in the ‘small,’ ‘mid-size,’ and ‘large’ categories, and they all seem to be selling.
“The car market is still struggling somewhat, but the SUVs, from the smaller models right up to the full-size SUVs, are doing very well,” Pion said, citing solid numbers for models ranging from Buick’s Envision (a new product) to GMC’s Acadia (a larger model).
Cosenzi agreed, noting that the SUVs made by all three carmakers she handles are doing well, as are entry-level cars — those generally under $20,000 now — such as Hyundai’s Elantra and VW’s Jetta.
The Road Ahead
As he talked about the market moving forward, Pion said his plan, in most all respects, is to continue following his father’s advice.
That would be to read and listen to the analysts’ projections, put them away for reference, but show up to work ready to sell cars.
Thus far this year, dealers have been selling more than the forecasts said they would. And they believe the conditions are such that things will continue in this vein.
This won’t make them outliers, necessarily, but it will make them quite happy.
George O’Brien can be reached at [email protected]