With auto industry roaring, it’s Utah car buyers who are scoring
Turnaround • As sales reach five-year high, 2013 holds promise for dealers, customers.
Published: January 14, 2013 09:37AM
Updated: May 5, 2013 11:32PM
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Trent Nelson | The Salt Lake Tribune A row of new Prius's for sale at Mark Miller Toyota on Tuesday, Jan. 8, 2013, in Salt Lake City.

Finally free of the grips of the Great Recession and coming off its best year since 2007, the auto industry is looking forward to an even better performance and more competition in 2013.

That’s good news for consumers in Utah and elsewhere, who should see more rebates on the table, more new models from which to choose and more opportunities to rid themselves of that older-model, not-so-golden oldie in the driveway that has helped the average age of a car in the U.S. top 11 years, a record.

Despite problems in economically challenged Europe, automakers are getting healthier. Despite a market that doesn’t yet (and may never) resemble the boom years of the early 2000s, dealers in Utah and beyond are poised to build on a year that saw their sales rebound big-time in 2012. And despite the challenges of an uncertain political landscape in Washington, D.C., and no guarantees economically, potential car buyers are awash in a boatload of eager bank and credit union lenders ready to give them low-interest loans, and a feeling that at least in Utah although their lives might not get much better they probably won’t get much worse.

Automakers, including Japanese and other foreign manufacturers, sold nearly 14.5 million cars and trucks in the U.S. last year, a 13.4 percent increase from 2011. They are expecting to sell as many as 15.5 million this year.

“There is certainly reason for optimism,” said Craig Bickmore, executive director of the New Car Dealers of Utah. “Last year, we saw a remarkable comeback from four years ago [in 2009], when there were just 10.4 million sold.”

Although sales totals are still down from the 16 million to 17 million new cars and light trucks sold annually a dozen years ago, buyers have returned to dealer showrooms in numbers reminiscent of the past, especially in Utah.

Through the first nine months of 2012, dealers sold 71,681 new vehicles, according to the Utah Tax Commission, an 18 percent increase over the same period in 2011. By all accounts, the surge in buyers continued throughout the final quarter of the year.

“We had the best year ever at our Subaru dealerships, and at our Toyota dealership it definitely was one of our better years,” said Salt Lake automobile dealer Mark Miller.

For consumers, that means those who venture onto new-vehicle lots in the state will find healthy inventories of cars and pickups, from the recently introduced Chevrolet Sonic, now the best-selling subcompact car in the nation, to the all new 2013 Honda Accord.

They’ll also see plenty of cars with electric drivetrains, which showed big sales gains in 2012. GM saw a 72.2 percent increase for its Chevrolet Volt; sales of Toyota hybrid models rose 38 percent; and Ford had a record fourth quarter for hybrid and electric car sales.

“What we saw in 2012 was that the manufacturers were starting to act normal again — like normal companies instead of recession-burdened corporations,” said Brent Brown, the owner of Brent Brown Toyota in Orem. “They’re all eager to get back into the game and compete” for market share.

Most automakers are healthier now than they were during the boom of a decade ago. Their costs are much lower, in part because of restructured labor agreements, and they are getting higher prices for most of their vehicles.

Toyota Motor Corp., which has recovered from an earthquake and tsunami in Japan that crimped its factories two years ago, said sales jumped 27 percent for 2012. Its December sales were up 9 percent. Unlike 2011, the company had plenty of new models stocked in showrooms for most of last year.

Chrysler, the smallest of the Detroit carmakers, had the best year among U.S. companies. Its sales jumped 21 percent. December sales rose 10 percent. Demand was led by the Jeep Grand Cherokee SUV, Ram pickup and Chrysler 300 luxury car.

At the dealership level, consumers could find that prices overall will be about the same as last year, Miller said, noting that the value of the inventory at his dealerships is up only about 1 percent from last year.

But among things working in buyers’ favor is that manufacturers and dealers are expected to offer more low-interest financing and other incentives than in 2012.

Last year, because of booming sales, the auto industry eased up on such promotions, trimming the profit-robbing offers by an average of 5 percent, according to Edmunds.com. In December, however, some automakers came up with a number of year-end deals, topped by GM’s discounts of up to $9,000 as it endeavored to clear its growing inventory.

St. George automobile dealer Stephen Wade, who ended his term this week as chairman of the National Automobile Dealers Association, said he anticipates more incentives than in 2012 as automakers try to make up for the weak market in Europe.

“They’ll be doing everything they can to boost sales here because they are really getting their fannies kicked in Europe,” Wade said.

Buyers with a vehicle to trade in also should benefit in 2013 from a continuing shortage of quality used cars and trucks. The low numbers were spawned in part by the Great Recession, which led many consumers to hold on to their aging cars, and also by the Obama administration’s “Cash for Clunkers” program in 2009, which had the side effect of decreasing the supply of pre-owned vehicles.

Dealers Wade and Miller said they saw a lot people last year reach their limit with their older cars, finally jumping back into the new-car market after years on the sideline.

“I’m expecting to see the same thing this year,” Miller said. “There still is a lot of pent-up demand. The average age (of a car in the U.S.) may have gone down a little bit, but there are still a lot of people out there who are starting to think about buying a new car.”

The Associated Press and USA Today contributed to this story

Pros and cons of leasing vs. buying

Excerpted from Edmunds.com

Advantages of car leasing

Lower monthly payments

Lower down payment

You can drive a better car for less money each month

Lower repair costs (With a three-year lease, the factory warranty covers most repairs)

You can more easily drive a new car every two or three years

No trade-in hassles at the end of the lease

You pay sales tax only on the portion of the car you finance

Disadvantages of car leasing

You don’t own the car at the end of the lease

Your mileage is limited to a set amount, typically 12,000-15,000 miles a year (excess miles are paid for at the lease termination)

Lease contracts are confusing

Leasing is more expensive in the long run (as opposed to buying and driving until the wheels fall off)

Wear-and-tear charges can add up (paid at lease termination)

It’s costly to terminate a lease early if your driving needs change

Advantages of car buying

Pride of ownership — you can modify your car as you please

Car buying is more economical in the long run unless you buy and trade-in regularly

No penalty for driving excess mileage

Increased flexibility — you can easily sell the car whenever you want

Disadvantages of car buying

Higher down payment is generally required.

Higher monthly payments

You’re responsible for maintenance costs once the warranty expires

Trade-in or selling hassles when you’re ready to get rid of your car

More of your ready cash is tied up in a car, which depreciates, rather than an investment that appreciates

Source: Edmunds.com, read more at http://edmu.in/13mUfOB

Should I lease or buy?

Check out SmartMoney.com’s advice calculator at http://sm.wsj.com/UGGlWn

New-car buying advice

From setting up a loan to the latest model ratings, Consumer Reports offers tips at http://bit.ly/VQIdqt