Autos – Back on Track

2011-03-06T00:00:00Z Autos – Back on TrackBy Andy Mikonis TIMES AUTO CONTRIBUTOR nwitimes.com
March 06, 2011 12:00 am  • 

When car sales went into a tailspin with the economy in Fall 2008, things were looking pretty grim. Sales plummeted to 13 million from 16-17 million for the previous several years. In last year's NWI Now auto section, we reported a dismal 10.4 million U.S. sales for 2009, though we could see glimmers of hope. Predictions were for a ten percent gain over the next year. Sure enough, the numbers came in for a total of 11,590,274 cars, trucks, minivans, and SUVs sold in 2010.

"All the analysts and experts agree this year is going to be better," said Tom Kennedy of Kennedy Mazda in Valparaiso. The consensus for 2011 is for the gradual rise to continue, with sales in the high 13 million unit range. This trend is expected to continue for a few years until a stable leveling off, though perhaps at a sales rate lower than the peak in the early 2000's. Most importantly, an analysis by the trade publication Automotive News noted that starting last October it was retail sales, rather than fleet sales, that were driving the increasing sales numbers, and are the true signs of economic recovery since it means regular people are getting back out there and buying cars. That trend has continued so far this year. "We have experienced exponential growth, with more retail customers coming in than in years past," said Tom Vicari, general manager of John Schutz's Center Garage in Cedar Lake.

While at the Chicago Auto Show last month, Ralph Gilles, CEO of Dodge, said the recovery was happening "nice and slow, just as we thought it would be." If you're not feeling it where you are, he suggested our local perspective might not represent the full picture. "The Midwest seems to get hit the hardest. It's the first to go down and the last to recover," he observed.

Signs of Recovery

Dealers have always been shrewd observers of the economy. Their livelihood depends on it. Several told us they were seeing the signs of economic recovery in local car sales and beyond. "Things are really turning around," said Jeff Batliner, new car manager at Christenson Chevrolet. "It's picked up 40 percent over last year, and it's way better than the year before. There have been tremendous gains. This is the seventeenth straight month of improvement comparing to the same month in the previous year...Things are looking good. We went to the Chicago Auto Show opening breakfast and saw results for other manufacturers. They were all showing substantial improvement over January a year ago, and we're doing even better than most. I'm seeing it everywhere. We went to a restaurant on Saturday and had to wait for a table. Sunday we went to the theater and it was full."

Looking at a few of the highlights, the Detroit 3 automakers showed impressive results. Ford increased sales 19 percent in 2010, largest of any full line automaker, and posted the highest net profits in ten years. General Motors is riding high after an initial public offering of stock that exceeded expectations. Chrysler Group met turnaround targets with an operating profit at the end of the year. Chrysler Group CEO Sergio Marchionne said he hoped for an initial public offering for Chrysler in 2011.

If you stood around Hyundai-Kia headquarters, you might hear the question, "What recession?" Here's one company that has stayed in the black and posted gains this whole time, and led the charge, up 22% for the year. Indeed, CEO John Krafcik announced at the Chicago Auto Show that the Hyundai brand broke a record in 2010, selling 500,000 vehicles in the U.S. Breaking it down by brand, the top three sales winners in 2010 were three of the core nameplates from a reinvigorated General Motors. Buick posted a 52% increase, Cadillac 35%, and GMC 32%.

Right here in the Times' backyard, the Chicago-built 2011 Ford Explorer was named North American Truck of the Year. In his keynote speech last month launching Chicago Auto Show media days Ford's group vice president of global sales marketing and service Jim Farley said: "Chicago Assembly is running full steam, building our reinvented SUV and we're delighted that Explorer brought 1200 new jobs to Chicago. We're selling every Explorer we can build. So, we're adding another shift and even more new jobs to meet the demand."

The Chicago Auto Show showed a ten percent increase in attendance over last year. "We enjoyed an opening weekend stronger than in 2010, but gave some of those gains back on Valentine's Day," said general manager Dave Sloan. "But heightened interest in a recovering auto industry, coupled with a warmer-than-normal February and strong buzz in the community helped achieve the show's gains. Our closing Saturday was among the best days we've ever had. Our manufacturers and dealers had hoped to see a bump in interest this year, and they weren't disappointed... now we have to see how this translates into sales at local dealerships. If the boost in our attendance is any indicator, I predict we'll see a continuation of the increases we've been observing in monthly sales."

Changing Tastes and Priorities

Perhaps the most confident gesture is launching a new brand. Fiat is about to start selling cars in the U.S. for the first time since the mid 1980's. Laura Soave, CEO of Fiat Brand North America, projects the "downsizing" trend in everything from computers and cell phones to cars will result in interest in small cars virtually doubling by 2012. "It used to be an entry-level segment, something to get you from point A to point B, but that's changing," said Soave during a recent appearance in Chicago. She predicts the high content, attractively priced subcompact 2012 Fiat 500 will appeal to buyers more carefully contemplating their valuable purchases.

Fiat has selected 130 Chrysler dealers for Fiat franchises, which will be opening across the country throughout this year. Local dealers, Bosak Auto Group, will represent Fiat in Northwest Indiana. "Undoubtedly, it's an interesting time to launch," said president Cary Bosak. "...[but] it's a calculated risk because it's such a strong product."

Don't count larger vehicles out just yet. "You might think launching a full-size SUV in a post-recession, fuel-efficiency conscious, green-minded world, would be mission impossible," said Farley. "For Explorer, though, the timing couldn't be better. Research shows that consumers are reassessing everything after the recession. They're rediscovering the values of responsibility and frugality, recycling, re-using...or making the most of what they already have. They're drawing closer together with their families and communities."

A Resilient Industry

Throughout its dynamic history, the auto industry has been a hotbed of innovation, and now adaptation. It has proven it can still turn profits on lower production and smaller inventories. The dealers continue to as well, and provide jobs and charitable support at the community level. The industry remains strong, reinvesting in a staggering array of new vehicles and technologies for 2011. Read which ones our local dealers are most excited about in this section. There's a new meaning for the old saying: "They don't make ‘em like they used to." No, they don't. And we can sure be glad about that.

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