Auto dealers face course of economic obstacles in 2005

When you talk about cars in Larimer and Weld counties, sales in 2004 proceeded at a steady pace, but typically stayed under the speed limit.
Now it?s 2005 that has everyone checking their speedometers.
?With the dealers in the metro-area, Denver, they were slightly ahead, thanks to trucks,? said Bill Barrow, president of the Colorado Automotive Dealers? Association in Denver, a trade association. ?If it weren?t for the trucks?ehh,? he said, making a sound that indicated what increase there was would have been wiped out.
Colorado Auto Outlook, a publication by Barrow?s organization, shows just what the numbers are: Larimer County experienced a 3.3 percent drop in new retail registrations, falling from 8,572 last year to 8,289 in November of 2004. Weld County showed a 3.1 percent increase from 7,256 to 7,484. The county that performed the best was LaPlata County, which includes Durango. Fremont County ? Canon City ? did the worst.
Of course, a lot of the automotive business depends on who and where you are. Some local dealers said they were going great guns. Brad DeSelms, the general sales manager for the Weld County Garage in Greeley said his dealership?s growth was 12 percent over last year.
?New and used grew exactly the same amount over last year,? he said. ?That was really good growth for us.? DeSelms gives a great deal of credit to the fact that the Weld County Garage moved from its spot downtown to Greeley?s west side.
?Truckwise we?ve sold almost twice as many as we were before moving. Moving (to the west side?s) been wonderful for us.?
Ryan Ferrero, owner of the Ferrero Auto Center in Loveland, said he did fairly well this year and is looking to iron out a few things to see if it will pay to move his operations from the central part of town to the Centerra development along Interstate 25, four miles to the east. Ferrero said he is ?seeing a level of optimism that he has not seen for a while.?
Roger Belisle, the general sales manager for Markley Motors in Fort Collins, said he also had a good year. ?Net sales are 13 percent ahead of last year. That?s a little unusual,? he said. ?I think we?re up a little more than some of our fellow car dealers.? Belisle said Markely had 34,000 customers in his shop last year ? a reason he would not join the crowd of dealers that expect to move toward the interstate.
?When he wants maintenance done, he wants it done as close to home as possible,? Belisle said of his customers.
Another reason for not moving is the $1.5 million facelift Markley just completed to its building.
If the recent rise in gasoline prices caused Americans to back off on their love affairs with sport utility vehicles, or SUVs, which the auto industry classifies as trucks, there doesn?t seem to be much sign of it.
?People like mass and power,? Ferrero said. ?There is some gas consciousness, but the truck and SUV sales have been strong. Passenger cars have been going along the same lines.?
The main reason that Americans still want SUVs is size. Hybrid cars use an electric engine to get the car up to speed and then switch over to a conventional internal-combustion engine. Another innovation is the eight-cylinder engine that runs on six cylinders and uses the latter two when you need them, such as when the car climbs a hill. Toyota?s Prius may get gas mileage in the 40s, but it?s small. So are a lot of hybrids. In fact, Honda?s new Accord, due for release next year, is supposed to be the biggest of the new hybrids, and that?s a mid-size.
?You try getting the family and your luggage and the dogs in one,? said Barrow. ?People say a Prius is great and percentage of registrations may be up 158 percent, but for something like that, they want a Yukon,? which is a full-size SUV built by GMC that accounted for 1,980 registrations in Colorado in 2004, representing a 203 percent increase.
Another reason is that before the high gasoline prices hit in late November, most people had already bought SUVs. Even among SUV owners, Americans are trying to get the best fuel economy they can get. ?The only thing I noticed during the whole gas thing was that we had a huge influx of Dodge Durangos. They wanted to get into an ? or a car or something that had better gas mileage,? he said.
So what is coming in 2005? Well, it could be good or bad. The Colorado Auto Outlook predicts a 2.7 percent decline in sales from 2004, which is on pace with the drop of 2.9 percent from 2003.
That sounds gloomy. Here are some other factors to keep in mind that might make things take a turn for the worse:
? High consumer debt levels.
? Strong new vehicle sales over the past several years that could lead to a cyclic decline.
? High gas prices.
However, there is room for optimism. For example, when car dealers say that new vehicles are very affordable, they are not kidding. It may not look like it on the sticker, but with rebates and adjustments for inflation, cars are not much more expensive than in past years. Of course, that may be cold comfort if you are carrying a heavy debt load. Also, employment growth is accelerating, personal income is improving and economic growth is predicted to remain strong in 2005.
Finally, there is a new array of products due for introduction next year that Colorado Auto Report describes as ?impressive.?

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