BY JUSTIN DENNIS
The landscape of the auto industry changed from 2008 to 2010, when two of the “big three” car manufacturers – Chrysler and General Motors – declared bankruptcy and were rescued by the government. Some manufacturers backed out of the leasing game – but not indefinitely – and auto makers shifted focus to selling fuel-efficient models at a time when gas was continuing to climb and all pocketbooks were hurting.
Since then, car dealers will tell you the business is as strong as ever. In 2012, it was a record sales year for many manufacturers and some broke records even under the spectre of recession. But it’s not for the electric or hybrid models dealers are stocking.
Matt Smith, co-owner of Laurel Auto Group, said a big part of it is the benefits buyers enjoy from package deals offered on the showroom floor.
“All of us today are looking to stretch our dollar a little further,” he said. “Dealers can be competitive in prices, but it’s really the package they get from a particular dealer that makes the difference.”
Extra incentives, such as bumper-to-bumper warranties or lifetime powertrain warranties, as in Laurel Auto Group’s new “Laurel for Life” program that rolls out this year, add an indirect value that may soften the final price tag.
A February study conducted by Interest.com, an online rate-comparing service that analyzes interest rates on mortgages, certificates of deposit and car financing, found that most consumers can’t really afford a new car – although it may seem that way, if they’re able to afford the monthly payment.
In this manner, leasing is becoming a more attractive option for consumers as well as American auto dealers, who have found a measure of stability there since the auto industry crisis. One domestic auto manufacturer that stuck with their leasing programs was Ford. Suppes Ford general manager Courtney Suppes Droz declined to comment.
Jack Slezak, general sales manager at Cover Chevrolet, said the leasing slump is over.
“Leasing’s made a comeback and, right now, it’s probably almost as popular as it ever was,” he said. “I think a lot of it is due to the increase in prices of vehicles today. It becomes a much more affordable option for a lot of people.”
Smith said high-end luxury cars are most likely to be leased.
“I think leasing has and always will have an integral part in our industry,” Smith said. “It’s not for everyone, but our business models across all brands averages anywhere from 15 to 30 percent (of our sales.)”
Smith said leasing agreements vary from state to state, given the native tax laws, but also that the cost of ownership when leasing a car is very predictable, especially when the first three years’ worth of service is included. That’s usually how long lease agreements are signed for, according to Slezak, since it keeps the leased car within its manfacturer’s three-year bumper-to-bumper warranty.
“With a purchase, if you finance it for six years, you could find yourself being out of bumper-to-bumper at half that,” Slezak said. “That makes it a smart choice as far as out-of-pocket expenses go.”
One of the things that doesn’t seem to be covered when leasing a car is the gas you’ll fill it with – a cost that’s becoming increasingly harder to sustain. That still doesn’t stop Johns-towners from buying what they want. Sales of trucks and SUVs have refused to decline in our region, in spite of oil crises and climate change rhetoric.
“You would think that in today’s situation of the price of gas and everyone talking of fuel mileage and how to save on gas expense – it’s funny, but we are still selling our full-sized trucks and our bigger SUVs,” Slezak said, adding that the V-8 Silverado is a best seller.
Bill Ingram, general manager of Thomas Team Honda, said rising gas prices mean rising sales for his team. But that doesn’t necessarily translate into sales of hybrids.
“The Honda brand is so efficient from a fuel standpoint,” he said. “The traditional gas Civic is such a strong performer anyway. The difference
between the hybrid and the performance that customers are getting for the Civic just aren’t that great.”
Availability of electric car charging stations is also an issue in the state. According to Smith, funding is in place to install them along the turnpike but locally, there are fewer options to juice up.
“The challenge for our area with electric vehicles is range and price,” he said. “The cost relationship to the range you’re going to get on a fully electric vehicle on one charge may range from 80 to 120 miles
and that might prohibit interest in our area.”
At the Laurel Nissan facility along Eisenhower Boulevard, a new station was added during recent renovations, allowing electric car owners to recharge in three to six hours.
Cover Chevrolet is also looking to get a “face lift”, as Slezak called it, and plan to make substantial improvements to their facility in “the very near future.”
Ingram predicted good things for the spring season.
“The stock markets are up, spring is here, tax returns are coming in,” he said. “When the spring weather hits, it’s incredible how there’s more traffic, more activity.”
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