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Area Dealers Prop Up Sales of SUVs With Year-End Incentives

Area Dealers Prop Up Sales of SUVs With Year-End Incentives


Staff Reporter

As sport utility vehicles show some signs of sluggish sales, area dealers are reducing sticker prices by up to 25 percent as part of end-of-model-year sales.

At Beverly Hills Ford, where roughly 60 percent of the 200 ’04s on the lot are SUVs, consumers may save as much as $10,000 on Explorers and Expeditions through discounts and rebates, according to Sales Manager Chris Fox.

At Goudy Honda in Alhambra, where Sales General Manager John Jomehri said incentives are rarely offered, special deals are lowering the monthly cost of leasing a Pilot SUV to as low as $300, compared with the usual price of $380-$390.

“Manufacturers have to be more aggressive than they were with incentives,” said Todd Turner, president of automotive consulting firm Car Concepts in Thousand Oaks.

Demand for SUVs has cooled in the wake of higher gasoline prices and studies by the National Highway Traffic Safety Administration that show some of the vehicles are prone to rollovers.

SUVs were sitting on dealer lots nationwide an average of 73 days in July, compared with 60 days for the like period a year earlier, according to a report by Power Information Network, a unit of J.D. Power and Associates. In addition, the report noted, there has been a decline of 2 percent, or $620, in the average SUV sale in July compared with the year earlier.

Auction values on leased SUVs that have been turned in are down 6 percent to 7 percent over the last 12 months, Turner said. “It shows that the market’s willingness or desire for these vehicles is weakening,” he said. “People are really feeling less secure about being associated with SUVs than they used to be.”

Sales for larger SUVs at Goudy Honda are off 20 percent compared to a year ago, Jomehri said, while smaller SUVs like the CRV are faring better.

Jomehri said he does not believe rollover concerns are factoring into consumers’ decisions. “It’s more because of gas prices,” he said. “The gas mileage is obviously not as good as it is for passenger vehicles.”

SUV sales at Beverly Hills Ford are on par with last year, said Fox, and both he and Cerritos Nissan Sales Manager Ken Yates said they don’t believe talk of gas mileage and rollovers has hurt SUV sales.

The vehicle that fared worst in the most recent ratings was the Explorer Sport Trac 4×2, which Fox said accounts for only 5 percent to 10 percent of Explorer sales at the dealership.

“We’re really busy, even during the week,” said Yates, noting that its most popular vehicle is the full-size Titan pickup truck.

Nationwide, sales were up 6.5 percent for the first seven months of 2004, compared to the like period a year earlier, according to J.D. Power.

Turner said he believed the latest rollover reports will have little impact on consumer decision-making.

“The market correction has happened for the most part, and I doubt we’ll see a great deal more erosion in appeal unless gas prices again go up significantly,” he said.

As consumers look to take advantage of clearance sales, the deals may not be as good as they seem.

“Because of the incentives themselves that are getting people motivated to buy these products, residual resale values are dropping even faster,” said Turner. “If you buy a one-year-old car, you’ve probably lost a lot of its value before you’ve even driven it. It might be better to wait for the ’05s, because they are also going to have incentives.”

Where’s the Vrooom?

Newport Shelby Cobras will sell you one of its curvy, $100,000-plus sports car replicas designed by former race car driver Carroll Shelby thing is, it just can’t sell you one with an engine.

The Cobra is a kit car. Enthusiasts can spend years building their own models, and Newport Shelby does much of that work for those willing to pay for it.

But since Newport Shelby Cobras is a dealer, it can’t put in the engine because, according to a two-year-old California law, if Newport Shelby does, it would be an automaker.

The Costa Mesa dealership could solve the problem by getting a manufacturer’s license. But then the cars it produced wouldn’t be considered “specially constructed vehicles.” About 500 hobby cars a year fall under that category and don’t have to meet today’s safety and smog standards.

“Somebody has decided they really don’t want us doing this,” said David Parcell, co-owner of Newport Shelby.

The Cobra CSX series are replicas of the original, built in the 1960s (the engine wouldn’t pass today’s emission rules because it is built to 1965 standards). Shelby Automobile Inc. in Las Vegas makes the Cobra’s chassis, with the final assembly including installing engines for cars going out of state done at Newport Shelby’s shop.

The Department of Motor Vehicles officials wrote to Newport Shelby owners that installing the engine was “aiding and/or abetting in the operation of a vehicle manufacturing business without a vehicle manufacturer’s license.”

Orange County Business Journal

Big Stock

Supply of many SUV models exceeds the average of all vehicles nationwide.*

Vehicle Days’ Supply

Hummer H1 386

Isuzu Axiom 254

Buick Rainier 128

Cadillac SRX 117

BMW’s X-Series 100-plus

Volkswagen Touareg 100-plus

Chrysler Pacifica 96

Isuzu Ascender 96

Ford Expedition 92

Hummer H2 92

*As of Aug. 1 Source: Car Concepts


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