AUTO SELLERS DISCOVER THE BUYING POWER OF LATINO CUSTOMERS
When Gary Hartunian opened his Nissan dealership in Mission Hills last September, he was expecting to sell 70 to 80 vehicles a month.
The dealership, located in a community that is more than 64 percent Latino, sells over 200 vehicles a month, twice as many as the newly opened Nissan store in Huntington Beach.
Once shunned for their working-class reputation and low per-capita income demographics, neighborhoods like Mission Hills are being seen in a new light by car dealers. As the Latino population becomes more acculturated to American business customs, such as the use of credit, car dealers have found that these communities can be lucrative.
“We’re absolutely going after that market,” said Hartunian. “The ability to buy is definitely there.”
Latinos in the city of Los Angeles bought 139,094 new and used vehicles in 1999, an increase of 32 percent from 1998 and more than 50 percent from 1995, according to Strategy Research Corp.
As sales to the population segment have grown, manufacturers and dealers have stepped up their marketing efforts as well.
Consider these developments:
-Chrysler recently acquired a site in Mission Hills with plans to establish a Latino-owned dealer franchise.
-The local Ford dealer association for Southern California now spends 79 percent more on advertising targeted specifically to the Latino market than it did in 1996.
-General Motors Corp. has increased the number of its minority-owned dealerships nationwide by 71 percent over the past eight years.
-Nissan Motor Co. Ltd. recently launched its first national advertising campaign directed to the Latino marketplace.
“In Southern California, it’s almost a no-brainer,” said Mike Michels, a spokesman for Toyota Motor Sales U.S.A. “The young adult market is a new initiative for us, and given that the Hispanic market is about 10 years younger in median age than the population in general, that’s a big portion of where our market is coming from.”
The Latino population has swelled over the past 10 years, increasing by 39 percent in the San Fernando Valley and nearly 27 percent in Los Angeles County. But just as important, the demographics of the community have changed. While first-generation Latinos formerly eschewed credit and bought vehicles, typically trucks, that could be used for work and double as a family car, Latino buyers now more closely approach the profile of the American car shopper.
“There’s been an increase in what we call the rising middle class,” said Corey Castaneda, account executive for Zubi Advertising, which handles the Southern California Ford Dealers’ Spanish-language account. “So there’s more disposable income to buy what suits them, as opposed to what’s necessary.”
At Ford, more Latinos are buying models like the Focus and the Mustang, suggesting not only that two-car families are replacing the single, all-purpose vehicle purchase, but also that the Latino car buyer is getting younger.
“We’re going to as young as 18 to 25 in the Ford Focus advertising,” Castaneda said.
The dealer association recently began targeting the market for the Focus with ads in “Spanglish,” a combination of English and Spanish. The campaign’s tagline reads, “One world. Dos idiomas. Un focus.”
As a group, Latinos are also now far more willing to buy on credit, a trend that experts say first-generation consumers have been reluctant to join in. With the growing acceptance of credit purchases, the group is buying more new cars instead of used vehicles.
At Mission Hills Nissan, Hartunian estimates that about 75 percent of his customers are Latino, and they are just as likely to buy on credit as anyone else. “They want to finance, and they’re concerned about interest rates and getting the best rates,” said Hartunian. “It’s another generation, and they’re entering the middle class.”
Companies like General Motors have been increasingly promoting minority dealer development programs as a way to tap into the market. The program offers qualified minority entrepreneurs the chance to open a dealership with GM subsidies. As the dealership grows, they can then buy out GM’s share.
“The owners understand the culture, they understand the business and they can offer a more diversified approach,” said Rebecca Harris, a GM spokeswoman. The automaker expects to add another 30 Latino-owned dealerships nationally, bringing the total to 350.
DaimlerChrysler AG, which runs a similar program, in November acquired a 3.4-acre property at Sepulveda Boulevard and San Fernando Road in Mission Hills for a new, minority-owned dealership, which would likely be Latino-owned. The city of Los Angeles has plans to condemn the property in order to build a police station there, but DaimlerChrysler said it plans to move forward with its dealership anyway.
“I don’t really have another suitable place to go,” said Bob Beehler, zone real estate manager for Chrysler Realty Corp. “We decided on this property because we felt the traffic was better and it was still close enough to the city of San Fernando and could service our market.”
Not only would the location enable DaimlerChrysler to tap into the San Fernando city market, where the population is more than 89 percent Latino, it also would benefit from close proximity to the freeway.