By Ade Adesanya
Despite high unemployment, relative economic stability in the nation is encouraging both buyers with excellent credit and those who have poor credit ratings to begin purchasing cars.
“We’ve been very blessed. New and used car traffic is peaking,” Jarod Quinn, the car sales manager at Waco’s new and used car dealership Richard Karr Motors, said.
The rising auto sales are reflecting the recovery of the Waco economy.
The American Community Survey, a continuous statistical survey by the U.S. Census Bureau, cites Waco unemployment at 9.8 percent.
According to IBIS World, a market research organization that specializes in industry forecasts used for corporate strategic planning and research, used car sales are expected to increase by 3.4 percent annually over the next five years.
Auto dealers in Waco are quick to take advantage of the increasing demand for used cars: domestic and imported U.S. auto makers have been restructuring brands by eliminating domestic brands perceived to be unsuccessful.
Some of the eliminated brands are loved by some customers and brand losses mean those cars are no longer produced and are pushed off the car lot, Quinn said.
“We’ve been able to maintain sales even with the loss of the Pontiac brand,” Quinn said. “Our business is doing well, used and new. We maintain relationships with our customers and we enjoy a lot of repeat business from Waco residents.”
Used car sales are increasing nationally as dealers are finding creative ways to secure financing for customers.
A combination of tax refunds and low interest rates is driving sales.
“Credit union pricing promotion has helped us boost sales,” Quinn said. “Also low interest rates are moving sales; March is the best month of the year.”
According to IBIS World, a large portion of the used auto industry’s clients have poor credit ratings, which diminishes sales in an economic climate where the best financing options are restricted to individuals with high credit scores.
Regardless of the hesitancy in the economy to make capital expenditures like vehicle purchases, potential buyers with good credit ratings are benefiting from incentives and discount to buy new cars.
In-house financing has sustained used car sales.
According to IBIS World, used car dealers are expected to experience annual revenue growth of 2.8 percent between 2011 and 2015.
Quinn said high gasoline prices tend to reduce both used and new vehicle sales when people are uncertain of the future.
“High gas prices are a threat to the auto industry as a whole; however, increasing gas prices also boost the sales of used and new fuel-efficient passenger cars,” Quinn said.
While increasing auto sales suggest the economy is rebounding, local auto dealers are still monitoring the economic trends and world events.
Other local dealers are monitoring the economy closely and they are interpreting the general business climate as volatile.
“Anytime there is an event overseas like what is happening in Japan, people hold back a bit to see what will happen before they make a purchase,” Travis Gunn, general manager for sales at Allen Samuels Chevrolet, said. “Looking at it that way, we can say sales are as expected, they are fluctuating; even the weather affects sales.”
Positive economic forecasts expect income to increase 1.3 percent annually over the next five years, according to IBIS World.
The auto industry report also said as employment stabilizes, consumers will be more willing and able to purchase vehicles, which is a trend expected to continue till 2015.