Cali Owings, Published July 12 2013
New vehicle sales booming at dealerships
Ford reported June sales were up 14 percent while Chrysler and GM reported gains of 8 percent and 6.5 percent, respectively.
Dealerships in the Fargo-Moorhead area say sales are strong, but the market is steady. They haven’t seen the steep hills and deep valleys that many other local economies experienced during the recession.
Still, many more people are buying new cars as the uneasiness of the recession settles.
“A lot of people put it off until they felt more comfortable,” said Dan Anderson, general manager for Kia of Fargo.
Now, Anderson said customers aren’t afraid to buy nice cars. Updated models, record-low average interest rates and a shortage of quality used cars are making it easier for people in the Fargo-Moorhead area to get behind the wheel of a brand new car.
Pickup trucks are fueling the national sales boom, with Ford reporting it sold more than 68,000 F-Series trucks in June while GM said sales of its Chevrolet Silverado spiked 29 percent to 43,259. The increase in truck sales is largely attributed to the health of small businesses and the construction industry.
Here, one of Chevrolet’s biggest sellers is the Silverado alongside the Equinox, a crossover SUV.
But trucks aren’t as popular for other dealerships. Mid-size cars and SUVs dominate the market.
And though gas prices are higher this summer than they were a year ago, many say fuel economy isn’t as big of a factor as it used to be when selecting a new car. A few years ago, the auto industry saw mass trades of large SUVS in favor of more fuel efficient small models.
“Not as many people react to high fuel prices,” Anderson said.
Jon Cole, general sales manager for Gateway Chevrolet Cadillac, agreed.
“We’re still selling Suburbans and Tahoes,” Cole said. “It doesn’t come up as much as it used to.”
It helps that newer SUVs now have comparable fuel economy to mid-size sedans after many automakers traded in six-cylinder engines for more fuel efficient four-cylinder engines.
For Jerad Eback, 21, of Fargo, fuel economy is one of the main reasons he was looking into a 2013 Chevy Malibu on Friday. Eback is in the process of trading in his 2012 Jeep Grand Cherokee for a lower car payment and better gas mileage.
He’s just “waiting for the numbers” to decide whether he’ll lease the new Malibu instead of making payments on the $30,000 Jeep.
He said right now was a great time to lease because interest rates are so low.
Rates are low for new car buyers, too. The average rate on a 48-month loan is 2.7 percent, according to Bankrate.com.
Buyers in the Fargo-Moorhead area often qualify for good rates, too, because they have such good credit.
“I’d say average credit here is better than most parts of the country,” said Victor Peterson, general manager for Corwin Honda.
At Kia of Fargo, Anderson said rates range from zero to 2.9 percent.
The same goes for Gateway Chevrolet Cadillac where buyers with good credit can buy a new car with zero percent interest.
Another factor pushing people into new vehicles is the narrowing price gap between new and used vehicles.
As the number of low-mileage vehicles has decreased, the value of those cars has increased. For some, it can be a difference of just a few hundred dollars between a low-mileage older vehicle and a brand-new one, Anderson said.
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The Associated Press contributed to this report.
Readers can reach Forum reporter Cali Owings at (701) 241-5599