Traverse City’s Top Five Drives
Over the past few years, Traverse City has been "Truck Town" and "Kia Country." The king of the new car sales hill – at least in the third quarter – was the sport utility/crossover Ford Escape, which locals purchased at a rate nearly 20 percent higher than any other. Why? Fox Grand Traverse's Sales Manager Steve Winters says, "Competitive incentives, growing popularity and inventory. Generally, Honda, Toyota, and Jeep have stronger incentives in that segment. Also, it is the last of the 'sport utility style' in the segment and customers like the way it looks compared to the crossovers."
The Inventory Earthquake
The earthquake in Japan in March caused one of the most significant new car inventory snags in automotive history, as plants, parts, and shipping slowed down. Looking for a specific Toyota or Ford model last spring, you might have faced a long wait. "We still can't get enough cars, and the manufacturers have made clear they'll never go back to the volumes they had before," notes Mike Marsh. "Supply is a little better," agrees Fox's John Cueter, "but there are still models, like the Ford Explorer, that we sell as soon as they arrive."
Growth and Consolidation
Two years ago, with the major manufacturers in or facing bankruptcy, dealer consolidation was all the talk. But the reality today? Very few dealers have closed, though some have been purchased by growing auto groups, as evidenced by Grand Rapids-based Fox Motors snagging dealerships in Traverse City, Charlevoix and Cadillac. Conventional wisdom is that consolidation will continue. Cueter sums up Fox's growth strategy simply: "Absolutely. We want to acquire more dealerships. But we want to grow the right way, making smart acquisitions for our portfolio."
For years, Lexus ruled the roost as America's best selling luxury vehicle. But due to the earthquake in Japan, Lexus' sales are off, bringing about a battle for the top of the luxury sales heap. In one corner, Mercedes-Benz has had new models help sales climb. In the other, BMW quietly has taken supremacy and looks to be the likely 2011 champion. Regardless of the outcome, there will be one company that can't lose: Fox in Traverse City sells both BMW and Mercedes-Benz.
Hybrids and Electrics
It might surprise some, but hybrids still haven't caught fire locally. In fact, sales are off 60 percent from last year. Through July, August, and September, locals bought only 10 Toyota Prius models, prompting Cherry Capital and Traverse Motors' owner Otto Belovich to say, "Those are small numbers, but they're the best of the small numbers!" And indeed they are. The Prius was one of only two hybrid models to sell even one vehicle in the third quarter. "The price of gas is down, and the demand isn't there," he says. "Many people are not prepared to spend an extra $10,000 for a hybrid right now." Marsh agrees. "There's a lot of interest, but just not much volume yet." And the number of Chevy Volts – the electric car creating so much buzz – sold locally in the third quarter? Zero.
The second, third, and fourth best-selling new vehicles in Traverse City are trucks. Sales numbers are still way down compared to five years ago, when local dealers could rely on steady demand for pickups thanks to local builders and contractors. But with the real estate and construction sectors still in a slump, dealers are happy to at least see truck sales coming back a little. "Of course it's always a great segment up here," says Marsh, "but it won't be back to those stellar numbers again until the contractor business in the region picks up."
Fox Motors credits some of its sales increases to its new "VIP" program, a loyalty program for businesses and their employees. Local businesses that enroll secure special sales, leasing, and service benefits and discounts. John Cueter says his team has already signed some local businesses up, and employees are taking advantage of the benefits.
Chrysler and VW See Big Growth
Two individual success stories in the industry this fall have been Chrysler and Volkswagen. Facing bankruptcy and rumors of its demise less than two years ago, Chrysler got hot. Popular new TV commercials, appealing new sedans, and the revamped minivan earned the company an industry-leading 27 percent increase in September sales. But as impressive as that number is, consider the news at VW: Sales of its redesigned Passat were up 339 percent in September and demand is high, putting Paul Nielsen of Traverse Motors in an interesting position. "We got two models in September, but they were demos, so we couldn't sell them. I got one last week Friday, and sold it Saturday morning to a couple from the thumb area, who drove up to get it. Availability is very tight, but getting better. It's a good problem to have, and it's a great car." BN