Few trends say more about the optimism of Orange County consumers than the rush to buy new cars.
Last year, Orange County dealers sold 199,000 new vehicles – up 57 percent from four years earlier, according to the Orange County Automobile Dealers Association’s annual report on the industry’s economic health.
The report is a financial review but also a not-so-subtle reminder to the community about what car sales mean to municipal coffers.
The fact that consumers put off car purchases during the recession, pushing the average age of an American car on the street past 11 years, primed the industry for a healthy rebound, says John Sackrison, the association’s executive director.
Major advancements in car safety and passenger comforts reinvigorated sales efforts, he adds.
“Just look at the leap in technology,” Sackrison says.
But to me – and my trusty spreadsheet – the buying spree is evidence of how consumer sentiment changed after the Great Recession, which devastated the local auto industry.
When I compared the association’s latest report, which tracks 2014 activity, with 2010 – the end of the recession – I found an overall growth story with a wrinkle or two.
Clearly, Orange County is buying more cars – and paying up for the new rides.
That shopping spree over four years added up to a 71 percent bump in dealership revenues to $11 billion last year – a sum boosted by a 68 percent spurt in spending on service work and other items at dealerships.
By comparison, countywide taxable sales across all industries – one measure of consumer spending – rose 26 percent in the four years ended in the third quarter of 2014.
The data also show that used-car sales were essentially flat in the past four years. But the association’s members are only new-car dealerships, so its tally of used-car sales is just a slice of that overall market, reflecting transactions that involve factory dealers. Missing are used-car lots and private sales.
A shortage of newer used cars and recent aggressive financing for new vehicles dimmed the popularity of older cars at dealerships, Sackrison says. “The value proposition isn’t really there.”
The boom in overall automobile activity boosted the ranks of local dealerships by five stores – to 122 countywide. (Note: That’s still down from 142 in 2007.)
And O.C. dealership bosses increased payroll spending by 22 percent in four years.
Full-time staff at auto dealers grew by 13 percent, to 11,224, while part-timers grew by 25 percent, to 732. Total average compensation was up 7 percent in four years.
And, yes, car dealers make local tax collectors happy. By the dealer association’s count, its members generated $83 million in tax revenues for Orange County cities last year – up 63 percent in four years.
Buying a vehicle is an act of economic self-confidence, so auto sales are a good indicator of the local financial outlook.
And this report reinforces the notion that many Orange County shoppers are shopping with gusto once again.
Contact the writer: 949-777-6727 or jlansner@ocregister.com
