Sunday, August 15, 1999

No brakes on new-car sales

American families sport shiny fleets

USA Today

        Hot. That's the best way to describe new vehicle sales, which likely will hit a record this year, surpassing the 16 million cars and trucks sold in 1986.

        So, who's buying all those cars, pickups, sport-utility vehicles and minivans?

        Everybody, say automakers, dealers and analysts:

        Families are buying sport-utility vehicles as the second vehicle, in many cases replacing that 5-year-old minivan Mom is sick of driving. And they're spending in the high-$20,000 to low-$30,000 range for the Lexus RX 300 and Mercedes M-Class SUVs.

Practicality vs. image
        “People are buying four-wheel-drive SUVs to drive in downtown L.A., knowing the vehicle will never see snow, much less leave the pavement,” said James Bragg of Fighting Chance, a car-buying and information service in Long Beach, Calif.

        Yet minivan sales are booming. New entries from Honda, Toyota and General Motors are doing well. Even the standard-bearer Chrysler minivans, which are long due for an update, are selling.

        Dads are buying extended-cab pickup trucks and loading them with leather seats, CD players and other amenities clearly not intended to help with heavy hauling.

        Sales of light trucks — pickups, SUVs and minivans — are closing in on 50 percent of the new-vehicle market.

        More teen-agers living in households with higher incomes are getting new cars. “We are moving closer to the day where for every driving adult in the household, there is one vehicle,” said Glenn Forbes, vice president of transportation for Polk Co., an information service firm that tracks vehicle registrations.

        And the age of a family's fleet of vehicles is getting younger. The average age of the primary car in a family was 3.9 years last year, down from 6.2 years in 1986, according to CNW Marketing Research, a Bandon, Ore., firm that tracks consumer behavior. The average age of a family's secondary car dropped to 5.1 years in 1998 from 8.1 in 1986.

        So far this year, sales of luxury sports cars are running 12 percent ahead of last year.

        Helping to fuel new-car fever are buyers like Alan Bernstein of Buffalo, N.Y. He's in the market for a new Infiniti I-30 or Lincoln LS luxury sedan.“I am an attorney, and I am doing well,” he said.

        Indeed, Mr. Bernstein's reasoning cuts to the core of why new car sales are hot. Spurred by a sustained strong economy, consumers are chasing their wants instead of needs. And high on their shopping lists are new cars.

        “New cars are regaining a status image,” said Art Spinella of CNW Marketing Research. “They were high in the mid-1980s, fell off in the early '90s and have been steadily increasing since 1995.”

Affordability factor
        Other factors contributing to new-vehicle fever:

        • New cars and trucks are at their most affordable prices in 19 years, according to Comerica Bank in Detroit. Faced with intense competition, automakers have been holding the line on prices while consumer income has climbed.

        • The average-priced new vehicle (at $20,611) required 23.7 weeks of median family income before taxes in the first quarter of 1999, down from 24.2 weeks in the fourth quarter of 1998.

        A wide variety of hot new products, from cars like the Volkswagen Beetle to the new minivans, has helped whet consumer appetites. The choices seem endless.

        Some analysts predict the market will always hover around 15 million annually, driven by a steadily growing driving-age population.


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