Feb. spurt in car sales: new up 4.3%

used, 18%

`I'm really surprised,' says president of dealers association

April 05, 2002|By Ted Shelsby | Ted Shelsby,SUN STAFF

Maryland motorists continued their buying spree in February - both in the new-car showrooms and out on the used-car lots - at a pace that has astonished dealers, according to figures released yesterday by the state Motor Vehicle Administration.

"I'm really surprised," said Peter Kitzmiller, president of the Maryland New Car and Truck Dealers Association, as he looked at the MVA numbers showing a 4.3 percent gain in new-car sales and an 18 percent jump in sales of previously owned cars.

"We had been expecting a shakeout in business as a result of the strong sales late last year due to the zero-percent financing plans," said Kitzmiller. "At that time we thought that we were borrowing sales from the first quarter of this year, but that doesn't seem to be happening."

John Miller, president of Miller Brothers Chevrolet, Oldsmobile, Cadillac and Ford in Ellicott City, said his used-car sales were up 25 percent during February as many shoppers looked for lower-priced transportation.

Miller said strong new-car sales in November and December resulted in an increased number of trade-ins, and that created some good buys on used-car lots.

He said the average used car sold for $12,000 to $14,000.

While that's only half the price of the average new car, Miller said, the used-car business is very important to every dealer because the profit margin is slightly higher on used cars.

"There is much more competition among dealers for new cars, because dealers get the exact same car and pay the exact same price," Miller said.

"That's not true with used cars. Each one is a one-of-a-kind animal."

Miller said 40 percent of his total vehicle sales came from the used-car lot in February.

According to Paul Taylor, chief economist with the National Automobile Dealers Association, the average dealer profit on a new car last year was $186, compared with $244 from each used car.

February used-car sales of 50,982 represented the best selling period for that month since the MVA resumed releasing title registration figures, which equate to sales, in 1991.

The number was nearly 6,000 vehicles more than dealers sold in February 2000, the second-best month on record.

Dealers sold 27,520 new cars and light trucks, including vans, pickups and sport utility vehicles, in February. This was second only to the 30,489 new cars and light trucks sold in February 2000.

February marked the fifth consecutive month in which sales were higher than in the corresponding period of the previous year.

The 4.3 percent jump in new-vehicle sales here compares with a 3.5 percent decline in sales for the nation as a whole.

"This clearly shows that Maryland's economy is doing better than the national economy," said Anirban Basu, who is director of applied economics for Towson University's RESI research institute.

"What these figures tell us is that people in Maryland feel really good about their near-term prospects," Basu said. "This is very good news for Maryland, very good news indeed."

"The consumer represents about two-thirds of the economy, and when they feel good and spend money on big-ticket items like cars, it's a boost to the economy. It's a situation where it feeds on itself - the economy improves and they feel more comfortable to spend even more."

Basu said the gain in used-car sales was particularly important because there are fewer dealer incentives on used vehicles.

"It tells us that consumer demand is growing in Maryland," he said.

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