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Local car dealers seeing boom

March 8, 2012
Meg Alexander - Staff Writer , Fairmont Sentinel

FAIRMONT - It's called "pent-up demand," when consumers postpone purchases and make due with what they've got until the economy improves and they can upgrade.

Based on U.S. car sales, consumer confidence is rebounding.

"Nationally, [sales are] good, and they're probably better here than nationally," said Dave Kloeckner at Fairmont Ford. "The reason for that is our strong ag economy. Last year, our sales were absolutely outstanding, and the first two months of this year already. Sometimes you're a little quiet in January and February, but we haven't been quieter at all. We've been just rock solid."

"Where we are lucky enough to live," he added, "we don't peak or valley. We kind of float along, but we're floating pretty tall right now."

Generally speaking, Kloeckner and his brother, James, say business is as good as it has ever been. The F150 pickup is their bestseller - after all, this is truck country - but people are shopping for fuel-efficient models too.

There are challenges accompanying the increased demand, however.

"Ford's producing all the vehicles it can produce, and we're still not getting enough vehicles," said James Kloeckner.

Across town at Militello Motors, Jeff Militello said he is having a similar experience with a special make and model: People are calling from all over the country to ask about the Cherokees he has on hand.

"Grand Cherokee has turned out to be quite the hit. We can't get enough of them," he said. "... But the right stuff is harder to get because there's not as much out there."

When the U.S. auto industry fell apart in 2008, the comeback plan included cutting production. That means these days there are fewer new cars are on the market. It also means there aren't as many newer used cars.

Before 2008, manufacturers were making more than they could sell, and they sent the extras to lease and rental companies. Once the vehicles had reached a mileage limit, the "product cars" were available at low prices for dealers to purchase.

But it wasn't a sustainable system, and so the price of a newer used car has gone up. Meanwhile, dealerships' profits on used cars have shrunk.

At Hawkins Chevrolet in Fairmont, some of the company's best sales months in history have been tempered by tight margins.

"In February, we broke our all-time record for sales," said Tom Hawkins, "but even with that ... the margins aren't as good as they were."

While used car sales aren't as profitable as they were, their less-competitive pricing is pushing some consumers to consider brand new models. Militello said where he used to sell 4:1 used to new cars, that ratio is shifting.

At Ford, the Kloeckners also say they're seeing traditional used-car customers looking at new cars for the first time.

"Wholesale prices of used are relatively high, which brings the transaction prices of new and used closer together," said James Kloeckner.

As Militello prepares for interior modeling that coincides with his business' 35th anniversary, he is starting to change his strategy. The competition at trade shows for late-model, low-mile vehicles is so tight, he is starting to invest elsewhere.

"A car today is worth more than that same car was a year ago - it's unheard of," he said.

That makes a good trade-in more valuable than ever, and typically worth the time and money - easily $1,000 - he invests in them.

"We are also keeping more of the high-mileage stuff and fixing it up to our standards - there's a big demand for them," he said.



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