With 2019 bringing a number of new challenges, such as predicted flat sales according to AutoNews.com, the Greater Pittsburgh Automobile Dealers Association is confident in its ability to weather the conditions of this year’s market.
“We’re actually pretty close to where we were before the recession, so the dealers are still pretty happy that it’s flat at 16 million to 17 million cars a year, which is almost the records in terms of new car sales,” John Putzier, CEO of GPADA told MegaDealer News. “I don’t hear any ‘sky is falling' claims from them.”
One of the biggest predicted trends for 2019 is that used car sales are anticipated to be higher than new car sales, a trend which Putzier credits to millennials and younger buyers who are not able to afford brand-new vehicles.
“It’s predicted for the pre-owned market to be stronger moving forward, as new car prices are going up and up with all the new features being thrust upon us,” Putzier said. “There is complete contentment in the sales, as long as they don’t go down, we’ll be happy.”
Putzier explained that new versus used car sales affect dealers minimally, rather that it is the manufacturers who are dissatisfied with such changes in the market.
“Perhaps the manufacturers are unhappy because they only sell new cars; the dealers actually don’t care where they earn a profit,” Putzier said. “We’re seeing a lot of these market disruptors, such as Carvana, with all pre-owned vehicles, so apparently there is enough market for these new entries and we still don’t suffer, which tells me that sales look pretty good.”
Yet another trend for 2019 is the expected increase in depreciation rate, which is projected to grow from 12.4 percent to 15 percent. Putzier believes that this may have more to do with a new type of car on the road — e-vehicles — than anything else.
“Part of this is hybrids and e-vehicles because as they age, they lose a lot of value as the batteries have to be replaced, which is one of the unintended consequences of going green, not to mention the disposal of the battery, which is very complex,” Putzier said. “Even on a hybrid, which is an engine with a battery, you have to replace a battery once every seven years, depending on use, which makes a car’s value decrease significantly, as the batteries cost thousands.”
Regardless of the challenges that face the auto industry, Putzier believes that dealers can adapt through increasing their service department offerings and vehicle maintenance services.
“It’s a catch-22, because the better cars are made, the less we make on service; it’s wonderful that newer cars last as long as they do, but the dealer has to make it up on extended service plans, new tires, extended warranties, GAP insurance, etc.," Putzier said.