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Sunday, Jun 16, 2024

OC’s Auto Dealers Adapt and Win

The SUV segment’s sales strength isn’t a new story, but it certainly hasn’t gotten old for dealers.

The segment continues to be a bright spot in an operating environment that’s seeing plenty of retail headwinds: the inventory crunch due to the parts shortage and supply chain constraints, plus the continued impact of digital and direct-to-consumer models changing how dealers do business.

Still, if any industry is going to find the bright side, it would be those in sales with dealers adapting as best they can to obstacles, while still continuing to come out strong as buzz builds around an incoming raft of new electric vehicle models expected to hit the market in the coming years.

To that end, the Orange County Automobile Dealers Association reported a 25.6% jump in new car and vehicle registrations in July and August to 28,211, with light trucks continuing to gain share. The segment rose 3.7 percentage points to 65.9% for the same reporting period.

Notably, it was the luxury compact SUV segment in August that saw the biggest increase in market share locally, moving up 3.9% as midsize cars fell the most at 1.3%, according to OCADA.

The biggest mover was Fountain Valley-based Genesis Motor America Inc., notching the highest surge in new vehicle registrations to 193 for the July/August period. That reflects a 154% increase.

The luxury badge, the sister brand to Hyundai and Kia, capitalized on consumers’ appetite in the SUV segment once its GV80 and GV70 SUV models were introduced last November and this summer, respectively.

That trend has continued through September for Genesis with the two vehicle models leading the automaker’s sales volume.

In fact, former Genesis CEO Mark Del Rosso told the Business Journal earlier this summer before his leave from the company that, regardless of whether the SUV demand was coming from the general market all the way to the super luxury market, the appetite was sustainable over a longer term. 

Big Movers

Other big brand movers in OC included Maserati, which doubled registrations to 44, Volvo up 81.7% and Tesla rising 57.8%.

“It’s a challenging time in the automotive and dealership world right now having to deal with the supply constraints,” OCADA Executive Director John Sackrison said.

“It’s an exciting time from the standpoint of the new vehicles, the electrification, the new technologies that are upon us. The desire to have a personal vehicle has accelerated during COVID. There was a lot of talk five years ago that personal vehicle ownership was diminishing and everyone’s doing ridesharing. I think that’s in the rearview now. Our vehicles provided us with a lot during the pandemic because we probably didn’t want to be riding around with people who weren’t in our household. It’s what got us to the grocery store.” 

Multi-Door Strategy

Among the 30 largest local dealers, sales climbed 14.8% to $4.9 billion, according to this week’s Business Journal list. The ranking measures sales for the 12 months through June 30 with a year-over-year comparison.  

Outside of sales growth, another industry trend that’s not stopping: the growth of dealership groups.  

It didn’t take long for Garth Blumenthal, the former general manager of Fletcher Jones Mercedes-Benz in Newport Beach, to make good on that. The auto vet in 2019 purchased the remaining 49% of Mercedes-Benz of Temecula that he didn’t already own to become sole owner of the dealership.

Fast forward to this year he bought in March Volvo Cars Mission Viejo and Audi Mission Viejo, forming the Unstoppable Auto Group. The group added Polestar to its fold in June.

The goal now is for the Unstoppable portfolio to own more than 25 luxury dealerships by 2025.

There’s also the Newport Beach Automotive Group that’s focused on the high-end automotive segment. The group earlier this year bought a 3.5-acre parcel for a 1,500-square-foot Bugatti showroom that began construction in February. Showrooms in the Irvine Auto Center by Newport Beach Automotive also include construction on McLaren Newport Beach and Koenigsegg Newport Beach, both set for completion in the first quarter of next year.

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