Orange County auto dealers have something to look forward to next year.
Auto registrations—a barometer of new vehicle sales—are projected to rise 16% in 2010, according to the Costa Mesa-based Orange County Automobile Dealers Association.
The forecast signals the worst is over for dealers, which have been weathering the severest downturn in recent memory.
Orange County has fared worse than other markets. The county’s new registrations fell 33% for the first nine months of this year versus the same period a year earlier.
Registrations nationwide fell 22% during the same period.
Pittsburgh, Philadelphia, Cleveland, New York and Chicago all did better than OC. Markets that saw steeper declines than OC included Sacramento, which declined 38%, and Los Angeles, which was down 35%.
From January through September, Toyota/Scion held its No. 1 market share in OC with Honda, Ford, Mercedes-Benz and Nissan rounding out the top five.
Hyundai, Kia and Volkswagen were the top market share gainers.
Mercedes-Benz was the top luxury brand through September at 4,742 registrations, despite a 27% decrease from a year earlier. Lexus was No. 2 with a 33% drop to 3,903 autos, followed by BMW, which declined 34% to 3,755 autos.
Industry watchers still are awaiting sales numbers for OC for August, when dealers saw a boost from the “cash for clunkers” program, as well as September, which was expected to see a pullback with the end of the program.
Saab Switch
Steve Coleman, owner of Saab of Mission Viejo and Saab of Santa Ana, has traded one of his dealerships for a Mitsubishi showroom.
The Mission Viejo dealership now is Mission Viejo Mitsubishi.
“We’re getting Mitsubishi on its upswing,” Coleman said.
He said he opened the dealership within three weeks of finding out he was approved to be a Mitsubishi dealer. Other than the signs, the dealership didn’t need to make too many changes, Coleman said.
Coleman has the OC Saab market, albeit a small one, to himself. One dealership in Santa Ana was enough to serve the county, he said.
Saab, now part of General Motors Corp., is about to become part of Sweden’s Koenigsegg Automotive AB.
A deal is expected to close by year’s end, pending the approval of a $600 million European Investment Bank loan to luxury automaker Koenigsegg.
Luxury Shopping
Luxury shoppers may surprise this holiday shopping season.
While luxury retail sales are expected to lag discount sales, they’re expected to be better than in 2008, when they were off by about 34%.
“My expectation is there seems to be some pent-up demand,” said Greg Palme, audit partner for Deloitte & Touche LLP’s retail group in Costa Mesa.
The well-heeled have been less affected by the down economy but still have been cautious.
“We know they haven’t been spending,” Palme said.
“We are cautiously optimistic,” said Debra Gunn Downing, executive director of marketing for the South Coast Plaza in Costa Mesa, a luxury shopping hub.
Downing said she is expecting a slight increase in sales this year.
“Luxury retailers will be offering more service,” she said.
South Coast Plaza is 95% full.
The Clubhouse restaurant is set to close at the shopping center in January. Orlando, Fla.-based Darden Restaurants Inc. plans to open two restaurants in the Clubhouse’s space in late 2010.
South Coast Plaza has at least one other store it expects to close and has a tenant ready to move in, according to Downing.
Discount Disconnect
Retailers that have sought to avoid the heavy discounts of last holiday season may be at
odds with shoppers expecting the same sales, according to Deloitte & Touche’s recent holiday report.
That could leave a lot of people disappointed. Retailers have slashed their inventories this year, which means goods likely will run out before they’re marked down.
People plan to buy fewer gifts and spend less, according to Deloitte & Touche’s poll of 10,000 shoppers. Consumers plan to purchase about 18 gifts, down from 21 in 2008. They plan to spend $452 on those gifts compared to $532 last year.
Nearly 60% say they will shop at discount stores.
Even though shoppers say they will spend less, they seem to be somewhat optimistic about the economy. About 55% of shoppers said they expect the economy to improve next year, compared to 28% of respondents last year.
Black Friday
Retailers are expecting big crowds for Black Friday, the day after Thanksgiving and one of the best days of the year for retailers.
“It will be a very busy day,” said South Coast Plaza’s Downing, “equal to or greater than last year’s Black Friday.”
Last year was one of the best Black Fridays South Coast Plaza has ever had, she said.
Local malls of Simon Property Group Inc. are expecting a strong showing for Black Friday as well.
But while Black Friday can be a predictor of mood, it isn’t a predictor of how sales will turn out for the season.
In 2008, 172 million shoppers spent an average of $372.57 on Black Friday weekend, up 7.2% from 2007’s 147 million shoppers who spent $347.55, according to the Washington, D.C.-based National Retail Federation.
But sales for the season ended down 3.4% in 2008, according to the trade group, which is forecasting sales this year to be $438 billion, a 1% drop from a year earlier.
The sales forecast is for November and December and excludes auto, restaurant and gas sales.
