The 25 largest automobile dealers in Orange County saw revenue drop 19% to $3 billion for 2009, according to this week’s Business Journal list, making it the worst year for dealers in recent history.
The decline follows a 15% drop in revenue from 2007 to 2008, which ended at $3.8 billion.
The steep decline reflected on the list, which ranks auto dealers by sales of new and used autos plus service revenue, is mostly a reflection of the first half of 2009.
Sales for auto dealers began improving in August as the government program “cash for clunkers” brought an influx of sales from people looking to trade in their less fuel-efficient autos. But that rally was short lived as sales dropped off in September after the program ended.
The dealers then ended the year with a slight uptick in sales.
Nationally, 2009 was the worst year for auto sales in 30 years. Sales of new autos were down 21% from 2008 to 10.4 million.
OC sales were worse than the national average.
In 2009, sales for all OC dealers fell 26% to 96,289 vehicles, according to the Newport Beach-based Orange County Automobile Dealers Association.
New vehicle sales for the top 25 on our list fell 28% to 49,037. Used auto sales were down 2.4% to 27,064 autos.
Not one of the dealers on the list registered an increase in revenue or new auto sales, but seven did see increases in used auto sales.
Figures for seven dealers are Business Journal estimates.
Better Year?
Dealers predict a better 2010 as they hope pent-up demand and a mildly recovering economy will bring buyers to the dealership.
“We’re looking forward to a better year,” said Al Parajeckas, general manager of Crevier BMW in Santa Ana.
Some of that prospective growth will rely on easier financing.
John Sackrison, executive director of the Orange County Automobile Dealers Association, said banks are beginning to approve more auto loans.
The county’s new auto registrations, a barometer of sales, are forecast to rise 13% to 109,000 vehicles this year.
No. 1 Fletcher Jones Motorcars of Newport Beach projects a 5% rise in sales this year, said Garth Blumenthal, general manager.
Fletcher Jones saw sales decline 17% to $431 million in 2009.
Fletcher Jones is the second largest dealer in the nation after El Monte’s Longo Toyota.
The Mercedes-Benz dealer sold 6,558 new and used autos last year.
No. 2 Crevier also expects to boost sales this year, after sales fell 16% to $255 million in 2009.
Both Fletcher Jones and Crevier saw drops in employees last year. Fletcher Jones saw its salespeople drop 17% to 50 people. Its service staff declined 16% to 168 people.
Crevier’s salespeople declined 9% to 49 and its service personnel dropped 1.4% to 140 people.
Overall, auto dealers on our list cut salespeople to 660 last year, an 11% drop. Service workers were down 7% to 1,456.
Last year’s employment declines weren’t as steep as in 2008, when the top 25 dealers cut their sales staff by 17% to 760 and service staff by 10% to 1,565.
Some dealers are likely in for a rougher 2010 than others.
No. 7 Toyota of Orange, which sold 6,107 new and used autos in 2009 and saw revenue fall 24% to $133 million last year, is facing an early drop in sales after massive recalls by Toyota Motor Corp.
“We have seen a pretty marked drop-off for the Toyota brand,” said James Bell, executive market analyst for Kelley Blue Book Co., based in Irvine.
Some potential buyers now are looking at Ford, General Motors, Kia and other brands, Bell said.
“I feel like it’s a little bit of a reshuffling of the deck that’s going on,” he said.
Hyundai, Kia
Though Kia and Hyundai brands fared relatively well last year, their local dealers didn’t sell enough autos to crack our top 25.
That could change in coming years if Fountain Valley-based Hyundai Motor America and Irvine-based Kia Motors America Inc., part of South Korea’s Hyundai Motor Co., continue to gain customers in the U.S.
But OC has long favored European and Japanese brands. Mercedes-Benz and BMW dealers top our list by revenue, while Toyota dealers sell the most autos.
The BMW dealers on our list were able to somewhat offset new auto sales declines by boosting used auto sales.
Crevier upped its used auto sales by 11% to 1,597. It sold 4,849 autos altogether.
BMW AG helped boost used auto sales with incentives, Parajeckas said.
No. 3 Irvine BMW bumped up its used auto sales by 18% to 1,628 for a total of 3,996 autos. The dealer saw a 12% decline in revenue to $197 million.
No. 10 Buena Park-based Shelly BMW increased its used auto sales 3% to 793 autos. Revenue declined 19% to $119 million.
No. 14 Newport Auto Center, which sells Bentley, Porsche and Audi brands, also was able to boost used auto sales—by 11% to 261 autos. Overall, the dealer was down 22% in sales to $88 million.
No. 9 Newport Lexus saw the smallest sales drop on our list.
The Lexus dealer, which moved up from No. 11, saw a 4% decline in revenue to $129 million. It sold 14% fewer new autos, 1,695, and boosted used auto sales 13% to 1,500.
Other Lexus dealers didn’t fare as well, including No. 15 Tustin Lexus, which saw sales fall 27% to $80 million. Its used and new auto sales were down.
Both Newport Lexus and Tustin Lexus are owned by Orange-based David Wilson Automotive Group. The dealer group also owns No. 17 South Coast Toyota, No. 3 Toyota of Huntington Beach, Toyota of Orange and No. 25 Freeway Honda, which changed its name last year from Honda of Santa Ana.
Freeway Honda saw its sales decline 28% to $51 million.
Download the 2010 OC’s Largest Automobile Dealers list (pdf)
