What’s driving vehicle sales in California?
The car industry’s winning streak in California continues.
For the first three months of this year, registrations for new cars sold exceeded 500,000, a 3.8% improvement over the first quarter of 2015, marking the 22nd consecutive year-over-year increase in quarterly registrations.
The state is on track to top 2 million new vehicle registrations for the second straight year.
“We’re a car state,” said Brian Maas, president of the California New Car Dealers Assn., which released the new figures last week. “Passenger cars are king.”
The car-buying rally is due a number of factors, including plenty of pent-up demand on the part of drivers to replace what they are currently driving.
Maas said the average vehicle on California’s roads is 11 years old — a much higher age than cars and trucks in most other states.
In addition, low interest rates, aggressive lease programs from dealers, low gasoline prices and a generally better economic picture offer additional incentives.
“Combine all that and it’s really a good time to buy a vehicle,” Maas said.
Light trucks led the way, with a 12.5% increase over last year. The Ford F Series pickup took nearly one-third of the market share for full-size trucks, with 10,986 registrations through March.
In Los Angeles and Orange counties, first-quarter sales rose 5% for the year-earlier period, representing a 0.8% decline in car sales but a 15% increase in truck sales.
Southern California purchases were up 4.4%, while sales in Northern California rose only 1.9%
The used vehicle market saw solid growth, up 11.7% across the state.
It was a much different story seven years ago, when dealers got socked in the immediate aftermath of the Great Recession.
In 2009, barely more than 1 million cars were purchased, only half of what the current market is selling.
But for all the good news, the 22-quarter winning streak may end soon as demand for new cars tapers off.
This quarter’s 3.8% rise pales in comparison with quarterly increases that often topped 10% as the economy recovered. For example, the third quarter of 2012 saw a 34.2% surge over the previous year.
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“We can’t continue to keep up that pace of improvement forever, so it makes sense it’s going to ease,” Maas said.
While the nation’s top-selling vehicle is the Ford F-150 pickup, the bestselling vehicle in California is a subcompact, the Honda Civic, which racked up 20,790 registrations in the most recent quarter.
The Civic was also the bestselling used car in the state.
Among some of the other big winners in the report: Buick, which saw a 90.7% increase over the first quarter of 2015, and Volvo, which was up 75.9%.
Fiat experienced a 34.3% sales drop and Mitsubishi fell 34.1% in the first quarter.
The CNCDA report also showed signs how the low global price for oil — which leads to low prices at the pump — keeps hurting sales for hybrids, plug-in hybrids and electric vehicles.
After reaching almost 7% of market share in 2013, hybrid registrations in California have steadily slid to just below 5% in the most recent quarterly report.
National numbers have been even more pronounced.
There was some good news for Tesla though. Its Model S was the top seller in the “luxury and sports” segment in California for the first quarter of 2016, with 2,552 registrations, edging out the Mercedes E-Class.
