A hot summer for car dealers

A hot summer for car dealers
Strong sales in June combine with lower gas prices to boost sales of domestic, smart cars.

LONG BEACH - With lower gas prices, Southern Californians may begin to slake their thirst for the SUV and other cars, boosting an already strong summer for dealers, automotive industry watchers said.

Positive earnings reports from automotive manufacturers for June were released last week by several auto makers, and dropping gas prices, with many discount stations under $3 per gallon, may play a part in more good news to come.

"June was a good month," said Phil Reed, a Long Beach resident who works for auto industry analyst edmunds.com.

He expects July and August to be strong as well, with a possible resurgence of interest in SUVs if gas prices drop even lower.

It takes a few weeks after gas prices begin dropping to make consumers look toward less fuel efficient vehicles, but because gas prices are moving in an opposite direction from the normal upswing they take during the summer, the later months may give dealers sweltering sales, Reed said.

"To some degree, it's very good news, particularly for domestic manufacturers who are very reliant on larger vehicles," Reed said.

Smart car

However, some of the hottest interest in vehicles this summer may be for a tiny, fuel-efficient vehicle that hasn't even come to the United States yet.

The Smart fortwo, manufactured by smart USA, a Mercedes Benz company, has generated massive interest.

Through its Web site, www.smartusa.com, the company allows people to pay $99 to make reservations to purchase the car. The money is refundable if you change your mind, or it can be used toward the purchase of the vehicle.

"It has gone beyond our most optimistic projections," said Dave Schembri, president of smart USA.

The approximately 1,700-pound car is powered by a three-cylinder, one-liter, 71-horse power engine.

The company, which reported more than 20,000 reservations have been made, came up with the idea of the reservations as a way to gauge reaction after it announced about a year ago that it was bringing the popular European car to the United States.

After the announcement, the company saw a swell of visitors to its Web site.

"Since then we've had over 1.8 million visitors to the Web site spending an average of over five minutes," Schembri said.

Aside from fuel efficiency - the car has yet to be EPA rated, but its designers say it achieves 40-plus miles per gallon - the car has drawn a great deal of attention because of its price.

The base model will retail for under $12,000, while an equipped coup version will be under $14,000. A well-equipped convertible will sell for around $17,000.

Still, manufacturers of the vehicle are touting its strongest selling point as fuel efficiency.

"The right car in the right place and the right time," Schembri said. "You look around and you almost feel irresponsible driving a big car. If you were going alone to a restaurant you wouldn't order a big dinner for five."

Big in L.B.?

The car may also prove to be a big hit with the urban market, such as in downtown Long Beach, where parking is scarce and smaller cars often have more parallel parking options.

"This car is the answer to a lot of questions people are asking," he said.

Road shows are the main thrust so far of the company's marketing campaign. In May the company equipped three trailers each with five Smart fortwos and visited 50 cities allowing people to see, touch and drive the car.

The campaign was most recently in Los Angeles, and hundreds of people test drove the car each day, according to the company.

There's another reason the car is expected to be a strong seller, Reed said, adding, "It's also extremely cute."

All in all, if summer gas prices stay cool, that will be good for all car sales, big and small, Reed said.

"If gas prices stay low, sales will be strong," he said.

source : www.presstelegram.com