California is the biggest market in the Nation.
California makes up 11.1% of all sales of cars and light vehicles in the United States. It is the 8th largest economy in the world. California was the first state to institute emission standards and the standards it institutes today has an effect on the entire United Staes. PHEV/EV/BEV/ZEV are on the market because California demands a certain amount of Zero Emission Vehicles from each manufacturer.
With this knowledge, how is each manufacturer doing in the Golden State?
Domestic brand market share (the Detroit Three) in California was 27.7 percent, below the 45.4 percent share nationally, yet Jeep brand was the number one selling brand in California for the Second Quarter 2014 and had the biggest percentage increase in the first half of this year in California of any manufacturer.
Toyota is still the leader in the California market (21.9%), and the Camry was the best selling vehicle in California.
Top 4 vehicles sold in the US, according to WSJ online
1. Ford F-Series
2. Chevy Silverado
3. Toyota Camry
4. Dodge Ram
Top 4 vehicles in California, according to California New Car Dealer Association
1. Toyota Camry
2. Toyota Prius
3. Hond Accord
4. Honda Civic
Toyota owns 21.9% of California sales – 1 out of every 5 cars sold in California is a Toyota.
Volkswagen, Ford and Chevy are down in California. Jeep is up.
New light vehicle registrations (including retail and fleet transactions) in California increased 7.3 percent from the first half of 2013 to this year, higher than the 5.4 percent improvement in the U.S. market (see table below). Passenger car share of the overall light vehicle market in California was 61.9 percent.
The most interesting region in California
The Southern California retail market increased 8.5 percent, while Northern California was up 9.1 percent. The Los Angeles and Orange County market improved 9.5 percent, while San Francisco Bay was up 8.7 percent.
San Diego County was interesting because it’s overall vehicle retail registrations increased only 4.2% and car retail sales increased only 1 percent.
Light trucks, which include pickup trucks used for construction, were up 9 percent. The other regions in the attached graph showed higher percentage gains in retail sales registrations in both categories. What is the reason behind such a difference? Is San Diego in a downward economic spiral?
At the end of 2013 Marney Cox, Chief Economist, San Diego Association of Governments (SANDAG) told the San Diego Reader that “If you liked 2013, you may like 2014. It will be another mediocre year. Nothing substantial ” steady, but below par.” Is that what is happening in San Diego in 2014, is San Diego county below par? I called Cox to get his take on the situation.
Cox was surprised at my call asking him why San Diego County was below par in registrations from January to June of 2014. Remember, I’m looking at actual registrations for vehicles. Cox looks at the taxes accrued from the sale of those vehicles. I read the sales registrations growth to Cox and he was still surprised, “we have a group that monitors sales tax for us because the SANDAG receives a 1/2 cent of the sales tax dollar collected, so it is in our interest to track the numbers because it is a revenue source for us.”
I could imagine Cox tilting his head as he said over the phone, “If my memory serves me correctly the numbers we received back from them were much closer to statewide than what you are giving me.” I queried him if the numbers were low because of economic conditions in San Diego, not because the jobs weren’t growing but because of the low-wage people were paid, or because they were working part-time. “I wouldn’t think it would it would be responsible for the biggest difference as what you have absorbed to it. Our expectations for the 2014 year are about a 4 percent growth, down from 5.2 percent last year on a fiscal basis.”
Cox did say that the Board of Equalization agrees with those numbers and has sent his agency a letter saying they are reducing their expectations of what they are expecting in sales tax revenues for the coming year in light of the trends they are seeing out in the marketplace.
It occurred to me that even though sales registrations could be down for San Diego there might be a reason tax revenue is up – the price of the vehicles could be that much higher, thereby causing that much tax revenue to cover the lack of registration growth compared to the rest of the state. For this information I went to Alexander Edwards, President, Strategic Vision, a global marketing communications company that has developed tools to measure decision-making, human behavior, attitudes and perceptions.
Edwards told me that his numbers were a bit different, “Even though there are what looks to be high percentage changes, in reality, they are not more than 100 or so vehicles sold/not-sold per month.” (that could be the difference between sales and registrations. Polk provides information on registrations, the end owner. Sales are primarily to the car dealerships.)
Alexander gave me some insight into San Diego’s statistics;
* The US gained an additional $1K in annual income between 2013 & 2014.
* San Diego new vehicle buyers household income dropped from $96K to $88K.
* San Diego is already a tough place to live and to have income down in this area (which is something that many are feeling here) it makes sense that there would be a slowdown in vehicle sales.
Edwards says that trucks are a different animal in San Diego, “In San Diego, we have a high proportion of Active Duty Military living here. 4% of all new vehicle buyers in San Diego are Active Duty Military (US average is 1%). Their income is somewhat stable (so long as they are in the military and living here). They can afford new vehicle consistently compared to those in San Diego who are suffering. Armed Service Members are twice as likely to buy a new Truck over a new Car.”
Essentially, Edwards said, Truck sales can remain more constant because of the military stationed in San Diego.
average pickup costs $40,000
average car costs $31,610
Experian is seeing some interesting trends in financing
* Of all new vehicles sold in Q2 2014, leases accounted for a record high 25.6 percent, up from 23.4 percent the previous year
* The interest rate for a new vehicle was up from 4.46 percent in Q2 2013 to 4.59 percent in Q2 2014
* Used vehicle interest rates were up from 8.56 percent in Q2 2013 to 8.82 percent in Q2 2014
* The average credit score for a new vehicle loan in Q2 2014 was 711, up from 699 a year earlier
* The average credit score for a new vehicle lease rose to 717 in Q2 2014 from 706 in Q2 2013
* car loan time is going up – they are already seeing 6 to 7 year car loans
Alternative-powered vehicles drop in California and the Nation
California started the zero-emission vehicle laws and alternative-powered vehicles have made a difference in the quality of air in California, particularly Southern California.
According to Experian Automotives most recent report looking at automotive market share and registration trends, the answer appears to be that the segments growth has hit a wall. In the first half of 2014, new sales for alternative-powered vehicles decreased by 3.6 percent from the previous year. This marks the first time that “green” cars have experienced a regression in new sales since the recession in 2009.
California Auto Outlook, on behalf of California New Car Dealers Association, sourced Polk data to show that hybrid sales are going down in California as well, “Hybrid vehicle market share (excluding plug ins) was 6.2 percent during the first six months of this year, down from 6.8 percent in 2013.”
Listen as Lou Ann Hammond, CEO, Driving the Nation, talks to John Batchelor radio show about California versus the Nation.