Local dealers aren’t feeling car-tax crunch

Alicia Robinson

Car buyers in Newport-Mesa are not put off by the tripled car tax

that went into effect last month, according to local car dealers, who

say they aren’t suffering the same sales slump as the rest of the

state.

Consumers are wondering whether Gov.-elect Arnold Schwarzenegger

will make good on his promise to repeal the car tax when he takes

office next week, but that uncertainty hasn’t stopped them from

buying.

Auto sales figures released Thursday by J.D. Power and Associates

showed retail auto sales statewide declined 33.1% from September to

October, but local dealers haven’t felt that big of a pinch.

Business has been slow, said John Fitzgerald, a salesman with

Connell Chevrolet, but he attributes it to a combination of

unexpected events, such as the grocery and transit workers’ strikes

and the wildfires.

“I think the key thing is the uncertainty with the American public

right now,” he said.

Fitzgerald said sales were affected in the first week in October

when the higher tax kicked in, but General Motors responded with a

license fee relief program that offered buyers a cash rebate. Other

incentives from manufacturers and marketing by Connell have helped

keep sales alive, he said.

“We’ve definitely noticed sales reductions, but just not as

significant as we would normally,” he said. “We have an excellent

customer base here that we’ve built up.”

If the tax increase has affected car sales, it’s because people

don’t understand that they’ll pay increased license fees whether they

have a new car or an older one, said Garth Blumenthal, general

manager of Fletcher Jones in Newport Beach. Fletcher Jones sells new

and used luxury cars.

“I think that the car industry as a whole could do a better job of

explaining that,” he said.

The license fee increase has had a minimal effect, he said, adding

that Fletcher Jones’ sales in October are less than 10% below sales

in the same month in 2002.

Customers trying to beat the increase boosted September sales,

which Blumenthal called “astronomical,” leaving Fletcher Jones’

combined sales for September and October ahead of the same period

last year.

“We’re having, by far, our best year,” he said.

With this sales climate, Blumenthal said, dealers are more

inclined to be flexible and offer customers whatever it takes to

close a sale. Malcolm Phillips of Phillips Auto, which sells used

luxury and sport vehicles such as Mercedes, BMW and Jaguar, blames

any customer wariness on media hype about the car tax.

Usually when customers shop for a car, “they haven’t got a clue

what their license fees are,” he said.

“My sales haven’t been affected drastically at all,” he said.

One factor helping buoy local car sales is Orange County’s low

unemployment, said Richard Luehrs, Newport Beach Chamber of Commerce

president.

Because so many people are working, more of them have disposable

income, and they’re using it to buy cars, he said.

Area car dealers say that in the auto-centric culture of Southern

California, people aren’t inclined to worry about paying a few

hundred dollars more for license fees.

“They want what they want, and they’re going to get what they

want,” Fitzgerald said.

* ALICIA ROBINSON covers business, politics and the environment.

She can be reached at (949) 764-4330 or by e-mail at

[email protected].