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Tesla Motors : For Santa Rosa, 2016 brought big shifts in the car-buying landscape

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01/22/2017 | 03:19pm CET

Jan. 22--Jennifer Alcocer already leases one electric car, but last week she was looking at a second, a new model that on a single charge can travel more than twice the distance of her current ride.

"I've totally had the range anxiety," said Alcocer, referring to the fear that electric vehicle drivers have about running out of power before reaching the next charging station.

Enter the 2017 Chevrolet Bolt, an electric-powered hatchback with an EPA-estimated range of 238 miles and a base price of $37,495. The Bolt, this month named car of the year at the North American International Auto Show in Detroit, is eligible for $10,000 in state and federal tax credits for buyers.

"It's Tesla range for half the price," said David Barnes, general manager at Platinum Chevrolet in Santa Rosa, where Alcocer and husband Kevin Tedrick stopped by Tuesday afternoon.

Sonoma County auto dealers enjoyed strong sales again last year, and high-tech offerings like electric vehicles and advanced safety features continue to attract buyers into showrooms.

Even so, it's unclear how much more sales can grow at a time when the wider new car market appears to be slowing. And Sonoma County's used car business just got more competitive with the recent addition in Santa Rosa of CarMax, the nation's largest used car dealer with a website that allows local buyers to easily find and acquire vehicles from other company stores in the region.

"Anyway you cut it, business is extremely good in Sonoma County," said Jim Bone, the dealer and a partner in the Jim Bone Auto Group in Santa Rosa.

Car sales, he said, have benefited from strong employment and rising wages.

For the first 10 months of 2016, Sonoma County dealers sold 18,546 new cars and light trucks, according to global information services company Experian. That was just 240 more than from the same period in 2015, but still on track to be the best year in more than a decade.

In contrast, during the depths of the last recession, county car dealers sold just 9,700 new vehicles in all of 2009. In 2010, the total rose to fewer than 10,600 vehicles.

However, after an unprecedented six straight years of increasing sales, the state's new car market "seems to be running out of steam," the California New Car Dealers Association stated in a November outlook.

Sales growth for new cars was flat in the third quarter. But the state's buyers still purchased roughly 2 million new cars in 2016 for the second straight year, the best results in a decade.

"We're slowing down near the top," said Brian Maas, president of the California New Car Dealers Association. "That's the good news."

The association forecasts dealers will enjoy relatively strong new car sales for at least the next two years. The market is benefiting from rising household incomes, relatively low interest rates and new tech innovations.

The innovations include recent advanced safety features, including a car's ability to automatically brake to avoid a pedestrian in a crosswalk or another vehicle making a quick stop.

Also available this year are more affordable electric cars that can travel from, say, Santa Rosa to Redding on a single charge.

That kind of range drew Alcocer and Tedrick to check out the Chevrolet Bolt. The couple already have an electric Mercedes B Class hatchback, with an estimated range of 87 miles.

Tedrick said he had been thinking of making his next car the upcoming Tesla Model 3, a sedan with a base price of $35,000 that is scheduled for release later this year. But he acknowledged being impressed with the Bolt, and he thought plenty of other drivers would find it a value when compared to gasoline-powered vehicles that require oil changes and other engine-related maintenance.

"It makes a lot of sense," he said.

Electric cars now make up less than 2 percent of new cars sales in California, according to the dealers association. In comparison, regular hybrids make up almost 5 percent, but their share has slipped over the past two years, while plug-in hybrids account for less than 2 percent.

Late last year, two local dealers benefited from an electric car incentive program offered by electricity provider Sonoma Clean Power. The public agency gave $2,500 discounts to consumers who purchased or leased a Nissan Leaf or a BMW i3, the electric models of the two manufacturers that opted into the incentive program.

Buyers acquired 180 Leafs from Bone's Nissan dealership between late October and early January, the dealer said. Normally he would have sold about 25 Leafs for that period.

"It put a lot of electric cars on the road," Bone said of the program.

While the numbers to date have been small, more electric vehicles are coming, dealers said. For one thing, such autos can help manufacturers meet stringent state and federal fleet emissions standards that take effect over the next decade.

Also, the vehicles increasingly are able to travel farther between charges, making them more useful to consumers. In the coming years, several manufacturers reportedly are preparing to release cars that can travel 200 miles or more on a single charge.

That kind of distance will be a "game changer," Bone said. "It takes the range anxiety out of the equation."

One change in the electric vehicle market came last summer when Bone closed his Santa Rosa Fiat dealership, whose models include the Fiat 500e with a driving range of 84 miles. Asked if he closed that dealership because of disappointing sales, Bone said that was one factor in what was "just a business decision" and "it wasn't a decision we came to lightly."

The local Fiat dealership is now operated by Lithia Chrysler Dodge Jeep Ram Fiat of Santa Rosa.

While some dealers said sales had increased markedly this year, an executive for the Hansel Auto Group acknowledged sales at their nine county dealerships had been lagging through October.

"We were tracking down a little until the last two months of the year," said Vice President Justin Hansel.

But business picked up, with November being the group's best month for used car sales and December ranking as the best sales month for new and used cars ever.

"I think 2017 will be another robust year," Hansel said.

Among the those doing business with Hansel was Jeanelle Payne, a Montgomery High School history teacher. She and her husband first tried to save some money buying a used Honda Odyssey from another dealer but grew frustrated when a salesman wouldn't drop the advertised price.

The Santa Rosa couple next turned to Hansel Honda in Petaluma. When they learned what they could lease a new Odyssey for, Payne said they asked one another, "Why are we doing this and trying to haggle for a car that has 50,000 miles on it?"

This month they leased the new vehicle from Hansel.

The frustration that buyers like Payne have experienced during price negotiations speaks to a key tenet of CarMax, the Richmond, Virginia-based corporation that opened its Santa Rosa store in late November.

Brandon Mullins, the store's general manager, said before the company began selling cars in 1993, it conducted research on what shoppers liked and disliked most about buying a used car.

"It came out that haggling over prices was the worst part of the experience," he said.

As such, CarMax emphasizes "no-haggle prices," meaning "the price you see is the price you pay for the vehicle," Mullins said.

After nearly a quarter-century, the publicly traded CarMax has sold more than 6 million used cars, including 156,789 in the three months ending Nov. 30. For that period the company's net sales and operating revenue increased 4.4 percent from a year earlier to $3.7 billion.

With more than 160 stores in 39 states, CarMax features a website where customers can easily search all the vehicles the company owns around the country. At a shopper's request, CarMax will bring most cars for free to Santa Rosa from its Bay Area or Sacramento stores, and a few customers have paid it to ship cars from around the nation, Mullins said.

The Santa Rosa store employs 57 workers and is still hiring, Mullins said. The property's fenced and gated show lot contains roughly 300 cars, trucks and SUVs. To reach the lot, shoppers first park in a separate customer parking area and enter via a 15,000-square-foot showroom and service center.

For their part, dealers said they welcome CarMax's presence in Santa Rosa, even as they seek to bolster their outreach to consumers.

For Hansel, that included unveiling late last year its online site, gohansel.com, where buyers can easily search all vehicles at the company's nine dealerships, including roughly 600 used cars.

Dealers also tout their certified pre-owned programs, featuring used cars that receive a special designation from the new car manufacturers. Such programs can come with rebates, financing or better warranties than are available with most used cars.

"The manufacturers like it because it creates more brand loyalty," Hansel said.

When a new sales competitor like CarMax comes to town, it forces the existing dealers "to sharpen their game," said Maas of the dealers association. "That's good for consumers."

Both he and dealers said the increased concentration of car sellers here can mean more shoppers passing by their showrooms and more opportunities for sales.

Barnes of Platinum Chevrolet said competition is hardly a new concept, because he already sits near Manley Honda and some Hansel dealerships, both of which have much larger used car inventories than he does.

"If anything," he said, "CarMax is just going to bring more car buyers to Auto Row, which is a good thing for us."

You can reach Staff Writer Robert Digitale at 707-521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit

___

(c)2017 The Press Democrat (Santa Rosa, Calif.)

Visit The Press Democrat (Santa Rosa, Calif.) at www.pressdemocrat.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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Financials ($)
Sales 2016 7 034 M
EBIT 2016 -212 M
Net income 2016 -471 M
Debt 2016 94,9 M
Yield 2016 -
P/E ratio 2016 -
P/E ratio 2017
EV / Sales 2016 5,62x
EV / Sales 2017 4,08x
Capitalization 39 423 M
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Average target price 239 $
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