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Dealers hope stronger economy fuels sales Many owners are ready to replace older vehicles

New-car dealers say they feel upbeat about this year, expecting the economy to strengthen and more shoppers ready to make deals.

Dealers will probably look back on 2010 as a stabilizing year for their industry. U.S. sales of new cars and trucks finished at 11.6 million units, up from a dismal 10.4 million in 2009, which was the lowest total in 27 years.

Many industry watchers, from automakers to analysts, predict U.S. sales will finish around 12 million to 13 million units this year, though some are predicting even higher figures. No one expects sales this year to return to the boom times of 17 million units of several years ago, but the sales trend is upward.

The long-range outlook is more promising. The Center for Automotive Research predicts sales will reach the 15 million-unit level by 2015. Meanwhile, an IHS Automotive researcher says U.S. sales could reach 17 million units by 2015.

But those sterling numbers -- if they do materialize -- are still a few years away. Dealers have to sell in the car-buying climate of the moment.

> Hoping for better

Paul Stasiak, president of the Niagara Frontier Automobile Dealers Association, sees reason for optimism. For dealers, last year "was a far better year than they anticipated, not necessarily with new car sales, but with the activity in the dealerships." Many of those showroom visitors are poised to convert to buyers this year, he said.

"There are a lot of drivers who have cars out there that are becoming obsolete, more than ever," Stasiak said.

Paul Taylor, chief economist for the National Automobile Dealers Association, agrees. On average, cars and trucks on the road are more than 10 years old, he said.

"Many consumers simply will feel the need to buy a new car or truck as the mileage on their current vehicles moves beyond the 120,000-mile mark," Taylor said.

> Trade-ins are vital

Trade-ins could help spur new-car sales, Taylor said. The used-vehicle market remains short on low-mileage cars and trucks, so customers will increase their trade-in equity when they buy new vehicles.

Taylor said the new vehicle market remains largely about the "needs" of consumers, rather than their "wants" as during the boom years of 2002 to 2007.

Another factor bolstering new-car sales is a more favorable credit picture, Stasiak said. Consumers have cleaned up their finances, and banks are showing more willingness to lend to make deals happen.

Through October, new-vehicle sales at area franchised dealers were up 8.4 percent from the year before, according to NFADA data. But sales were still down 10.4 percent from the same 10-month period in 2008. (None of the statistics includes figures for Chevrolet, whose sales totals were not publicly disclosed.)

West Herr Automotive Group's new-vehicle sales increased 11 percent in 2010, said Scott Bieler, the president. Its used-vehicle sales rose 6 percent and its parts and service revenue was up 6 percent.

For this year, the dealer group -- one of the nation's largest -- has set goals of increasing new vehicle sales by 12 percent, used vehicle sales by 10 percent and growing its parts and service business by 7 percent, Bieler said.

> Fiat returns

West Herr was awarded the region's lone Fiat dealership, as the Italian brand returns to the United States after a long absence. The dealer group plans to open the new dealership this spring.

Last fall, West Herr opened a new facility for its Ford and Lincoln dealership on Millersport Highway in Getzville, as well as a used car facility.

It adapted to General Motors Corp.'s elimination of the Saturn brand by converting its two Saturn facilities to other uses. West Herr also expanded eastward, acquiring two dealerships in Rochester.

Meanwhile, Mike Barney Nissan is overhauling its Amherst dealership to give it a completely new look, in conjunction with the automaker, said Joe Caldarelli, the dealership's president.

Caldarelli said his dealership has increased sales for seven consecutive years and expected to sell a combined 1,600 new and used vehicle units in 2010. The dealership didn't even break 1,000 combined units six or seven years ago, he said.

Caldarelli credited a combination of Nissan's products and his own staff with driving the numbers.

"We've been doing a lot of things over the years to build a base of customers and keep people coming back," he said.

> Revamped showrooms

The remodeling of the dealership, estimated at $750,000 to $1 million, will refresh the location's look and add a drive-in service feature. Its last remodel took place in 1996.

Nissan is drawing attention for the release of its Leaf electric vehicle. The rollout will occur gradually; Mike Barney Nissan will have three charging stations for it, but doesn't expect to receive a Leaf until summertime. Caldarelli said the Leaf builds greater awareness of Nissan's brand and products, even if customers don't end up buying an electric car.

Towne Automotive Group projects its new-car sales will increase 15 percent to 20 percent this year, said Frank Downing Jr., president. Its new-car sales rose more than 15 percent in 2010, including an increase of about 30 percent in the final three months of the year.

Downing said a combination of factors are driving the increase. The economy appears to be getting stronger, with consumer confidence growing and interest rates low. Manufacturers have gotten back into leasing, so lease payments have gone down. The value of trade-ins has remained the same or gone up, and vehicle production is expected to rise, he said.

> Gearing up for sales

"Every brand we deal with is increasing production to meet an anticipated higher industry in the U.S.," Downing said.

Towne is also undertaking expansion and renovation projects with its Ford, Lincoln, Mazda and Hyundai dealerships in Orchard Park. It is expanding its Ford location and moving Lincoln there, reflecting Ford Motor Co.'s push to co-locate the Ford and Lincoln brands.

A number of other dealers have recently completed renovations or have plans in the work, another sign of their confidence in an improving market.

Some of the dealer-related development is happening on the used-car side of the business.

Auction Direct USA, a Rochester-based business that builds its inventory through auctions, is expanding into Buffalo, with a location opening in Clarence. Duane Paddock plans to turn a former Ford dealership site in Kenmore into an expanded used-car operation.

e-mail: mglynn@buffnews.com