Beige Book: Dealers Experience Robust 2010 Finish

Dealers experienced fairly healthy sales in most pockets of the country in the final reporting period of 2010, according to the Federal Reserve, which said eight of its 12 districts saw either increased or steady vehicle sales.

“Automobile sales were either steady or up in eight districts during the reporting period, while New York stated that auto sales were ‘mixed but generally at favorable levels,’ and Kansas City noted limited auto sales but expected future improvement from additional incentives,” the Fed said in its most recent Beige Book report released Wednesday.

Discussing the activity in other districts, the Fed noted that in Philadelphia, Cleveland and Dallas, the inventory is right-sized given the sales environment.

Officials broke down the auto markets in each of the 12 districts in further detail, beginning with Boston.

While not providing any auto-specific information about the First District, the Fed noted that most retailers in general had healthy sales during November and December, and also indicated that promotions have been helpful.

“The majority of contacted First District retailers report positive sales results for the months of November and December,” officials pointed out.

“Year-over-year comparable same-store sales are mostly increases ranging from the low single digits to the low double digits, with the exception of one contact who reports a drop in same-store sales but notes a recent positive turn,” they added. “Several retailers indicate that consumers continue to react positively to promotions.”

Moving over to the Second District, dealers reported “mixed” results. However, for the most part, sales were pretty solid thanks to continued thawing of credit conditions both on a retail and wholesale level.

“Rochester-area dealers report that sales of new autos surged 24 percent from a year ago in November and appear to be running about 10 percent ahead in December, helped by incentives,” the Fed shared.

“On the other hand, dealers in the Buffalo area report that sales were down slightly from a year earlier in November and remained fairly sluggish in December; the inclement weather was seen to be a factor,” it added.

In this region, vehicle sales were moving upward at the end of 2010. Dealers anticipate that this year will see a modest increase, though many were worried that sales of less fuel-efficient rides might be hindered by gas-price hikes, according to the Fed.

Regarding supply, the Fed noted: “Dealers said that inventories were increasing as they took delivery of new models, but dealers generally considered their stocks of new and used vehicles appropriate for the current sales rate.”

Continuing on to the Fourth District, the auto market and overall retail environment was “generally positive.” November new-car sales for dealers were either stable on a sequential basis or improved slightly. Year-over-year, they showed gains for the most part.

Some dealers said leasing was stronger, as well.

It is anticipated that the winter will reflect “seasonal trends,” though sales are projected to be modestly stronger on a year-over-year basis, the Fed noted.

“New-car inventories are in line with demand. Reports on used-vehicle purchases were mixed. Little change was seen in credit availability,” the board shared. “Buyers with high credit scores can readily obtain financing. Dealers’ spending on showroom upgrades to comply with factory mandates remains modest. More aggressive capital outlays are dependent on sustainable demand.”

Next up was Richmond, where the overall retail market showed sales and traffic growth during December.

While not giving any auto-specific details, the Fed offered some commentary on the retail sector, noting: “Several managers at chain discount stores reported solid sales leading up to Christmas. In addition, retailers indicated that Black Friday sales were brisk at big-box stores, as media attention helped pull in customers, but Cyber Monday also brought a big jump in online sales.

“One exception was big-ticket sales, which continued to languish particularly for items driven by home sales, such as furniture, according to our latest survey,” officials added.

In the Sixth District, dealers enjoyed year-over-year gains during the reporting period, according to the Fed.

“District automobile dealers indicated that vehicle sales improved recently and were ahead of year-ago levels,” officials indicated. “Sales of commercial trucks were also up modestly.”

Moving on to the Seventh District, big-ticket retail sales, in general, were up modestly year-over-year, but auto sales were flat.

“Discretionary spending was up this holiday season — apparel, jewelry, and electronics accessories were particularly strong, while big-ticket electronics and furniture performed slightly better than a year ago,” the Fed stated.

“In contrast, auto dealers reported that sales held steady in December despite an increase in showroom traffic,” officials continued. “Retailers, in general, expressed a positive outlook for 2011, expecting stable, moderate growth in sales in the first half of the year with the potential for spending to accelerate later in the year.”

Continuing along, the Eight District has shown modest improvement on the new-vehicle side, but things were a bit different on the used side.

“Sales of new automobiles have grown modestly in recent months, while used car sales have been mixed across the district,” the Fed pointed out.

Over in the Ninth District, the level of consumer spending, overall, showed year-over-year gains, and the area remained on the rebound.

With regards to the auto industry, the Fed noted: “According to an auto dealers association in Minnesota, new-vehicle sales through November were up slightly from a year ago; light trucks gained market share relative to cars.

“A Minnesota domestic auto dealer reported strong December sales,” officials added.

Dealers here saw their sales slow down following modest gains in the prior reporting period. This helped push inventories to a higher level.

Despite the sales drop-off, there was some good news for 10th District.

“Dealers were optimistic … that auto sales would pick up with additional financing incentives and discounts,” the Fed shared.

Moving to the 11th District, dealers experienced a stable period to close 2010, the Fed said. They expect full-year sales will be a good bit stronger on a year-over-year basis.

“Contacts expected sales to be strong the final week of December. Inventories rose modestly but are in the desired range,” the Fed pointed out.

Dealers are looking to once again see a “gradual improvement” in 2011.

Finally, the 12th District saw burgeoning demand for both new and used vehicles.

And the robust trade-in values caused by used-car demand was said to have had a strong impact on new sales, as well.