Almost a decade since the auto industry hit the skids during the Great Recession, car dealers have been cruising the last few years thanks to an improved economy and lower gas prices.
In fact, new car registrations in Sonoma County jumped 9 percent last year, putting 22,668 new cars on local roads, believed to be a new record, according to Experian, a credit reporting firm.
The sales spike was driven, in part, by calamity. Thousands of cars were damaged or destroyed in the October wildfires, forcing residents to buy replacements.
New car registrations rose sharply during the last three months of the year in Sonoma County: 2,297 in October, 2,038 in November and 2,398 in December, according to Experian. Those three months — when fire victims would be most likely shopping for replacement vehicles — represented 30 percent of the overall sales for last year.
“We’re pleased we’ve been able to help 46 people replace cars they lost in the fires,” said Tom Hubert, senior vice president of auto, insurance and wealth services at Redwood Credit Union, which operates a car lot in south Santa Rosa. Redwood had a 13 percent increase in car sales last year, about a quarter resulting from new cars.
The state Department of Insurance reported that 4,173 auto claims were filed as a result of the fires in Sonoma County, representing almost $70 million in insured losses. Carriers had paid out nearly $50 million to fire victims as of last month. Additionally, 502 auto claims were filed in Napa County, 167 in Mendocino County and 35 in Lake County from the wildfires.
Redwood Credit Union offered 230 auto loans for its members to buy replacement vehicles that were damaged or destroyed in the fires, said Ron Felder, Redwood’s executive vice president. Redwood offered them a special 1.9 percent annual interest rate so they could afford to quickly get new wheels.
But the fires were not the only force driving up car sales.
New car registrations in Sonoma County have topped more than 20,000 annually over the past four years, according to Experian. That is a far cry from the 9,704 new vehicles registered in 2009 during the depths of the financial crisis, when the Big 3 automakers teetered near bankruptcy and General Motors Co. and Chrysler LLC required bailouts by the federal government.
“We’ve essentially doubled the number of cars sold from 2009 and we reached what I would call market stability,” said Brian Maas, president of the California New Car Dealers Association. Despite a 2 percent decline in sales, auto dealers statewide still sold 2.05 million cars last year — the fourth year in a row more than 2 million vehicles were sold in the Golden State.
Nationally, new car sales dropped 1.7 percent last year to 17.1 million vehicles.
Analysts said the primary reasons for the strong car market were a growing economy — the gross domestic product grew 2.3 percent in 2017 — and relatively stable gas prices.
“We track pretty much with the overall economy,” Maas said. “Car sales are like the proverbial canary in the coal mine.”
Average gas prices in California have not surpassed $4 a gallon since the summer of 2014. Buyer enthusiasm has not slowed, even with a 12 cent per gallon tax increase that went into effect Nov. 1. Notably, sales of new light trucks in California surpassed cars in 2017, accounting for 51 percent of the market. Trucks and sport-utility vehicles typically decline the most when gas prices are high because of their lower fuel efficiency.