California new car sales sputter | John Lindt

by ZeuCer

The California new vehicle market slipped 16.1% during the first nine months of 2022 versus 2021, as limited inventories and strong year earlier sales impacted results.

The U.S. market declined by 13% during the same period. That is according to a new report from the California New Car Dealers Association. It is the fourth double-digit decline in a row brought on by the pandemic and supply chain problems that have limited inventory even though demand was there.

Best selling companies in the report were Toyota followed by Tesla. While most brand sales declined in the third quarter, Tesla sales were up 63%. Infiniti and Land Rover sales declined the most. The New Car Dealers expect California sales to increase in 2023 after two years of decline. Car registrations were down 22.7% while light trucks fell by 13.8%.

Indeed the pace should improve in the fourth quarter of this year, dealers expect. They estimate by the end of the year sales will be off by less — down just 9.7 percent compared to last year. Dealers are lowering projections to 1.68 million registrations for all of 2022. That compares to 2.09 million new automotive sales in 2019 – before the pandemic.

Electric car sales climb

Electric vehicles increased market share in the 3rd quarter of 2022 to nearly 30% of all vehicle sales in California, figuring both electric and hybrid units. Sales of electric powered cars were just 2% of all sales in 2016 in California but now are 16%. Incentives helped boost electric sales even as the state promises to phase-out the sale of gasoline-powered vehicles by 2035.

Bigger gas stations / independents suffer

This trend is impacting gas stations’ future – particularly many mom and pop-owned properties even as discounters appear to be building larger stations.

That includes locations in the Central Valley like Yokut gas, owned by The Rancheria, which has plans to add 12 new fueling stations to their inventory of 16 gas pumps near Lemoore. In Visalia, Fastrip, based in Bakersfield, plans to build a new 24-pump gas station on Mooney and Costco is now proposing a second north side location in Visalia that will feature 32 fueling sites.

Meanwhile, the Wall Street Journal reports that more communities in California’s wine country are telling gasoline stations to set up shop somewhere else. Eight cities and towns in Napa and Sonoma counties have banned the construction of new gas stations.

According to the National Association of Convenience Stores, there are a little over 5,000 independent gas station owners in California, and they’re already something of an endangered species. In interviews with the Los Angeles Times, many of these owners said the state mandate will accelerate the demise of their business model. One estimate suggests half these stations could close by 2035.

Under the Air Resources Board rule, sales of gas-powered cars will taper off over the next 13 years. But owners of legacy vehicles will still be able to drive and/or or resell them. With some 24 million fossil-fueled vehicles in the state now – that could fall to 16 million by 2035.

Some say we are not transitioning fast enough. Leading auto manufacturers, including Toyota, Volkswagen, and Hyundai, are transitioning far too slowly to zero-emission vehicles, which has dangerous consequences for our planet, said Benjamin Stephan, climate campaigner at Greenpeace Germany, in a statement recently.

Back in California used car registrations fell 13.1% over the first nine months of 2022, says the report. On the plus side, used vehicle prices have dropped in the past few months that will likely spur sales. Lower sales are impacting big players in this industry like Carvana. Carvana sold 102,570 cars in the U.S. in Q3, down from 117,564 in Q2 2022.

Returning to new vehicle sales in Q3, in the full size pick-up category, Chevrolet edged out Ford F-150 registrations followed closely by Ram pick-ups in California.

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