Our offices are located in the Tampa Bay, FL region. Though there was an earthquake in California yesterday, our local news made us shake when it was reported that the parent company of Bennigan’s, Steak & Ale, and Ponderosa restaurants would be liquidated, closing several restaurants across the Tampa Bay area. Many members of our staff loved the $4.99 lunch menu, but now we’ll have to revert to old-fashioned fast food choices for that kind of money. With that doom and gloom though we have the latest thoughts of Focus, Incorporated; a marketing agency specializing in direct-to-consumer advertising in the automotive industry. Though these are two different industries, both are a reflection of consumer confidence. See what Focus has to say about a potential economic recovery after the jump…   

Tampa, Fla.—July 29, 2008—Businesses across the U.S. are searching for signs of an economic recovery, and automotive dealerships are among the lot. With automotive sales down in 2008, dealerships have been forced to make drastic changes to inventory and incentive programs to encourage consumer spending. Consumer demand for automobiles has also changed production schedules for automobile manufacturers. Everyone in the auto industry is questioning, when will this be over?

Focus Inc CEO, Raul Vazquez, predicts an automotive market recovery will happen in mid-2009. His indicator: home prices.

“The housing market has been a prime influence on the automotive industry,” says Vazquez. As the housing market began to collapse in 2006, the automotive market followed suit. Automotive sales began to drop in late 2006, and the Wall Street Journal reported automotive sales figures for 2007 were projected to be the lowest in nearly a decade. In 2008, major changes have been made to incentive programs to compensate for revenue losses, and dealers have had to adjust inventory to meet changing consumer demands.

Vazquez explains, “Many attribute changes in the automotive industry to explosive gas prices, but in reality, gas prices have no direct relationship to total unit auto sales. Gas prices have helped change what kinds of cars people are buying, but it’s had no direct affect on total units sold. In actuality, total numbers have changed because the housing decline has given consumers and lenders less flexibility with their budgets. Moreover, in 2006 when the auto market began to experience serious decline, gas prices were well under $3.00 per gallon.”

Due to this housing market slump, lenders lost flexibility and tightened up their purse strings, making it harder for consumers to get loans of any type. So, consumers have begun to change their spending behavior, which has actually helped some dealerships gain traction despite the dwindling economy. For instance in 2008, overall new automobile sales are reported to be down, but Certified Pre-Owned (CPO) vehicle sales are up. Sales in “gas guzzlers” are down; energy efficient car sales are up. In fact, Volkswagen reported CPO auto sales were up 122 units in June 2008 compared to sales in June 2007, and Honda, known for its fuel efficient cars, has reported little to no loss despite the gloomy economic market. The fact of the matter is people still want cars; they just want different cars.

Predictions among economists regarding the start of the housing market recovery range from late-2008 to early-2009. As the market rebounds, Focus expects a rapid improvement for the automotive industry to closely follow. As home prices rise again lenders and buyers across the country will find more flexibility, and dealers who have worked hard to adjust through this supply and demand evolution will not only survive in the coming months, but they will thrive.

Focus, Inc. is currently working with automotive clients determined to improve their bottom line despite the tough economic times. Focus is helping their clients reach more consumers in search of Certified Pre-Owned vehicles, as well as sub-prime customers who need a little extra help these days to qualify for auto loans, and Vazquez reports, “business is booming.”