Posted on 10/23/2003 5:35:10 PM PDT by heleny
Report: Tripled Vehicle Registration Cost Sends New-Vehicle Sales Plummeting
Retail Sales Drop By 40 Percent This Autumn
POSTED: 11:48 a.m. PDT October 23, 2003
UPDATED: 12:09 p.m. PDT October 23, 2003
LOS ANGELES -- Since California's vehicle registration fee tripled at the start of the month, new-vehicle sales have plummeted, with luxury-vehicle sales hit especially hard, according to J.D. Power and Associates.Based on retail sales through Sunday, luxury vehicle retail sales in the state dropped by 40 percent from September to October, compared to a decline of 19 percent over the same period a year ago.
Total industry retail sales in the state declined 35 percent over the same period compared to 18 percent a year ago, according to Power Information Network, an affiliate of J.D. Power and Associates.
Luxury-vehicle retail sales nationwide, excluding California, declined 25 percent from September to October, compared with a 17 percent dip last year, while the industry-level retail sales dropped 27 percent from September to October, compared with a 21 percent decline a year ago.
The data is based on retail sales transactions through Oct. 19, 2003.
To help plug a $38 billion hole in the state budget, in June, Gov. Gray Davis signed an executive order for the Department of Motor Vehicles to begin charging California drivers who registered their vehicle on or after Oct. 1 up to three times the amount of the previous fees.
The fee amounts to 2 percent of the vehicle's value.
"We saw a spike in sales in California the last several days in September, with consumers trying to register their vehicles before the new law went into effect," said Tom Libby, director of industry analysis for PIN. "It's apparent California consumers are hesitant to buy right now."
He noted that Gov.-elect Arnold Schwarzenegger has vowed to repeal the car tax on his first day in office.
When Davis (through Steve Peace) tripled the VLF at the end of June or beginning of July, they said the DMV needed 60 days notice, which is why the tripling began Oct 1st.
Who knows if the Davis Democrats will cause trouble delaying the change?
What made sales plummet is the fact that Arnold (and others running for CA Governor) promised to repeal the tax. People stopped buying, waited to see if the recall would pass, and now that it has passed, are waiting for the repeal to take effect.
Because we have two children 16 & 18 years old attending school and living at home we are paying registration fees on both of their cars, my car, my husbands car, 2 old restored fun cars, one travel trailer and 1 motorcycle. Unfortunately, over half of these vehicles have registration due on December and January. Our newest vehicle is a 1996 Ford Van. I am scared to get the tax bill because I open the statement for the 1995 Dodge yesterday and it was almost $400!!!!!
Thank goodness we are very conservative with our budget. We will get through this but I worry about young couples with little children, living check to check. This is going to wreck a lot of Christmas'.
It might represent a buying opportunity for Californians, though. I can see heavy discounts offered in the last week of December in order to stimulate sales before the year is up. Many dealers might eat the amount of the tax increase, rather than just close up shop for three months.
Many people may also be not buying as a form of tax protest as well.
It was done away with because it caused a massive decrease in sales of items subject too it, raised little revenue and was a net revenue loss because of lost jobs.
About $750/month. I thought that was outrageous, so when I bought my Lexus I took the hit up front and paid $40K in cash...and was the dealership ever disappointed! They love all that interest - as it was, they only made about $500 off of me on the transaction.
Unintended Consequences: It's not just an idea, it's the law.
Not to mention the loss from all the people who decide it would be worth the extra trouble/risk to buy and register out-of-state or in Mexico. I seem to be seeing more Baja and Sonora plates than ever.
Even if the drop in sales is only temporary, 3-5 months out of a year may cause a noticeable dent.
Yes, there are dealers now advertising that they'll give you an additional discount equal to the increased fees for the first year.
I've never been able to figure out exactly how much money they make on a particular cash sale. The dealers always claim they lose money when they sell below their "invoice price," but who knows how many rebates and incentives they get that we don't see.
That's why I never understand why people make car payments. They should just buy cars they can afford, then save up what they didn't pay out in interest ---- and soon they can buy whatever car they want with cash.
Plus part of the price of a car goes into the salaries and commissions of the dealer's employees. Those people pay sales and income taxes too, so that's yet more money the government won't see.
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