We Are What We Drive
And more and more, we're driving trucks.
by Cynthia Furlong Reynolds
Published in December, 2018
Can you judge a book by its cover? We're told we shouldn't. But can you judge a community by the vehicles in its driveways? Perhaps so.
What are residents of Chelsea, Dexter, and Saline buying? "Trucks. Hands down," says Gary Rippee, sales manager for Chelsea Chevrolet Buick, who explains that includes SUVs, crossovers, and the traditional pickup truck. Nearby dealers agree.
"Years ago, an occasional neighbor would have a pickup, and you might borrow it once a year to haul something. Now everyone has a truck," says John Cooper, acting manager for Chelsea's Golling Chrysler Dodge Jeep Ram dealership. "Trucks have replaced the station wagon and minivan as the family car."
Trucks are so popular they're knocking some sedans out of production lines. In 2016, Fiat Chrysler announced that it would stop making sedans in the U.S. Ford followed this year, announcing it would discontinue the production of every car except the Ford Mustang.
The Chelsea market for sedans is small--"and primarily consists of older couples whose children are grown and gone," Cooper says. "But even then, many older people like the fact that they can sit up higher and feel safer in a smaller SUV."
This shift to trucks is dramatic within the automobile industry and on city streets, but not so much for the people of Chelsea and nearby townships, says Suzie Palmer Weber, whose family owned Palmer Ford, Michigan's oldest Ford dealership, until 2009.
"My grandfather, Leigh George Palmer, was a civil engineer," she recalls. In the early 20th century, he worked on a big project--probably the Detroit-Windsor railroad tunnel--but "when that job ended, the country was in a recession, and there were no real jobs available," Weber says. "So his father told him, 'For $100, we can open a dealership for Ford Motor Company.' That's what they did. My grandfather never really liked the car business, but my father [George Leigh Palmer] was a greaser who loved everything about cars."
Palmer Ford opened its doors on Main
St. in Chelsea on April 15, 1912--the day the Titanic sank with a Chelsea-area resident aboard. The dealership closed ninety-seven and one-half years to the day later, on October 15, 2009, in the midst of a recession and rising gas prices.
"Until then, people here were always interested in trucks, and we were interested in selling them--the bigger the vehicle, the more money a dealer makes," she says. But in 2009, "we had an inventory of 'gas guzzlers' at a time when gas prices were soaring, and everyone was concerned about gas consumption. When diesel hit five dollars a gallon and gasoline prices rose to $4.80, everyone began looking for small cars--no one wanted the Expeditions, Navigators, Tahoes, or Suburbans any longer. On top of that, the [federal] 'Cash for Clunkers' program immediately wiped out our inventory of small cars, and we couldn't get more. What we had left in stock--all those trucks--were suddenly on the do-not-buy list."
How times have changed.
"Now, only nine years later, everyone drives a truck, SUV, or crossover," Weber observes.
Cooper agrees. "In days gone by, if people had a truck, it was their family's secondary means of transportation. Nowadays, if they have a sedan, that's secondary ... We have farmers and people in the trades buying standard pickups they'll use as workhorses and drive for 300,000 miles, and we have people buying expensive trucks fully loaded, to cart kids around, haul boats, or tailgate at football games."
The way vehicles are sold is changing, too, as local businesses like Palmer Ford give way to regional groups. Bill Golling, who already owned a Chrysler Dodge Jeep Ram dealership in Bloomfield Hills, bought the former Village Chrysler in 2015. The LaFontaine family's twenty-two locations include the Chevy store in Dexter and the Chrysler Dodge Jeep Ram dealer in Saline.
"It's an awfully exciting time in the auto industry," says LaFontaine Chevrolet general sales manager Shaun Benard. "In recent years, Chevy has seen a fifty percent rise in truck sales and a fifty percent drop in car sales--and that includes award-winning cars with a strong track record, like the Malibu, Cruze, and Impala." The day before our interview, he sold ten trucks and not one car.
"Safety, technology, and comfort features are top priorities for most customers, followed by the 'value equation,'" Rippee says. Gas mileage comes a distant fourth.
That was true for the Repine family of Dexter. When they relinquished their minivan for a Honda Pilot this fall, "I would say our first consideration was safety," Deb Repine says. "We were especially interested in the blind spot side-passing feature. But that doesn't mean price wasn't a consideration. And our third criteria was to buy an SUV made in America. Our Pilot was manufactured in Alabama."
The Dexter area "has the fifth highest median income in the state," Benard points out. "We still have farmers and others living out in the country, where four-wheel- and all-wheel-drive vehicles are desirable. But we also have a lot of professionals drawn by the nearby recreational opportunities, so functionality and status can go hand-in-hand."
In one exception to the truck trend, Benard reports that Chevy's plug-in hybrid Volt and all-electric Bolt are also in demand, probably due to Dexter's proximity to Ann Arbor and its parking challenges. In addition to their environmental virtues, battery-powered vehicles can use reserved spots and free chargers in many public and university parking lots and garages. "Our Bolt sales are particularly strong, due to the Bolt's large electric range," Benard says. "It can drive up to three hundred miles without recharging. Every one I get, I sell instantly. I even had someone drive down from Northport because we had a particular color combination he couldn't get up there."
Saline is seeing the same transition as Dexter and Chelsea. "Our car line has deteriorated," says Kris Mackinnon, general manager of LaFontaine Chrysler Dodge Jeep Ram. "People want trucks, SUVs, and minivans. They look at safety features, and they want to sit up high." He's selling a lot of Ram trucks and Chrysler Pacifica minivans, and he predicts that "at least through 2020, the economy and car sales will remain strong."
"We don't see as many farmers as we used to," the eleven-year veteran of the dealership adds. "But there is still a lot of farming around us. I sell vehicles to a lot of U of M professors, coaches, and professionals, so our customers' average credit score is very high. Our schools are our biggest asset here, and younger, more affluent people are moving in because of the schools' reputation."
Some dealers are hoping that automobile sales--as well as Michigan jobs--may get boosts due to the renegotiated North American Free Trade Agreement (NAFTA). The new rules require that 75 percent of vehicle content must originate in North America (up from 62.5 percent); 70 percent of all steel, aluminum, and glass used in auto production must originate in North America; and 40 percent of an automobile and 45 percent of a light truck must be produced by workers earning an average wage of $16 per hour.
"That means that some people will have new jobs or better-paying jobs, which should help the economy and car sales," Rippee suggests.
The downside is likely to be even higher costs. "Frankly, I'm frustrated about the new NAFTA agreements--the price of cars is getting scary," Mackinnon says. "The average price of cars sold here used to be $31,000. Now it's $42,000--the figure rose from last year and will rise again. On top of that, healthcare for employees and interest rates on cars are rising.
"Dealers pay far more in those costs than we used to. We carry 350 cars on our lot, which means we pay $12 million in fees for that, and the banks are charging us more interest nowadays."
As prices rise, more people are leasing cars instead of buying them outright. "Southeast Michigan tops the nation in the ratio of leases to purchases," Cooper says. "People around here really know and appreciate cars, and they like the idea of having a new car every two or three years."
According to Rippee, 50 percent of his Chelsea deals are leases. "Our average buyer is on the lower end of the spectrum in terms of income and credit," he says. "I expected the opposite when I came here from Jackson after sixteen years in the business. I don't think it's the economy, which is strong now. Is it the demographic? Younger buyers? I see a lot of difficult financial situations, and I'm working harder to put packages together."
In addition, many local farmers maintain the philosophy their fathers and grandfathers espoused: "If you can't pay cash, you don't need it."
According to Benard, his sales in Dexter range from "50 percent to nearly 80 percent leases."
Mackinnon says 80 percent of his customers in Saline lease their vehicles. "That's pretty standard for Michigan, Ohio, Illinois, and Indiana, because we're all car-manufacturing states, and lots of customers are employees, friends, or family members of people in the auto industry. They get good deals, and they like driving a new car."
They're also more informed than they used to be. "Today people do a lot of research, and for that reason, we have both a regular showroom and a digital showroom online," Mackinnon says. "Our shoppers have been on their phones or computers studying cars for hours. They come to us for a test drive."
Like dealers in Chelsea and Saline, he notes that the amount of time a customer spends in the showroom has dropped significantly. "We can offer a test drive, discuss numbers, prepare the car, get it all cleaned up, and watch it leave our parking lot in a couple of hours. Sales are a lot faster than they used to be."
"In the old days, people shopped around and spent hours at dealerships, sitting in different cars, taking them for test drives, discussing features and options, and negotiating prices," Benard says. "Nowadays, our average customers have spent sixteen or eighteen hours researching vehicles online. They are very knowledgeable about features and price when they come through our doors. They ask to do a test drive to make sure of their choice, but they know what they want, what features are available in the different models, and what they should expect to pay."
High school parking lots reflect the changing times. Not so long ago, students at Saline High celebrated the end of the academic year by driving tractors to school on the last day. Recently one mother of a Saline High graduate drove by the parking lot and was amazed at the number of BMWs she saw--and "new, upper-end BMWs" too.
A recent visit to high schools in all three communities found some aging sedans and pickup trucks. Often, though, shiny new SUVs and crossover models were parked next to them.
Mackinnon understands the trend, not only because these are relatively affluent communities. "Parents can fork out $15,000 for a used car or finance it for $250 a month, or they can pay $300 a month [to lease] a new vehicle with the latest safety features. And those new vehicles are trucks or SUVs."
Unfortunately, the resurgence in truck and SUV sales came too late for Michigan's oldest Ford dealer. "But I'm proud of the reputation my family built in the industry," Suzie Palmer Weber says. "My father always said, 'Anyone can sell you a car, and customers will drive miles to get a good deal, but they won't drive more than five miles to service their car.' Our business is--and always has been--all about service. And we were--and are--proud of our reputation."
She laughs to recall that she entered the business at the age of ten, doing inventory for her father. "I can still tell you the numbers for Ford parts," she says. "Nearly ten years out of the business, I still see a fair number of 'Palmer Ford' stickers on the backs of vehicles around here, I'm proud to say."
[Originally published in December, 2018.]
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