Story last updated at 12/10/2008 - 11:29 am
AMARILLO, Texas - The economy may be in recession in most of the country where car dealerships are folding daily, but auto sales are humming along in the Texas Oil Patch.
Pete's Car Smart Kia, now open, has become the third multimillion-dollar dealership to start operating in the same Amarillo neighborhood in the span of a year.
The new $2.2 million Pete's Car Smart joins Street Toyota-Scion and L2 Autos in a quest to lure car shoppers.
The $9 million Street Toyota-Scion opened in April, and Oregon-based Lithia Motors opened the Amarillo location of its L2 used-car chain at the beginning of 2008 at a cost of $6 million to $8 million.
A concentration of car dealers in a neighborhood "has always worked well," Street Toyota-Scion owner Joe Street said. "It's sort of like at the mall. People like to shop where they can shop many brands."
Car sales have "dropped off a little bit," Pete's Car Smart owner Pete Vaughan said, "but I think our biggest problem is, on Georgia Street, we did not have enough room to properly display our cars."
Consumer confidence will rise again, Vaughan said, on the strength of Amarillo's economy.
"We can count our blessings that we're not in Detroit or California or Florida," he said.
Goldman Sachs analyst Patrick Archambault said last week that plummeting consumer spending and tighter credit will depress auto sales nationwide into 2010, The Associated Press reported.
Archambault cut his 2008 sales forecast to 13.4 million from 13.8 million, his 2009 estimate to 11 million from 13 million, and his 2010 estimate to 13 million from 14 million, the AP said.
Amarillo National Bank analyzes local vehicle sales statistics in two-month intervals, and in September-October, new car sales showed slight improvement, while sales of used vehicles were down, ANB President Richard Ware said.
"And we think the new (increase) is a reflection of better gas prices," Ware said.
Sales are off, Ware said, because factory financing is harder to obtain.
"So the strengthening we've seen because of lower gas prices is now being offset by tougher financing terms," he said.
Amarillo National, however, is making more used-car loans than it has in the past, and the number of its past-due auto loans is down, as well, Ware said.
"Every year, gas goes up when school lets out and gas goes down when school goes back in session," Vaughan said. "And every year when you elect a new president, the economy gets a little shaky until after he's inaugurated. Then, the economy gets back up and takes off."
Vaughn and other investors are confident enough in the Amarillo economy that they continue working to recruit retail businesses for a development planned for a U-shaped piece of property surrounding the Kia site, he said.
"We're working on some exciting things," Vaughan said. "We're going to get some retail stores or restaurants or something to make this a nice little corner here."