While national auto sales figures continue to lag behind the record pace set in 2016, Colorado’s market is surging.
New vehicle registration were up 7.8 percent in the first seven months of the year over the same period in 2016, and increased a staggering 26.8 percent this July compared to last July, according to a report released Tuesday.
A massive hail storm could be to blame for the anomaly last month. But dealers say Colorado’s market is booming — even without the violent weather.
Tuesday’s report by the Colorado Automotive Dealers Association also showed strong growth in used-car sales. The number of registrations of late-model used cars — those seven-years old or newer – rose 13 percent during the first seven months of 2017 compared with the same period of 2016.
In total, 248,541 new and used cars were registered in Colorado in the first seven months of in 2017, up from 225,023 registered by the end of July 2016, according to the data collected by Experian Automotive.
CADA president Tim Jackson said the growth is likely driven by two things: a strong local economy and destructive weather.
Auto registrations are counted when they are processed by state, not when a car rolls off the dealership lot. This means many of the registrations recorded in July could be vehicles purchased in the aftermath of the May 8 hailstorm that ravaged the metro area, including many auto dealerships on the west side of Denver. That storm was estimated to have caused $1.4 billion in damage statewide.
Registration figures for this July are dramatically higher than those for the same month last year. New-car registrations jumped 26.8 percent to 18,686 last month compared with 14,742 registrations in July 2016. Used-car registrations increased 29.7 percent, jumping to 20,134 from 15,526.
“I think hail is going to be a big contributor,” Jackson said. “I also think the very good economy is going to be another. Consumers statewide are benefiting from low unemployment, low fuel prices, affordable interest rates and readily available credit for most buyers.”
Colorado’s unemployment rate was the lowest in the nation, 2.3 percent, in April and continues to sit below the national average.
Jackson emphasized the year-to-date figures are a more reliable reflection the Colorado market.
Jon Medved owns and operates six dealerships spread over two Front Range locations — one in Castle Rock, the other in Wheat Ridge.
The Wheat Ridge location was far enough east to avoid the worst of the hail that wreaked havoc on lots in the Golden and Lakewood areas. About 900 vehicles were impacted, he said, and of those, only 15 required serious body work. Still, with the help of a payment from his insurance provider, Medved was able to offer some discounts to buyers this summer.
He theorized the freak storm may have driven growth in auto sales in two ways: dealers who got larger insurance settlement than he did passing savings on to buyers and drivers whose cars were totaled in the storm going out to buy a new ride.
Even without the hail, Medved said the Colorado auto market is unique. The state is growing and attracting many new residents from places with mild winters or no winter at all. They come to Colorado and realize they need a different type of vehicle, Medved said.
“They want to get into something that is all-wheel drive or four-wheel drive,” he said.
Medved’s observation is supported by the CADAs report. From January to July, registrations of passenger cars increased by less than 1 percent in Colorado, while registrations of vehicles classified as light trucks increased 10.9 percent.
Kelley Blue Book in July predicted a 6 percent decrease in new car sales in the U.S. from 2016 to 2017. July was the fifth straight month national sales lagged behind seasonally adjusted sales rates, the longest streak since September 2014 through February 2015, coming on the heels of record U.S. sales in 2016.