LOS ANGELES -- The new-car business has been so bad in California that when the state finally posted a sales increase in the first quarter of this year, all dealer Steve Snyder could say is "sales in California have gone from horrible to bad."
First-quarter retail sales in recession-stricken California were up 11 percent over last year, according to Experian Automotive. That, coupled with a 4 percent increase in Florida, has fueled a sense that a recovery may be stirring in the critical Sun Belt bookends.
So why isn't Snyder, vice chairman of the California New Car Dealers Association, giddy over the 20 percent year-over-year increase in retail and fleet sales in the first quarter?
"Even though we were selling cars in the first quarter, no one is making any money," says Snyder, owner of Gold Rush Chevrolet-Subaru in Auburn. "Credit is better, but people with lousy credit aren't even coming in. A lot of dealers don't have money to advertise.
"We're not out of the woods yet."
California and Florida have striking similarities. In both states, auto sales soared amid booming real estate markets during the industry's good years. And sales slumped badly when jobs, real estate values and credit crashed in 2008.
Easier credit, particularly for leasing, is helping boost deliveries. For companies such as AutoNation Inc. and Southeast Toyota Distributors, which have half their sales in the two states, a recovery would be huge.
From 2004 to 2007, nearly 40 percent of car buyers in California and 25 percent in Florida used home equity. Feeling flush with quickly appreciating home values, those buyers liked high-end vehicles.
"In those days, everybody was looking for a fully loaded car," says T.Y. Lai, western region COO for DCH Auto Group, which operates 12 dealerships in California. "They felt their home equities would rise about 10 percent every year, so they didn't care if they bought a more expensive car."
Even now, sales in both states are still far below pre-crash years. California's retail unit sales dropped 35 percent from the first quarter of 2008 to 2010. They fell 39 percent in Florida for the same period.