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Car dealers optimistic as '15 models appear

The 2015 Nissan Murano is unveiled during a

The 2015 Nissan Murano is unveiled during a media preview of the 2014 New York International Auto Show April 16, 2014 at the Javits Center in Manhattan. The show opens with a sneak preview to the public April 18 and runs through April 27. Credit: Getty Images / Eric Thayer

Car sales on Long Island are strong on the eve of a new model year despite persistent worries about the local economy and middle-class incomes.

The Island's auto retailers have clawed their way back from the Great Recession and, along with industry experts, are cautiously optimistic that sales in the 2015 model year that starts Oct. 1 will grow.

In Nassau and Suffolk, new-vehicle registrations -- which closely track sales -- have soared from a low of just over 157,000 vehicles in 2009, the bottom of the recession, to 210,468 last year, up 34 percent, said auto data provider R.L. Polk & Co. That's comfortably above the pre-recession total of 191,000 in 2006, and an increase from 202,600 in 2012.

The most recent figures this year, through June, show local registrations of new cars and trucks were up 2.8 percent from a year earlier, to 106,300 new vehicles.

At the 22-store Atlantic Auto Group, which handles 13 domestic and import brands, co-owner Michael Brown said he anticipates sales will increase 12 percent this year compared with 2013. "I would say, the way things look right now, with the [interest] rates staying low, I don't see why we can't expect a similar year next year."

Particularly strong performers have been Nissan, which is in the midst of an extensive product revamp, and Jeep, which also is rejuvenating its model line. "Jeep is red hot," Brown said.

Slow start to 2014 sales
For many dealers, 2014 got off to a slow start as a cold winter kept many shoppers home. Although most of the buyers presumably bought a vehicle eventually, the harsh winter brought extra costs for snow plowing and heat that are difficult to recoup. Lee Certilman, owner of Nardy Honda in St. James, said, "In the first half of the year, we were running slightly behind last year, but I don't think I'm going to end up there. I'm seeing what I think is going to be a strong last two quarters."

That slow start could help explain why the increase in local new registrations in the first half of this year over last trailed that of the nation, where sales rose 4 percent.

Martin Melkonian, an associate professor of economics at Hofstra University, offers another possible explanation: The Island's economy is recovering more slowly than that of the nation. He points to the loss of thousands of high-paying jobs as companies such as OSI Pharmaceuticals and Grumman leave or downsize -- jobs that in many cases have been replaced by others offering lower pay and fewer benefits.

The latest census data show that median household incomes for Nassau and Suffolk were lower in 2013 than five years earlier.

"Long Island seems more or less stagnant in terms of its economic position at this point," Melkonian said.

Dealers and industry analysts base their optimism for the coming year on an improving national economy, the lure of new models and the wide availability once again of credit -- especially for "subprime" borrowers, those generally with credit scores of less than 640, as the credit reporting company Equifax defines it.

"It seems now that things are back to a normal basis," said Certilman of Nardy Honda. "The banks are lending. They have some stricter guidelines, but they don't get in the way of anybody getting loans."

This spring, national auto loan originations were at their highest level in eight years at $905 billion, according to the Federal Reserve Bank of New York.

Helping fuel sales are compact and midsize SUVs, which have been growing in popularity as sporty alternatives to minivans and station wagons and thriftier alternatives to gas-guzzling large truck-based SUVs.

Array of choices this fall
Shoppers this fall and winter will find at least 14 new or redesigned small or midsize SUVs, including the Audi Q3, BMW X4, Honda HR-V, Kia Soul EV, Lexus NX 200t, Lincoln MKC, Mercedes-Benz GLA 250, Porsche Macan, Jeep Renegade, Chevrolet Trax, Ford Edge, Land Rover Discovery Sport, Nissan Murano and Volvo XC90.

They'll also see an array of other light trucks, sedans and sporty cars among the 2015 models; some are already on sale and others are due this fall and early next year.

Light trucks, including SUVs of all sizes, pickups and vans, accounted for 52 percent of new vehicles registered this year through July in the nine-county New York region that includes the five boroughs of New York City, Long Island and northern suburbs, according to a report by a consultant to the Greater New York Automobile Dealers Association. That's up 4.8 percentage points from a year earlier.

New pickups include the redesigned compact Chevrolet Colorado and GMC Canyon.

Among new family cars are the redesigned Chrysler 200 and revised Dodge Charger and Subaru Legacy, plus a Toyota Camry and Volkswagen Jetta with some styling tweaks.

New luxury models include the Acura TLX, replacing the TL and TSX; the redesigned Audi S3 sedan; a new Cadillac ATS Coupe; and a redesigned Mercedes-Benz C-Class.

Sporty models include a redesigned Ford Mustang, Chevrolet Corvette, two Lexus RC coupes, Mazda MX-5 Miata, the Mercedes-Benz AMG GT, Subaru WRX and WRX STI, and Dodge Challenger.

Long Island's bestselling brand, Honda, has redesigned its subcompact Fit for 2015 and plans to add a small SUV based on it next year, the HR-V.

Owner Gary Schimmerling of Babylon Honda in West Babylon said his sales are up 7 percent so this year compared with 2013. The CR-V, Accord and Civic are his bestsellers, in that order. He's built a new service shop nearby, has repaired extensive damage to his showroom from last month's rainstorm and is, with fingers crossed, looking for a strong year in 2015.

Higher prices, incentives
Shoppers will find higher vehicle prices in many showrooms. TrueCar Inc., an online company that matches buyers with member dealers, estimates that the average transaction price for cars and trucks -- after factory and dealer discounting -- was $31,610 last month, up 2.4 percent from a year earlier.

TrueCar said, however, that buyers of the four most popular family cars -- Honda Accord, Toyota Camry, Nissan Altima and Ford Fusion -- were being offered the highest incentives, averaging $3,251 per car.

Fear of sales stagnating
Even with all the new hardware to show, the outlook is not entirely rosy, from the car dealers' point of view.

Much of the growth in sales in recent years, nationally and locally, has been attributed to pent-up demand from purchases postponed during the recession, which began in late 2007 and officially ended in June 2009. Now there's evidence that demand has largely been satisfied.

"I think the pent-up demand is starting to crack," said dealer Mark Calisi, whose Eagle Auto Mall in Riverhead retails Chevrolets, Kias, Mazdas and Volvos.

He also notes middle-class salaries are hardly rising at all. "Our sales will start stagnating across the board for that demographic of customers," he said. Bad publicity over General Motors recalls of millions of cars caused his Chevy sales to trail last year's slightly, he said, despite the strength of the Silverado pickup.

Overall, his business in full-size pickup trucks has been boosted by heavy construction activity in the Hamptons. Calisi also hopes this year to reopen his Jeep franchise, lost during the recession as Chrysler Group pared its retailing ranks.

Nationally, auto analysts at LMC Automotive U.S. Inc. of Troy, Michigan, expect sales of new cars and light trucks to total about 16.4 million vehicles this year -- up 5.8 percent from last year. But they forecast an increase of less than 2 percent for next year, to about 16.7 million. "We see incremental growth every year," said LMC analyst Steven R. Elliott.

Still that total would surpass the 16.5 million sales in 2006 before the recession.

"If the economy stays the way it is and the stock market is still doing well, we should be OK," said Schimmerling of Babylon Honda.

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