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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (1659)	10/26/2003 1:23:33 PM
From: Ramsey Su	Respond to of 110194

Now I am actually looking at flames from the Scripps Ranch fire.

To: Ramsey Su who wrote (1659)	10/27/2003 9:58:57 AM
From: ild	Respond to of 110194

Car sales plunged after hike By Janet Adamy and George Avalos CONTRA COSTA TIMES Car sales in California fell 35 percent after the state vehicle license fee tripled in October, according to a survey released Thursday by a J.D. Power and Associates affiliate. The news is a sign that the fee increase -- intended to boost the state's ailing budget -- may instead be eroding sales tax revenues that fund state and local governments. A decline in sales of big-ticket items such as automobiles may also end up hurting the economy, at least in the short run. Gov.-elect Arnold Schwarzenegger has said he will repeal the fee hike when he takes office in mid-November, and a Schwarzenegger spokeswoman said that drivers who paid the increased fee will get full refunds after the change takes effect. But since it's unclear when that will happen, the tripling of the license fee appears to have chilled buying. Car dealers say that some buyers simply shifted their purchases to September, which spiked demand during a month that's generally a strong one for sales. But they say that although car sales should rebound after Schwarzenegger revokes the fee, a chunk may be gone for good. "These revenue losses are real and will likely continue unless something changes," said Brian Maas, government and legal affairs council for the California Motor Car Dealers Association. Power Information Network, an arm of J.D. Power and Associates, measured the 35 percent drop by calculating average sales per day through Sunday. By comparison, sales during the same period last year fell 18 percent. Sales of luxury cars fell 40 percent between the two months, compared with 19 percent in 2002. "A 40 percent drop is frankly very large," said Tom Libby, director of industry analysis for the Power Information Network. In the country's 49 other states, car sales fell 27 percent from September to October. Luxury vehicle sales fell 25 percent. Power Information Network would not provide exact sales numbers. Amid one of California's worst budget shortfalls in history, the state raised the vehicle license fee on Oct. 1 to 2 percent of the vehicle's purchase price. The tripling returned the fee to its 1999 level. The increased fee affects not just new buyers but anyone with a California license plate who has paid their annual registration since Oct. 1. But the fee hits the heaviest when drivers first buy a car because it decreases each year the driver owns the vehicle as the value of the vehicle declines. The plunge in car sales will likely hurt the state's budget situation in two ways. First, state forecasters had assumed car sales would continue at a normal rate, meaning that the state is taking in less revenue than it expected from the vehicle license fee increase. How much less will depend on how long the sales decline lasts. Secondly, the decline in car sales will also affect the state's sales tax take. Last year, sales at car dealers accounted for 19.5 percent of the state's total retail sales, or $98 billion, according to the California Motor Car Dealers Association. It's possible that consumers will delay automobile purchases until the car tax is actually slashed again, said Christopher Thornberg, a senior economist with the UCLA Anderson Forecast, which tracks California's economy. But once it becomes clear that either the fee will be reduced by a certain date, or that the fee will actually stay the same, buyers would likely complete purchases they had delayed. "In the long run, it will all even out," Thornberg said. But for now, car dealers around the state confirm the unusual drop-off. The California Motor Car Dealers Association estimates sales have fallen between 30 and 50 percent since September. Fitzpatrick Chevrolet Buick Hummer in Concord has sold about 20 fewer vehicles so far this month than during the same period last year, said Ed Small, the dealer's general sales manager. Chris Langley, sales manager of Bob Lewis Volkswagen in Fremont, said that the rush of buyers trying to beat the fee increased sales on the last day of September, which was a Tuesday, to a level normally seen on a Saturday. Salespeople stayed at the dealership past midnight to finalize deals. "The people that are showing up at the dealership don't seem to mind, but there might be some people who are not showing up because of it, and I'm sure that's reflected in our sales and traffic," Langley said. The dealership, one of the largest in the Bay Area, expects to sell between 100 and 110 automobiles this month, down from 157 in September. Confusion over how much the fee increase would cost drivers also played into the buying chill, said Peter Blackstock, vice president of the California Motor Car Dealers Association Northern California region. Blackstock said dealers in San Diego and the Silicon Valley reported at a board meeting that some customers thought their sales tax -- not the license fee -- was tripling. Although Schwarzenegger plans to revoke the fee right when he takes office, the rollback won't take effect for 90 days, said Schwarzenegger spokeswoman Karen Hanretty. bayarea.com