Power Information Network Reports: California Vehicle Sales Rebound After Registration Fee Hike Was Reduced

WESTLAKE VILLAGE, Calif., Jan. 15 -- New-vehicle retail sales in California have increased substantially since Governor Arnold Schwarzenegger repealed the vehicle license fee increase on Nov. 1, 20037, 2003. Overall new-vehicle retail sales jumped 19 percent and luxury sales climbed 30 percent in California after the tax reduction, according to transaction data from the Power Information Network (PIN), LLC, an affiliate of J.D. Power and Associates.

"Prior to the reduction in the vehicle registration tax, Californians not only had to pay a higher tax rate for their new vehicles, but they also were preoccupied with major wildfires and a high-visibility gubernatorial recall election," said Tom Libby, director of industry analysis at PIN. "As a result, retail sales of new vehicles dropped dramatically in October and early November in California. Since that time, we've seen sales rebound significantly, to the point where they're on par with the other 49 states."

The Department of Motor Vehicles began charging California drivers who registered their vehicles on or after Oct. 1, 2003 up to 2 percent of the vehicle's value, amounting to as much as three times the amount of the previous fees. Keeping his campaign promise, Governor Schwarzenegger rescinded the fee hike on his first day in office. According to the California Department of Motor Vehicles, vehicle owners who paid the full fee will automatically receive a refund by mail.

The resurgence in new-vehicle sales in California is in contrast to the sales performance in the other 49 states. Outside California, total new-vehicle sales dropped 2 percent, and luxury vehicle deliveries eased 1 percent in the last six weeks of 2003 compared with the Oct. 1 through Nov. 16 time period.

Retail sales volume changes are based on sales volumes per selling day within each month. The period from Oct. 1 through Nov. 16 had 40 selling days, while the period from Nov. 17 through Dec. 28 had 34.

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PIN's automotive solutions are based on the collection and analysis of daily new- and used-vehicle retail transaction information from more than 6,000 automotive franchises in 26 major U.S. markets. More than 200 details from individual new-vehicle purchase transactions are aggregated, cleansed and analyzed to help dealers, manufacturers and financial institutions better align sales, marketing and product distribution strategies. PIN's industry-leading automotive solutions incorporate consumer demand and sales information to improve results in product planning, marketing, sales, and vehicle production and distribution processes for its customers including pricing, revenue management, incentives optimization and vehicle remarketing. www.powerinfonet.com