Auto industry has mixed results in struggling economy

August 10, 2011 7:56:38 PM PDT
While some are snapping up iPads, others are struggling to keep their cars on the road. Many drivers are putting off maintenance, and those who need new cars are buying used instead.

Gyrations in the stock market have a strong impact on consumer spending.

Auto industry analyst Jesse Toprak says there's an 80 percent correlation.

"You turn the TV on, stock market's up, stock market is down; it's almost like a stop-and-go signal for consumers' big ticket purchase patterns," Toprak said.

Auto dealers have seen single and even double digit sales gains compared to a year ago, after the recession forced some showrooms to close.

But some consumers are reluctant to spend money right now. When they do, it may not be by choice.

Rocco and Jean Tiffe bought a used truck today to replace one with a bad transmission.

"I don't like car payments; I always pay cash, we didn't have that kind of cash right now," he said.

A AAA survey says 54 percent of Americans are keeping their old cars running to avoid buying a new car. Twenty-two percent say they can't afford a $2,000 repair bill, while 18 percent say they can't afford a $1,000 bill.

"The economy is just so unpredictable right now," San Jose resident Lois Maslowski said.

"I'm aware that the economy is very fragile, so is my job; I can't see much further than the next couple of months," San Jose resident Christine Byram said.

Those fears may be helping some businesses, such as Jiffy Lube.

"It has increased our business because people are not wanting to replace their vehicle at a sooner time, so they're doing a lot of the maintenance that maybe they might have neglected in the past," Jiffy Lube manager John Green said.

Auto dealers remain optimistic there's pent-up demand among consumers who have driven their cars over 100,000 miles.

"Now we're getting all these trade-ins with much more than that on them, and people have been waiting and putting it off and putting it off, and they just can't keep doing that," Normandin Chrysler President and General Manager Mark Normandin said.

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