The pessimism of the Great Recession is being replaced by optimism for a growing number of small business owners like Mark Fischer, according to Chevrolet.
Fischer, vice president of Katch Kan USA in Houston, provides support for the oil-drilling industry in Texas, which Fischer estimates saw a 50 percent decline in activity during 2008 and 2009. As industry activity recovered in 2010, it has helped Katch Kan triple in size.
“We have experienced a lot of growth over the past couple of years,” said Fischer. “In 2008, we had six employees and two trucks in the field. Last week, we just added an eighth truck to the fleet, a new Silverado 1500, to support 25 employees working in the field 24/7.”
Chevrolet says its sales to small businesses such as Katch Kan USA have increased for three consecutive months. In the fourth quarter of 2010, Chevrolet dealers recorded a 36 percent increase in small business sales, almost three times the increase for the industry, indicating that small business across the U.S. are beginning to reinvest.
Additionally, Chevy says, in the fourth quarter of 2010, sales to small businesses – those that purchase fewer than five vehicles per year – significantly outpaced the total sales increase for the brand nationally:
October November December
Small Business Sales +15 % +39 % +54 %
Total Sales +7 % +18 % +9 %
“Small businesses put off capital expenditures such as vehicle purchases in order to weather the economic storm,” said Don Johnson, GM vice president, U.S. Sales Operations. “With the continuing improvement in consumer spending, and improving profitability of these businesses, we’re beginning to see a significant influx of small business buyers to Chevrolet showrooms.”
That increase supports findings in a National Federation of Independent Business survey, which found that small business owners’ optimism reached its highest level in 2010 during the fourth quarter. The study also pointed toward an increasing likelihood that small businesses will begin hiring in the near term.
Business owners’ increased confidence, combined with the increasing age of U.S. vehicles, suggests small-business sales will continue to grow. According to RL Polk and Company, the average vehicle age has increased to 10.2 years through October, 2009 – the first time that the American vehicle fleet has ever been more than 10 years old.
For example, Sunwest Air Conditioning in Costa Mesa, Calif. recently purchased two new Silverado HD trucks with service bodies to replace older vehicles in their fleet.
“We have nine trucks in our fleet, some with a lot of miles, said Sunwest owner Mark Dalessi. “In the beginning of 2009, we were just happy to have any work. But business started picking up towards the end of 2009, and 2010 turned out to be a decent year. As 2011 is shaping up to be a good year for us, we decided it was time to replace our oldest trucks.”
Key facts about small business and the U.S. economy per Chevrolet:
• In Q4 2010, small businesses increased their employment by 127,000 from Q3 while large business added 14,000 more jobs.
• The Small Business Optimism Index reached 101.3 in Q4, the highest it’s been since Q4 2007 indicating a likelihood of hiring by this sector in the short term.
• In Q4 2010, more small firms expected the economy to improve while more expected the economy to weaken in Q1.
• Of small businesses surveyed in Q4 2010, the percentage who say now is a good time to expand reached its highest level since Q3 2008.
• Real personal consumption expenditures increased 0.3 percent in November from October, pointing to strong growth in overall consumer spending in Q4.
• MasterCard Advisors’ SpendingPulse showed retail sales, excluding autos, rose 5.5 percent Nov. 5 through Dec. 24, from a year ago. The best increase in 5 years.