Since California's higher vehicle registration fees went into effect on October 1, new light-vehicle retail sales in California have dropped significantly, with the luxury vehicle market taking a substantial hit, according to Power Information Network (PIN) LLC, an affiliate of JD Power and Associates. The data is based on retail sales transactions to October 19, 2003.

Luxury vehicle retail sales in California declined 40% from September to October this year, compared with a decline of only 19% over the same period in 2002. Furthermore, total industry retail sales in California declined 35% from September to October of this year compared with a decline of 18% in 2002.

The Department of Motor Vehicles began charging California drivers who registered their vehicle on or after Oct. 1 up to three times the amount of the previous fees. The fee amounts to 2% of the vehicle's value. An executive order was signed by governor Gray Davis in June in an effort to help the revenue-depleted state.

"We saw a spike in sales in California the last several days in September, with consumers trying to register their vehicles before the new law went into effect," said Tom Libby, director of industry analysis for PIN. "It's apparent California consumers are hesitant to buy right now, however Governor-elect Arnold Schwarzenegger has already vowed to repeal the car tax on his first day in office."

Retail sales for the other 49 states also dropped, but the drop is marginal in comparison with California. Luxury vehicle retail sales nationwide (excluding California) declined 25% from September to October, compared with a 17% dip last year, while the industry-level retail sales dropped 27% from September to October, compared with a 21% decline a year ago.