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Recently in the media there has been increased chatter about the dangers of buying a salvaged car.  They are 100% correct in advising you against buying a salvaged car.  Nationally about 35 to 40 million used cars are sold and between 2 ½ to 3 million of those sales are salvaged cars.  You need to take some simple precautions to ensure you are not one of the millions who bring a salvaged car home. 

The first thing everyone should do when they are considering buying a used car is pull a CarFax.  Many dealers will provide you with a CarFax report, but even if they do not offer it, the report costs only $25 and provides you with a great deal of piece-of-mind.  Of course if there are any problems or unanswered questions resulting from the CarFax report you should not buy the car for any reason. 

In addition to a CarFax report it is highly advisable to bring the used car you are considering to an independent mechanic.  This person can inspect the car and check for water damage, repainting, damage to the vehicle’s frame and other tell-tale signs that an accident or serious damage has happened.   By taking these two precautions you can avoid 99% of the salvaged cars being peddled around the country.  Sure this could cost you a couple of hundred bucks, but driving a salvaged car can cost you your life!

If you own an SUV the bad news extends beyond the high price of gas.  That’s because if you are considering trading in your gas-guzzler for a small, fuel efficient car you might want to make other plans.  You see, your SUV that was in hot demand a couple of years ago, today has almost no retail value.  With the price of gas rising daily there is not a dealer in the country that wants to take in an SUV as a trade-in.  The market for used SUVs is so cold dealers hesitate to put any trade-in number on these gas-guzzlers.  To accept a SUV trade-in many dealers will only offer you a fraction of book value because they fear your vehicle will sit on their lot for eternity.

So, as the Auto Insider I recommend anyone who’s thinking about trading-in their SUV solely because of the price of gas to wait if at all possible.  The timing should be better this fall.  That’s because there is a chance that gas prices will stabilize or even go down later this year.  Plus SUV demand usually increases as the weather gets colder and by taking this strategy you might receive an additional $500 to $1000 for your vehicle (compared to the price you’d get today) which could more than offset your additional gas expenditure (when compared to a car).   

Skyrocketing fuel costs are a huge thorn in the side of auto manufacturers and no one is feeling the pinch harder than Chrysler.  Sales at Chrysler are down 18% this year and last year’s sales figures were horrible.  The future does not look good for America’s 3^rd largest auto manufacturer so they are attempting something really interesting!  In an attempt to avoid another terrible year and huge loses Chrysler has come up with a gimmick different than anything else.  You will soon be hearing about their program that will allow anyone who buys a new Chrysler to receive a pre-paid card that caps their future gas price at $2.99 per gallon.  The program is good for 3 years/12,000 miles based upon estimated mileage. 

Now at the time of this blog entry I could not find any more information about this program, executives have leaked the information I am giving you.  Now a smart shopper needs to know what the estimated mileage limit is for a car they are interested in and then calculate their real savings.  If you use a car for business and rack up high miles this might be a program that offers you huge savings.  One word of caution, make sure you find out if this program is in lieu of, or includes factory rebates.  If not your real savings will be thousands less.  As I learn more I’ll share the information with you. 

I am constantly surprised by the number of people who get burned by car dealers after entering into some kind of ‘special’ business dealing.  The classic example of a ‘special’ kind of business dealing is making a deal with dealer to sell your car on consignment.  In theory it should be a win-win situation for both of you.  But if a car dealer can win more by you losing, count on the results being: they win big… you lose.  A car dealer doesn’t take money from their pockets and put it in yours.  For people who expect this to happen there’s an old expression, ‘pigs get slaughtered.’ 

Here’s another case of someone trying to get money from a car dealer and ending up with nothing but a headache.   A gentleman named Jay Paul Deratany, a practicing attorney in the Chicago IL area visited Gold Coast Bentley to purchase a 2004 Porsche Cayenne.  After having a discussion with a salesperson at the dealership, Mr. Deratany decided to put a $10,000 deposit down on a limited edition 2006 Bentley convertible.  Since then Mr. Deratany has been unable to get his car or persuade the dealership to refund his deposit, so he is suing Gold Coast Bentley. 

Hold on a moment, here’s where this story provides a learning lesson.  When Mr. Deratany put the deposit down he was lead to believe he would be able to buy the car or make a profit from his deposit if the dealership sold his reservation to someone else willing to pay more for the car.  Ladies and gentlemen, let me explain this as clearly and concisely as possible, you do not walk into a car dealership and leave making money.  Car dealerships are not in the business of giving you money.  In fact, their business model is 180 degrees in the other direction, they want to take as much money as possible from you, and that’s why they have Mr. Deratany’s deposit and possibly several other people’s money. 

Now don’t get me wrong, Mr. Deratany does not deserve to have his money stolen from him, but remember what happens to pigs….  Here’s what you can learn from Mr. Deratany’s problem, do not walk into a car dealership expecting to find someone who will help you financially.  No matter how nice they are, no matter how persuasive they can be, you must remember the car dealer’s sole purpose is to take as much money as possible from you.  Protect yourself and shop smart.   

As the world’s largest automotive company, you can analyze what’s happening at General Motors and get a good idea of the overall state of the auto industry.  General Motors produces vehicles under the following brands: Chevrolet, Buick, Pontiac, Hummer, Saab, GMC, Cadillac and Saturn.  According to reports issued by General Motors they have seen sales drop by 27% for their light trucks, SUVs and light pick-ups while car sales are down only 0.2%. 

Obviously the sharp increase in gas prices has led many consumers to leave their SUVs and purchase a smaller vehicle.  This is not unprecedented territory.  Over the last thirty plus years when gas prices have gone up, consumers have moved to smaller vehicles.  In the 1970s and early ‘80s this shift in consumer demand opened the doors for companies like Honda and Toyota to become big players in the US auto market.  Now America’s domestic auto companies are attempting to restore themselves by selling consumers affordable, fuel efficient cars - what comes around… goes around!

This shift has not been painless for General Motors.  The company is so large that even the smallest changes in direction can require time and effort.  Their lack of flexibility has resulted in an extended sales slump accompanied by huge financial loses.  But, as the biggest kid on the block, once General Motors gets itself situated they can quickly dominate.  There are some signs that this great American car company is about to regain their stride. 

Right now their accumulated inventory is down to the lowest level since September 2005.  This is a positive sign.  Additionally, there are some short-term hurdles that GM is clearing that will allow them to continue moving forward in the future.  Primarily I am referring to their stance with some unions.  Right now they are being impacted by a strike at American Axle, a major parts supplier.  But, more importantly GM is taking a hard-line stance with AAU (American Auto Union).  As things are currently structured GM’s labor costs make it virtually impossible for them to be profitable, and they are committed to changing that.  I am not anti-union and I do not have a dog in this fight, rather I am just assessing the situation from GM’s point of view.  For the first time in company history they are committed to either reducing costs or changing how and where their vehicles are made.  They have begun closing production plants and more will close unless costs are reduced. 

As a car shopper, if you are considering a GM vehicle I think you can shop with confidence.  The company is getting healthier, the vehicles quality has improved greatly and because sales are soft you can get a tremendous price.  It would be a smart decision for a car, truck, SUV or CUV shopper to consider a GM brand.       

Everyone knows we are facing tough times, and it’s even tougher on car dealers who are facing huge financial loses every month.  The financial pressure these dealers are under is enormous and as the expression goes, ‘desperate times call for desperate measures’.  Well, I’m seeing dealers commit some horrific scams and crimes to get you’re your money.  Today’s bad dealer of the day is Bill Heard Chevrolet in Houston Texas.    

            The folks at Bill Heard Chevrolet are under investigation for a multitude of crimes and offenses.  The local police are very familiar with this dealership and its business practices because dozens of Bill Heard Chevrolet shoppers have felt so wronged and mislead that they have called 911 from the dealership!  Now, the dealership is being investigated for forgery and forced delivery of an unwanted car.  This is truly unbelievable, in all my years of working in this industry I’ve never heard of such a blatant abuse of a car shopper, here’s the story. 

A woman went into Bill Heard Chevrolet and took a car for a test-drive and filled out a credit application.  She decided not to buy the car.  It should have ended there, but it didn’t.  Someone at Bill Heard Chevrolet forged documents in this woman’s name to secure a loan to buy the car she test drove.  The loan went through with Chase (a bank) and they registered and plated the car.  Now they brought the car to the woman’s house and parked it on the street in front of her home with all the paperwork sitting on the passenger’s seat.  They couldn’t park it on her property, so they left it in front of her home!  Several days went by and the woman received a phone call from the police threatening to impound her car parked out on the street. 

This is how this poor woman found out that she’d been scammed by Bill Heard Chevrolet.  She contacted the police and Chase, who upon reviewing the paperwork determined that certain signatures didn’t match.  Chase voided the loan and forced the dealership to buy back the car.  So thankfully there was a happy ending to this story. 

Now if you’re shopping for a car, be VERY careful.  You do not need to fill out a credit application to take a test drive.  You DO need to provide a dealership with a copy of your driver’s license, but not a credit application.  If a dealership requires you to fill out a credit application prior to a test drive there’s something wrong!  The only reason you need to complete a credit application is when you have decided you want to purchase a car.  Remember, you’re taking a test drive to decide if you want to buy the car.  Be careful and shop smart.      

Preliminary reports show that auto sales will be down this April as compared to the same month last year.  In fact, some people are predicting that the second quarter 2008 auto sales will be worse than this year’s first quarter sales which were also down significantly.  For the auto industry the pot of gold at the end of this rainbow is that the people who are calling for a poor second quarter 2008 are also predicting that it will represent the bottom and the final two quarters of the year will see sales increase. 

            For the car shopper this is good news.  You should be able to walk into any car dealership and get a great low price, regardless of what you are shopping for.  A smart shopper will receive very little resistance getting the price they want.  On the flip-side, if you enter a car dealership unprepared you will likely get fleeced badly because somebody’s got to make up for all the money car dealers are losing in the second quarter. 

At car dealers around the country there is a huge sift in the business landscape that will dramatically change your car buying experience in the future.  Right now we are seeing car dealerships close at a rate never before seen.  And unlike any other time, many of these closures are being encouraged and assisted-by the auto manufacturers.  Last year 621 big 3 dealers (Ford, GM & Chrysler) closed and virtually every one of these dealers could be considered a Mom & Pop type of dealership.  You know the small single franchise dealer.  I’m talking about a place where the dealer principle worked in the dealership with a small and knowledgeable staff that was committed to keeping you as a customer. 

The Mom & Pop dealer is disappearing and being replaced by the multi-franchise mega-dealer.  This trend has been growing in recent years, but with the present auto sales slump dealers are going out of business at a record pace.  If your reaction to this is happiness because you feel that car dealers are getting what they deserve, that is your right but be careful for what you wish for.  As the little auto retailer is replaced by the mega-dealer the future is not pretty for the consumer.  Customer-care will diminish, I call that the Wal-Mart effect.  When the last of the Mom & Pop dealerships close a visit to a car dealership will include being treated like cattle (or flying today).  And worst of all, with less competition there’s only one way for pricing to go, and that’s up!  That’s why auto manufacturers are encouraging dealers to go out of business.  The little guy is holding the prices down for the consumers.  For car shoppers competition among dealers helps, too bad it will soon be a thing of the past.   

I have not been crying wolf with my blog entries warning people of the dangers of title fraud.  Here’s a case of thirty people getting scammed by a car dealer and now they are in big trouble!  In Castle Rock CO., near Denver there are 30 people who have paid for a car, never received their titles and now the dealership is closed and the owner’s nowhere to be found!  To read the whole story click here.  I’ll give you a quick overview; a high-end dealership in Castle Rock is now closed and abandoned leaving 30 customers without titles to the cars they paid for.  The reason the customers do not have titles is because the dealership never purchased the cars they sold to these customers!  So this shady car dealer sold people cars he didn’t own (and fake extended warranties along with not paying off any trade-ins).  This crook of a car dealer conducted transactions he never intended to complete and then disappeared.  Police are looking for the dealer principle, Wayne Weaver, but no one can find him.  My guess is Mr. Weaver was able to get out of town with at least a million dollars of other peoples’ money! 

As I’ve told you in multiple blog entries, this is a scam that’s very easy for a car dealer to commit.  Car dealerships sell new and used cars every day without having the vehicle’s title.  What honest operators do is after the dealership sells a car they obtain the title and transfer ownership to their customer.  But if you are a crook like Mr. Weaver, you begin the transaction and split without paying anyone off.  In 2008 we are going to see this type of fraud reach epidemic proportions as dealers are buried in debt so you MUST protect yourself.      

I recently read the results of a survey conducted with over 400 car dealers from around the country.  In the survey the dealers were questioned about changes they are making in their businesses to deal with the car sales slump.  I’ll give you the highlights, and then my thoughts.  From the survey it appears car dealers are ordering fewer vehicles than they did this time last year.  They are employing less people while limiting the remaining employees overtime.  Overall, domestic car dealers are forced to make bigger cuts than import dealers.  As a shopper you can expect to see a decrease in customer care from your dealer. 

But that’s not all, back in the go-go ‘90s manufacturers put tremendous pressure on dealers to provide customer care; now all the manufacturers care about are sales.  So that slimy car dealer that sold a ton of cars, but also generated a ton of upset customers won’t need to worry about the manufacturer’s wrath.  You see, in the auto industry in 2008, it’s only about sales.  If a car dealer can move tin, the manufacturer doesn’t care how many complaints they cause… just sell the cars.  The dirty, unhanded car dealer is the one who’s going to get the rewards going forward so… be forewarned!