As far as the auto industry is concerned, there are two parallel realities right now in America. The line is clearly drawn between the domestic manufacturers and the luxury imports. The economy is fueling this divide and it doesn’t look like it will get better any time soon. Last year 430 new car dealerships closed, most of them domestic brands (GM, Ford and Chrysler). If that number increases the domestic dealerships will be leading the way. In fact, this year may be the worst automotive history for America’s big three (GM, Ford and Chrysler). This year a record number of dealerships may go out of business, a foreign company (Toyota) may be the World’s sales leader and the prospect of things getting better appear to be way too far off on the horizon, if they exist at all!
Yet the luxury import market, with some exceptions is doing very well, so why the disparity? The customers for luxury cars like BMW, Mercedes Benz, Audi and Lexus appear to be immune from the cause for the domestic sales slump, the rising cost of gas. For years the domestic manufacturers lived off selling large vehicles to America’s middle class. Today these same people are being choked by gas prices and the last thing they want to do is buy another gas-guzzler. America’s middle class is stampeding towards cars made by companies like Honda, Toyota, Kia, Mazda and Hyundai. At the same time America’s wealthy continue to buy luxury imports creating a sad scenario for domestic dealers. Like a game of musical chairs, there are only two chairs left and three players remaining when the music stopped and America’s auto makers are the one’s left standing, sadly they don’t know how to get back into the game!
June is going to be another terrible month for the entire auto industry, but domestic auto makers are taking the biggest pounding. Compared to June 2007 Chrysler will see a decrease of about 22%, General Motors 15.9%, Ford 15.4% while Toyota’s drop is only 0.7%. Nissan is expecting to show a gain of 4.1% and Honda 17%, when compared to June 2007. Honda’s new Accord is fueling this significant sales boost in tough economic times.
These big six auto manufacturers show a clear and distinct separation, domestics are struggling while imports are doing much better. This is powerful information for a car shopper because your expectations for getting a good deal should correlate to the above numbers. If you are shopping for a domestic vehicle push for an incredible deal. It’s not hard to do because GM’s offering 0% financing for 72 months, Chrysler is discounting vehicles $13,000 or more and Ford dealers will do anything to move tin off their lots.
If you are shopping the imports the deals will not be as good. If you’ve got your heart set on a new Honda Accord you can buy one, but don’t expect a great deal because its not possible. Toyota has GM in its sights to overtake as the world’s largest auto maker so if they feel that’s possible the deals could get very attractive over the next few months. Knowing were the dealer and their manufacturer stands can assist you in getting your best deal possible.
I guess desperate times call for desperate measures. That’s what it looks like if you read or hear any advertising from a General Motors or Chrysler dealer. Much like sharks who smell blood in the water, car dealers recognize that the number one topic on every American’s mind is the price of gas and they are using that to take money out of your pocket. To make matter worse, even the manufacturers are assisting in this fleecing. All the advertising you see for free or discounted gasoline is a ploy to use your pain and fear to extract money out of your wallet, it’s really quite ugly! At first it might appear to be a good deal but after you examine what the discount is and were it comes from you’ll quickly see it’s no big deal!
That’s because the car dealer or car manufacturer who is promising you free or discounted gas is really just taking discounts they were already offering you and re-stating it in terms of gas prices. You need to understand that this type of advertising is utter nonsense. I can’t understand why there are not any state Attorney Generals going after the people committing these deceiving advertising practices. Oh, wait, I might know why a state Attorney General might not go after a car dealer, they are probably financial contributors to their campaigns! Do not fall prey to this horrible come-on, you work too hard for your money!
Let me explain this scam to you. Instead of using a car lets use something else. Imagine that last week you started shopping for a new sofa and you see a furniture store’s ad with a sofa you like advertised for $2,999, that’s a $1,000 savings off its regular price. You’re still shopping for the sofa and you see the same furniture store’s ad for this week and they have the exact same sofa advertised for $3,999 plus 3 years of gas for only $2.99 per gallon! WOW, you must be saving a fortune… right? It must be a better deal than previous week’s ad, right? No, it’s a worse deal! Somewhere in the fine print the furniture store would disclose that they are giving you 10,000 miles of driving per year and your car gets 32 miles per gallon. Remember they are giving you the difference between $2.99 per gallon for gas and $4.00 per gallon. In other words you’re getting $1.01 per gallon for 312.50 gallons per year (10,000 divided by 32) for 3 years or $946.89! I’d tell the furniture store the same thing as I’d tell the car dealer, listen I’ve been buying my own gas and I’ll keep doing that, I just want the very best price.
Hey, gas is going to be expensive for the foreseeable future and there’s nothing you can do about. But, you can make sure that you do not compound the effects of high gas prices by also paying too much for your next car. Car dealers are great at playing the shell game with customers to increase the amount of money they make and this free or discounted gas deal is another example of car dealer tricks. Any time you give a car dealer chances to enter additional items into the deal you’ve got the chance for trouble. The basics of a car deal is the price you will pay, trade-in value and financing and I suggest you keep it simple so you get the best deal.
With over 100 retail outlets nationwide CarMax is America’s largest used car retailer. As the Auto Insider here’s the facts and my opinion of this used car behemoth. First of all, CarMax bucks the industry trend of trumpeting the lowest prices. In fact, their balance sheet indicates that in 2008 they are averaging $1,878 gross profit per unit sold. This surpasses the national average which is $1,700 gross profit per unit sold (for used cars). So, people do not get the best price at CarMax yet they usually outsell the competition in their market, what gives?
Well, according to CarMax they provide a better buying and ownership experience so in fact CarMax customers are actually getting more for their money. Obviously this statement can be argued, but I do see their point. With their no-haggle pricing, no-pressure sales approach, clean and modern facilities they do offer a customer some advantages. Additionally, at CarMax they go over the top to prove to their customers that they only sell quality vehicles that have not been totaled or severely damaged. In other words they create buyer confidence and security. And for some people the presentation, the simplistic sales process and their customer concern is all worth at least $178.
So, if you are a used car shopper who wants a fair price, an easy shopping experience at a dealership that will stand behind their product, CarMax offers you an excellent option. But, if you are someone who needs or enjoys haggling over a price and you will not be satisfied unless you get the best price possible… CarMax is not for you!
As Americans continue to buy more and more items on-line new problems are arising. For example, buying a used car on Ebay is something that is gaining in popularity, but like anything else, you need to be careful! First of all, I would be very skeptical about buying a car that I have never seen, especially a used car. Yes, there are great buyer security features when using Ebay, but I would still feel much more comfortable having a trusted mechanic look over a used car before I bought it.
There are other concerns buyers need to be aware of when buying a car on Ebay. Recently a Staten Island man was the winning bidder for a 2006 BMW 750 Li. He bid $46,000 for the vehicle. The problem is, the Staten Island man thought he was bidding to buy a 2007 BMW 750 Li, not a 2006! Had he been buying a 2007 BMW 750 Li he was getting a great price, but for a 2006 model he was overpaying by $6,000! That’s a costly error.
After winning the bid the buyer realized his mistake and attempted to negotiate a lower price with the seller. The seller would not entertain taking anything less that $46,000 for the car and now they are heading to court. This is a real ugly situation that probably wouldn’t have happened during a face-to-face transaction. When you are looking at a car that you are considering buying you see things like a title or a manual and the buyer and seller discuss things about the car.
Now I do not know how this is going to end, but the seller is seeking $150,000 in compensatory and punitive damages! This is a sad story and one that can be avoided if you are careful. First of all, whether you’re buying a car or a toaster on line you need to know EXACTLY what you’re purchasing before you complete a transaction. Also, if you are buying a car on something like Ebay I would strongly consider getting an attorney involved before the transaction is completed. Be careful and buy smart!
As I am sure you are aware of, there have been severe flooding in the Midwest. This is obviously a horrible tragedy for many, many people. Unfortunately there is an additional ramification from these floods that can affect people all across the country. You see, as a result of theses floods there are countless cars being totaled. Once a car’s engine and computers are immersed in water the car is considered totaled and unsafe for use. Unscrupulous car dealers (and we both know there’s plenty of them) and private sellers take their insurance money and then dump the cars directly or through a reseller into the used car market.
For the next couple of months there will be a huge influx of these flood damaged cars available for sale, even though they should not be sold to the public. As a used car shopper you need to be smart to protect yourself. First of all, if someone’s offering you a price that’s too good to be true… it probably is! An ounce of prevention can save you big money; make sure a used car is inspected by a mechanic you can trust. Also, under no circumstances should you EVER buy a used car without getting the vehicle’s CarFax report. If an insurance company has paid off a flood damaged car this information will be on the car’s CarFax report. Shop smart and be careful, hundreds or thousands of flood damaged cars are hitting the market as you read this and you do not want to spend your hard-earned money on one of these lemons!
Ford recently announced that they are offering Employee Pricing on all F150 – 350s and Super Duty trucks. In the past, Employee Pricing has caused a near stampede into dealerships. This is one of the auto industry’s old reliable promotions, it seems whenever sales are slow they pull out either 0% financing for 60 months or employee pricing. Well, the question I get asked, “Is employee pricing a good deal?”
The answer is, YES! Employee pricing is a program, when initiated by the manufacturer that offers exceptional savings. For example, right now if you are shopping for a Ford truck the average additional savings (employee pricing vs. dealership’s best deal) is $2,200! So, if you might buy a new Ford truck in the next 60 to 90 days I strongly urge you to consider buying now. By taking advantage of Ford’s Employee Pricing Program you will save thousands of dollars!