In the auto business everyone’s trying to be the next Toyota. The next car brand the surges to the top and appears to completely bullet-proof. Well, the next Toyota might end up being Hyundai. For the last 3 months Hyundai sales have bucked the auto industry trend of decreasing sales. Something the big guys like Honda and Toyota could not do. The only question left for Hyundai to answer is can they keep this up? Well their product is not just affordable, but very well made and that’s the real key. No they just need to continue increasing sales and they will be on their way to becoming a force in the auto industry.
Car dealers are coming off a very soft month for sales (October 2009) so buying a car early in the month should provide you with better than normal negotiating opportunities. Your local car dealer is DESPERATE to sell cars! Go in with my car buying program (available at www.autoinsidertips.om) and you’ll have the salesperson eating out of your hand!
If you are shopping for a new car now do not be surprised if you find picking pretty slim at your local car dealerships. The combination of Cash for Clunkers and the factory shutdowns of last spring/summer has left car dealers with very little inventory. Now car dealers are faced with a conundrum: do they sell a car at any price because of the severe lack of customers or do they try and hold some profit because they only have a few cars on their lots?
It’s a hard problem. If you are shopping for a car now and you are not too concerned about things like the car’s color, sound system or other available options you can get a tremendous deal now because some dealers will wheel and deal to move a car because they need to generate cash flow. So shop smart and you’ll save big!
Ally Bank is a financial institution created from the old GMAC. They are an internet based bank that has been trying to gain market-share by offering better interest rates than the competition. Now, starting October 1, 2009 they will be making a strong push to get car dealers to finance their customers through their bank.
So, based on their business principle you should assume nothing but the best rate possible from an Ally loan. This is where you need to be careful; Ally is giving big incentives to dealers. Dealers will want to put that money in their pocket. If your dealer tells you that Ally will be your lending institution ask what the rates are from other banks. Do not be surprised if their response is, “another bank has the same rate as Ally…” but you get a silly reason to do business with Ally like, “but Ally is better to work with.” That’s nonsense. At this point you should pressure the dealership to give you a better rate. Tell them you are aware of Ally Banks incentives and as the one who’s going to be making the payments, you feel you should share in their incentives. Mention that you can take your lending out of their dealership completely and that you understand that this will cost them money. Be strong here and save money.
As part of the economic stimulus plan that brought us Cash for Clunkers there is still some advantages left for new car buyers. Although you can not receive a Cash for Clunkers rebate you can still receive a tax break if you buy a car. If you buy a car now you can deduct state, local and excise taxes paid on up to $49,500 of your new vehicle’s purchase price. Keep in mind that if you have an adjusted income of $125,000 or more ($250,000 if filing jointly) your ability to take advantage of this program is limited.
Sure it’s a gimmick. Sure it’s nothing more than a band-aid on a gushing wound. Sure it screams desperate. But I like it. It is bold and it shows that GM is a corporation willing to put their money where their mouth is. When the program is officially announced I will give you a game plan and a full evaluation. But what I like best about this program is that there are not any real restrictions or loop holes. It looks like this is a company that really believes that they are selling some of the best vehicles on the market.
There is a ton of speculation concerning GM and whether they will file for bankruptcy. In my opinion it is going to happen and it is the only way the company can survive. All early indications are that when they do file for bankruptcy they will do so in New York. Everything seems to be in place to file in New York even though they are headquarters are in Detroit. This creates a problem. Right now, as the company is structured they would have to declare bankruptcy in either Michigan or Delaware. But there is one path available for them to declare in New York, its Chevy-Saturn of Harlem. You see, Chevy-Saturn of Harlem is one of the few factory owned dealerships. If Chevy-Saturn of Harlem declares bankruptcy it would occur in New York and create the path necessary for GM to also use the New York courts for their bankruptcy proceedings. There is a precedent for this, when Eastern Airlines went in bankruptcy it was done in New York even though the company was headquartered in Miami Florida. They were able to use the NY courts because a small subsidiary of Eastern Airlines headquartered in New York preceded Eastern into bankruptcy court.
So, for the people who are watching GM and trying to figure out if they will declare bankruptcy watch Chevy-Saturn of Harlem, if they go into bankruptcy you can bet that GM will follow. Now if you are shopping for a car, do not let GM going into bankruptcy scare you. This will allow the company to emerge a better and more viable company.
If you are shopping for a car today that is an important question you need to ask yourself, can you buy an American car with confidence? Everyone is familiar with the major problems facing GM, Chrysler and to a lesser degree Ford, but what about the little issues? For instance, if you buy a car and the company goes out of business: how long will you be able to get parts, what type of warranty will it have and who will provide the work, how will it affect my car’s value?
All valid questions you need to ask. Plus you have to wonder if the people building your car are distracted by their work situation, disgruntled and looking for revenge, or just too preoccupied by the whole situation to do a good job. I am not accusing anyone of not doing a good job building a car, but you do have to wonder! When you add it all up, the government and these car companies have to solve this problem quickly or let the economic forces dictate how these companies proceed because I’m afraid too many people consider these companies to be in ‘nowhere land’.
I have touted the virtues of CarFax on this blog for a long time. It is a great service for anyone buying a used car. Unfortunately, some people consider it the gospel. When you are buying a used car you must factor in the chance that the vehicle could have mechanical problems that are not reflected on a CarFax report.
For $30 a CarFax report is the best insurance a used car shopper can have. CarFax gathers information from over 22,000 sources and they have saved countless used car shoppers time, money and heart-ache, but nothing is perfect. If you are shopping for a used car get a CarFax report, but you also need to give the car a good look over yourself and it would make a lot of sense to have a mechanic also inspect the car. When you combine a CarFax report with a good mechanic’s evaluation you’ve done everything possible to ensure that your next used car provides you with many miles of trouble-free transportation
I recently read a story about a car dealership in Albuquerque, NM, Zangara Dodge and the owner of this dealership was described as running a car dealer ‘Ponzi Scheme’. The New Mexico Attorney General is collecting information to attempt to convict Ken Zanaga, Zangara Dodge’s owner. His lots are empty and I doubt if he will ever be able to sell cars again, but the full extent of the damage he has caused is still not known.
The ‘Ponzi Scheme’ Mr. Zangara was involved in is the age-old dealer scam of not paying off a customer’s trade-in. Regular readers of this blog know that this is a dealer scam that I have begged you to be wary of for a long, long time. Now that it may become known as the auto dealer ponzi scheme I hope people will learn about this common scam and be smart enough to make sure that their trade-in’s bank is paid off after they buy a car.