For roughly a month, I have placed serious consideration into purchasing a new car – a new to me car. Looking at the overall economic climate, the limited credit market and potential savings to be had by dealers and automakers, I would be foolish not too. Plus, if I find myself out of a job within the next six months I would have difficulty obtaining a new car when my lease expires, so it just makes sense.

As I continue the process, I will document my experiences in hopes of providing help to others in the same situation. Before that takes place; however, I need to share my initial disappointment in the vehicles I’ve test driven.

Looking at cars in the used market, I took a Volvo S80 (2005) and Volkswagen Phaeton (2005) out for a spin. The luxury and quality that I expected from said models did not make an appearance.

The top of the line 2005 Volvo S80 struggled to get up to speed. It huffed and puffed as if it was the little engine that could. I noticed significant sway in the suspension as I drove over the slightest of bumps, and the overall refinement seemed to be missing. Changes may have taken place since 2005, but this is not the car I remember test driving so many years ago.

The at one time $80K Volkswagen Phaeton, which is simply a re-badged Audi 8, was a nightmare. I knew there were problems when I couldn’t start the car due to the on board computer warning me that it was malfunctioning, the suspension needed attention, the breaks were worn down and the tire pressure gauge was triggered. Yes, I did get the beast of a car started – and it is a huge car – and I took her out as well. The ride was very smooth but the steering was quite unresponsive, and the German V8 power plant of an engine did not seem to provide the “get up and go” that the car was highly praised for.

Maybe my experiences are specific to the two cars, maybe others will provide a positive outlook, but I’ve been let down thus far. All of this reminds me that there is a difference between want and need.

For the last decade, I’ve driven BMWs in one form or another. The reasons are quite simple – top notch quality, outstanding service and a drive unlike any other. While I cannot say I am at the point where I NEED a new car, though I will be there soon, I am really beginning to think that I WANT nothing but the best in whatever my next vehicle is. In the end, it is becoming more and more clear that I will remain a BMW owner.

Looking at the economy, why would anyone want to buy a new (or a “new to you” car) at this point?

Here are the negatives facing consumers:

• Decreasing consumer confidence
• Unknown job market and employment situation
• Unavailable credit for even what would normally be considered “healthy” consumers
• The fate of automotive makers – why buy from someone who may no longer be in business

On the positive side:

• Potential tax credits for individuals who purchase
• Automotive makers are providing unprecedented discounts
• Dealers are heavy on inventory and want to move product

Let us say one does want to buy a car, does that mean new or used? We should first take a step back and determine how long you intend on keeping the car. Keeping in mind that the days of easy credit may long be past, and the car buying experience may be once in ever 10 years rather than once in every three, a buyer should put a lot of thought into this decision. If that is the case remains to be seen, but it would not hurt to plan in such a manner.

Scenario #1: New

You want a new car. Great! Now it is time to start asking some questions about what the car will do for you… More specifically:

• What do you want in the car?
• How do you expect your lifestyle to change in the next 5 to 10 years?
• How many miles do you drive every year?
• Do you plan on moving, and would there be dealers in that area?
• How much do you want to spend on yearly maintenance?

Now that you’ve determined what is important in your new vehicle, and because you expect this purchase to last for some time, you should focus on the companies that expect to be around to support your auto. Immediately cut any car company that you don’t believe will be around in 10 years. That means GM and Chrysler. That already our a lot of fat for you – including Hummer, Pontiac, Saab, Saturn, Dodge and Jeep – along with a whole other range of cars. This allows you to focus on the automakers that are expected to survive – Toyota, Honda, VW, Ford* – when starting your research.

Head over to JDPower, Edmunds, Motortrend, Lemonfree.com and caranddriver.com to see what vehicles fit your needs. Chances are you will find a number of automotive critic reviews, individual reviews and enough safety information to make your head spin. Once you’ve determined your vehicle, get the invoice information from one of the sites you did your research from and start pounding the pavement. Go to a number of dealships, get a number of quotes and play the system. You need to remember that they need you more than you need them. Leverage that fact and press for a deal.

Scenario #2: Used

So you’ve decided a used car is what you need. Perfect!

Notice that I had originally asked why how long you plan on keeping this car? If you’ve made the decision that a used will fit your needs or budget, just simply be aware of potential lifespan issues you may face down the road. A 5 year old car may look good now but it may mean you will have to purchase a new car in 5 to 7 years as well.

I would suggest the initial steps to finding the car of your choice would be the same as researching for a new vehicle. Depending on the age of the car you are looking at, you may have a significant advantage in the amount of research available to you. By now the recall information, known mechanical issues, and detailed user satisfaction information is available all over the net. You can find dedicated user forums that specialize in your choice, pop by enthusiast websites or find a social networking site that can provide you with information.

Now start looking for inventory. Check Cars.com to see the number of matches you can find, check the Kelley Blue Book price listing, and start pounding the pavement and negotiating with the dealships.

But how are you going to pay for this?

Chances are you do not have a huge stack of cash just burning a hole in your pocket. If that is the case, you will need to arrange financing for your purchase. While it is true dealerships have the ability to provide financing, you may get a better deal by looking around.

Here are a few resources to check out:

• Capital One
• Bankrate
• E-Loan

Just remember..

Make sure you take advantage of the information on the internet and remember that you are in control. There is no rush, nor is there a need to rush. Find what works for you and take advantage of the current environment if you can.

*I say Ford because they appear to be rather strong – comparatively speaking – to GM and Chrysler.

First, I love having Monday off.

I have the luxury of working “flex-hours” at my job, which allows me to have an extra day off per week as long as I still work 40 hours during the week.  The one side effect that I never expected was the reduced stress level.  If you find your stress level to be high due to your work schedule, I suggest you investigate a 4 day work week.

Taken

I have a strong desire to see the movie “Taken”.

Originally, I wasn’t sold on the movie simply because it seemed there was a really, really, strong marketing push for the movie.  Usually, that is a sign of a studio trying to dump a junk movie on the market.  Add in the fact that it was released in January, a dumping ground for bad movies, and it seemed like a mix for a bad release.

Over the weekend I did some reading up on the movie and it appears that there is the potential for a good, yet mindless, thriller on our hands. Rottentomatoes.com has this listed at 56% fresh, so I’m still taking a bit of caution, but I’m still looking forward to it.

Oh, and FYI, the movie was originally released in October, 2008, in the UK and finally found its way over to the United States.

Stimulus Bill H.R. – 1

Thanks to the miracle of Opencongress.org I’ve been able to really dig into the Stimulus Bill (HR-1) that passed the house last week.  In no way am I anywhere finished reading the entire Bill, but there are two initial thoughts that I have.

There a number of limitations that follow a distinct protectionism point of view, such as…

None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron and steel used in the project is produced in the United States.

I am seeing a number of items that I would be hard pressed to believe would help stimulate the national economy, such as.. 

• $1,000,000,000 for periodic censuses and programs 
• $650,000,000 for the digital-to-analog converter box program 
• $400,000,000, for habitat restoration and mitigation activities. (NOAA)

Again, I am not close to finishing the bill but that is a large sum of funding for activities that would have very little impact on the economy at large.  Interestingly, $650,000,000, was set aside for: 

reconstruction, capital improvement, decommissioning, and maintenance of forest roads, bridges and trails; alternative energy technologies, energy efficiency enhancements and deferred maintenance at Federal facilities 

Now, I can see how that would start to pump funding into local and national markets, but I find it interesting that it’s the same exact amount for the digital-to-analog converter box program.  I just don’t see how they can justify those amounts. 

As for the idea of protectionism… while I understand the desire and need to keep the funding within the United States, protectionism during recessions/depression is a very dangerous idea. The United States had a protectionist viewpoint during the Great Depression which only worsened the economic climate due to a decline in global trade.   

It will be interesting to see how the Stimulus Plan plays out this week in the Senate.  Will the politicians in D.C. Get the idea that this bill is padded with activities, while maybe needed, are not intended for “stimulate” the economy as a whole?

Cars, cars and more cars…

I had an observation this weekend that I found, well, intriguing.  As I was out driving around I noticed 7 new cars on the road, as identified by the temporary plates on the cars.  Now I obviously don’t know if they were “new” or “used”, but I wonder if consumers are starting to feel better about about making these “large” purchases.

Ok, I’m off… until tomorrow.

“I’m going to go back and I’m going to order cars that I don’t need,” – Michael Andretta, owner of a Chrysler-Jeep-Dodge dealership in central Pennsylvania.  

So, dealers cannot sell the cars on their lots but Chrysler is asking that dealers actually purchase more cars than can sell.  How messed up is that?

This approach is based on the belief that if the dealership helps Chrysler, Chrysler will help the dealership. What I don’t understand is HOW will Chrysler help the dealership?  When it becomes apparent that the dealers don’t have money to purchase cars, or enough cash to keep day to day operations running, will Chrysler bail them out, or will the dealers end up being left on their own? If dealers had even more inventory they needed to sell, what steps were they taking.  I decided to find out.

With the current incentives being offered by Chrysler and their dealerships I took the time to obtain a quote and ask about what offers I could utilize in my purchase of a new car.  Well, none of my questions were answered and the dealership continued to push other items than what I had asked for.  Basically, what I ended up with was a bunch of spam… and this was a typical response from 3 different dealerships.

It is very clear the people who are in charge of selling cars have not changed their views on how to sell cars – especially under restricting economic conditions. Purchasing more cars when you cannot even sell what you have is a very poor business decision.

We know all about the automotive depression, no one is buying cars.  Got it. We don’t need to continue to beat a dead horse.  What I never really put much thought to; however, is what happens to all the “new” cars that go unsold?

Really, put some thought into it…

When inventory does not move, the entire supply chain management system backs up.  The dealerships do not need new cars due to the lack of sales, the automakers do not have anywhere to send the new cars, automotive suppliers have nowhere to send new supplies because automakers have suspended production… and the whole system comes to a trickle.  But what happens to cars manufactured ahead of the slowdown? The cars that were intended to be delivered to dealerships but now have no buyers?

Jalopnik.com has the answer (in pictures, no less).

What will happen to these cars?  

It’s painfully clear the need for cars won’t be picking up within the next three months, that means the glut of excess won’t be moving quickly.  On average, it takes a U.S. manufactured vehicle roughly two weeks to go from the end of the assembly line to the dealer.  Once on the lot inventory will sit for roughly 20 days.  This means when a person gets a “new car” they really are getting a new car.

The longer a “new” car sits the likelihood increases that the car will not be sold because of the depreciation on the asset, the product can quickly be outdated due to the expected launch of  expected new models,  or the elements may damage the goods.  So, if a car sits for three to six months, the value to the automakers and the dealerships drops dramatically.

What may have cost $20K to develop is now essentially worthless, and the company will need to account for their loss, leading the manufacturers to write down the cost of the cars.  

What we may be witnessing is the next major wave of right downs – the next multi billion dollar losses for the Big Three – but by that time it may be simply an exercise in accounting as I would expect one or two of the Big Three to be in bankruptcy by that point…

American’s just don’t get it, and I fear the masses won’t internalize our national dependency and the  need for alternative energy sources until it is too late.

This is not a rant about global warming – that is another discussion for another time – this is simply pointing out that American’s just don’t get get that the price of oil will rise once again.  Just because it’s $38 today doesn’t mean it will be $38 tomorrow.

According to edmunds.com, pickups and SUVs will outsell cars in the month of December.

Trucks and SUVs will outsell cars in December, according to researchers at the automotive Website Edmunds.com, something that hasn’t happened since February.

 

Meanwhile the forecast finds that sales of hybrid vehicles are expected to be way down.

 

Combined with discounts negotiated at the dealership, the actual prices consumers pay can be amazingly low, said Edmunds.com sales analyst Jesse Toprak.

 

“I can get about $10,000 off a large SUV,” he said.”There’s probably not going to be a better time.”

He is right, he could get roughly 10K off an SUV but what about when the price of gas goes back to $4/gallon, be it a year from now or three years from now?

Let’s say a large SUV has a tank size of roughly 20 gallons and gas goes up to $4/gallon once again.  This means the consumer will be paying $45 more per fill up.  If we assume they fill up the tank every week, that means they will spend an extra $2340 per year and if 4 years that “savings” would have vanished.

Now is the worst time for oil to have fallen because everyone, from corporations to the consumer, will be moving away from researching and investments in alternative energies because there is no cost savings. Why spend the money on research and development if it costs less to simply buy oil?

Now is the time we should be moving to hybrid technologies, now is the time the nation should be going to solar and natural gas… basically, now is the time we should be looking forward and attempting to find a way to free our nation from dependency on foreign oil, not trying to go back to our old ways.

Everyone keeps talking about what would happen if the auto industry went into bankruptcy, and the one thing people consistently talks about is the autoworkers (obviously).  There are roughly 2 million workers in the industry be it assembly, auto parts or in dealerships. 

Here is how it breaks down, via CNN/Money:

State	Rank	Total jobs	Auto assembly jobs	Auto parts jobs	Auto sales jobs
Michigan	1	241,883	57,997	144,413	39,473
California	2	189,749	7,430	42,741	139,578
Ohio	3	159,061	21,974	89,244	47,843
Texas	4	137,191	9,104	28,487	99,600
Indiana	5	111,665	12,622	71,403	27,640
Florida	6	99,199	915	12,083	86,201
Illinois	7	93,763	7,227	35,936	50,600
New York	8	82,357	607	28,792	52,958
Tennessee	9	79,424	10,636	42,415	26,373
Pennsylvania	10	76,759	533	17,128	59,098
Kentucky	11	65,468	13,664	37,621	14,183
North Carolina	12	59,276	522	20,662	38,092
Missouri	13	55,722	11,122	17,935	26,665
Georgia	14	54,954	1,966	14,960	38,028
Alabama	15	49,346	10,519	20,189	18,638
Virginia	16	47,485	1,777	9,978	35,730
Wisconsin	17	46,488	4,037	15,699	26,752
New Jersey	18	43,294	688	7,100	35,506
South Carolina	19	41,285	4,773	18,863	17,649
Arizona	20	34,973	67	5,886	29,020
Washington	21	31,343	197	5,788	25,358
Maryland	22	30,688	205	4,192	26,291
Minnesota	23	29,598	832	6,059	22,707
Massachusetts	24	28,464	178	3,839	24,447
Iowa	25	24,634	57	10,611	13,966
Colorado	26	23,510	55	3,408	20,047
Oklahoma	27	21,484	2,037	5,048	14,399
Connecticut	28	21,086	166	5,734	15,186
Oregon	29	21,067	115	4,909	16,043
Mississippi	30	20,879	3,640	7,288	9,951
Louisiana	31	19,404	82	2,139	17,183
Kansas	32	19,036	2,984	4,922	11,130
Arkansas	33	17,142	0	6,981	10,161
Utah	34	15,684	10	5,442	10,232
Nebraska	35	13,650	15	5,303	8,332
Nevada	36	13,041	65	1,511	11,465
West Virginia	37	8,966	0	2,295	6,671
New Mexico	38	8,763	0	842	7,921
New Hampshire	39	8,329	0	797	7,532
Idaho	40	7,475	61	1,049	6,365
Maine	41	6,864	0	636	6,228
Delaware	42	6,600	946	1,036	4,618
North Dakota	43	5,539	212	1,236	4,091
Montana	44	5,410	0	1,020	4,390
South Dakota	45	5,194	0	1,104	4,090
Hawaii	46	4,968	0	393	4,575
Vermont	47	4,143	0	1,145	2,998
Rhode Island	48	4,123	0	476	3,647
Wyoming	49	2,817	0	287	2,530
Alaska	50	2,470	0	133	2,337
District of Columbia	51	242	0	20	222

Ok, so after the bailout goes through – and GM or Chrysler goes bankrupt in a few months, or a year, what will happen to these people?  Isn’t giving a loan simply giving false hope?

I am thinking of doing something that is very, very unlike my personality (and me in general).  I am thinking my next car, whenever that may come, has the potential to be an American car if the product can show me there is a reason to consider buying American.

For the last 10 years I have been a strictly German car driver.  The cars I have chosen provide a ride unlike any other.  Factor in the dependability, the service and quality and the consumer has a truly top-notch drive. This level of, well, superiority from the vehicles I have driven over the years has really cut down my scope of potential cars and I am starting to wonder is it possible to find the same in an American car.

The three most important aspects of a car, for me, come down to:

1. Safety
2. Dependability / Quality
3.  Performance

Until recently, frankly, no American car has been able to capture all three of these qualities to a standard that would satisfy my requirements.  That has recently started to change with the information starting to come out from JDPower and associates.  Mercury, Cadillac, Buick and Lincoln are ranked at the same level of “overall dependability” as my choice of automaker, so, while skeptical, I am starting to wonder if now may be the time to look at why they have to offer. 

That said, let’s look at the cars in the line-ups of the companies just listed.

• Mercury – Designed for women.  Not being sexist, they really are designed to appeal to women.  Not that it’s a bad thing; it’s not what I look for in my car.
• Cadillac – There is potential here from a design view and CTS / STS lines are very attractive from a performance perspective.
• Lincoln – Re-badged Mercury.  Tried to target men but the design that appeals to women is still seen.
• Buick – The design and styling choices resemble that of a geriatric community, plus the power and performance lack.  What am I, a grandfather?  No.  

There is plenty of time for me to think about the potential next purchase as I have no plan on picking up a new car any time soon, but it is something that is in the back of my mind.  Have these brands overcome the quality and performance issues American cars have become known for.  Is there any reason to still buy an American vehicle?  I’m still left asking the question – American Cars… why?