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Strategies for Smart Car Buyers

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May 14, 2008

New Car Buying: A Process to Save $ Thousands

(Edmunds editors Phil Reed (L) and Brian Moody on a local car lot discuss best ways to buy a new car.)

My friends have a habit of coming to me after they buy a car. They want to know:

a. Did they get a good deal?

b. How can they unwind the deal?

When they tell me what happened my stomach starts to hurt. I feel helpless because there is little you can do once you signed the contract. But there's an awful lot you can do before you sign to make sure you get a good deal.

We put our heads together at Edmunds and came up with some simple advice and put it into this highly entertaining video (he said modestly). It's a two-parter about Finding and Buying the Right Car for You.

Here's a few tidbits from the video. Simple but effective.

-- Shop and buy on different days.

-- Make a target list of three cars and test drive them back to back.

-- Make a list of wants and needs. Shop for your needs more than you wants.

-- Use the dealership's internet department and shop remotely. This save time, money and aggrevation.

If you are shopping for a car now or know someone who is, check out these two videos. Then, after you buy you're car, you'll only contact me to say what a great deal you got.


Posted by Philip May 14, 2008 7:08 am

Categories: Buying New Cars


May 13, 2008

Vehicle Cost Is More Than Your Monthly Payment

 
When shopping for a vehicle, most people tend to buy the most vehicle that they can afford, with the highest monthly payment that their budget allows. Often, buyers haggle over that last $10 per month without looking into other monthly expenses that they may be facing. Some of these expenses hurt their bottom line, if they are not considered ahead of time.

Continue reading...

Posted by Lee May 13, 2008 4:58 am

Categories: Buying Used Cars | Buying New Cars | Maintenance | Financing | Fuel Economy


May 12, 2008

Interior Role Reversal: Japan Hardens While America Softens Up



Used to be that you could count on Japanese automotive interiors to feature plenty of soft-touch materials, even in relatively inexpensive cars. To wit, the five modern Japanese cars my family or I have owned -- '93 Prelude Si, '94 Accord EX, '95 Corolla DX, '95 Integra GSR, '98 Accord LX -- all had pliable plastics on their dashboards, which imparted a pleasantly surprising sense of quality given their modest MSRPs. American cars, of course, were a considerably different story. Ten or fifteen years ago you could pretty much count on any vehicle with an American badge to be chock-full of cheesy materials and crude construction.

Continue reading...

Posted by Josh May 12, 2008 12:03 pm

Categories: Leasing | Buying Used Cars | Buying New Cars | Driving


May 9, 2008

I Like My Gadgets


I love gadgets, and I am not ashamed to admit it. When I buy cars, I usually like to load them up with all manner of available gizmos and electronic toys. As a result, I have some great first hand experience with a lot of the "surprise and delight" features and options that are available on many of today's vehicles. Let me share my observations with you on some gadgets that I have on my vehicles, or have seen in action on other's vehicles...your opinions may vary.

Continue reading...

Posted by Lee May 9, 2008 8:05 am

Categories: Buying New Cars


May 8, 2008

Getting Lemon-aid for Lemons

Is your car a lemon? Or do you really want another car and so you try to force the manufacturer buy it back?

For every consumer protection law, such as the so-called Lemon Law, there are people trying to game the system and use it to their advantage. And then there are the lawyers (don't get me started on lawyers!) exploiting the laws for personal gain.

Continue reading...

Posted by Philip May 8, 2008 7:20 am

Categories: Buying Used Cars


May 7, 2008

Industry in Turmoil: And There are Deals to be Had!

The screaming headline of Automotive News this week was: "Industry in Turmoil." Cars aren't selling. Pickup truck sales in particular are completely stalled. Dealers are desparate for ways to get buyers into the showroom (as evidenced by Chrysler's "Refuel America" plan).

What does all this mean for you?

It means all bets are off when it comes to negotiating. Yes, check our True Market Value prices but you should know that due to slow sales you have extra leverage. A friend at Edmunds.com bought a two-year-old Infiniti G35 for $18,000.

Conversely, I've been checking prices on the 2007 Honda Fit that I own and have been thinking of selling. Due to high pump prices the asking price on those cars is going through the roof.

Moral of the story: sometimes prices change faster than the pricing guides. Look at the world around you and consider all factors before shopping.


Posted by Philip May 7, 2008 6:43 am

Categories: Buying Used Cars


May 6, 2008

Chrysler Offers Gas Cards As Incentive To Gas Sticker Shocked Consumers


Chrysler has announced a new program that it hopes will stimulate sales, and help to give consumers a hedge against rising gas prices. From now until June 2nd, when you purchase nearly any Chrysler, Dodge or Jeep vehicle (offer excludes all SRT models, Dodge Viper, Dodge Challenger, Dodge Ram Chassis Cab, Chrysler Crossfire, Jeep Wrangler and Dodge Sprinter), you will have the opportunity to receive a gas card that will only bill you $2.99/gallon of gas (regular grade, diesel or E85) for three years, with a limit of 12K miles/year (based on the EPA mileage figures of the vehicle purchased).

As with most things, there is a catch. If you select the gas card promotion, you will have to give up all other rebates and incentives. Also, if your vehicle requires an octane higher than 87, there is an additional price penalty, depending on the grade of fuel needed.

Whether this is a good deal or not really depends on the vehicle selected and how many miles the individual consumer drives, so be sure to check out the current available incentives and compare it to the value of the gas card offer. Keep in mind that gas prices are likely to continue to rise over the three years the program will be in effect. The current average price of regular unleaded in the US is $3.61/gallon. With a maximum of 12K miles/year for three years, the current value of this offer is about $1300. I suspect that a diesel vehicle will offer the greatest benefit since diesels rarely have any cash incentives on them and diesel gas prices are significantly higher than $2.99 a gallon right now.

Who does this offer benefit the most? Chrysler, of course. While a $1300 incentive on all vehicles wouldn't even garner a blip on anyone's radar, the offer of discounted gas for three years has every news organization, both local and national, along with every automotive and business related website, blog and forum on the Net buzzing with the news. Chrysler is getting millions of dollars in free advertising. Not to mention the fact that many consumers who might not have even thought of a Chrysler, Dodge or Jeep vehicle might be taking a look at them now.


Posted by Lee May 6, 2008 5:09 am

Categories: Buying New Cars | Fuel Economy


May 5, 2008

Fuel Economy: Break Even Time for Hybrids

"I'm so sick of the price of gas I'm going to buy a hybrid!"

I can't tell you how often I've heard this. And I want to tell these people that they are on the wrong track. If they merely want to save money, dumping the old gas guzzler and buying a hybrid will take years to save them money. That's because it costs more for the privledge of saving gas. This is the so-called "hybrid premium."

If you compare a hybrid to a nonhybrid car you will see that the hybrid car costs more because of the sophisticated powertrain. In the long run this saves money for the car's owner when buying gas. But most people aren't in touch with exactly how much they spend on gas for a year.  Even driving 15,000 miles, and paying $3.61 a gallon for gas, a typical car will consume about $2,000 of gas a year. Over the same distance a typical hybrid will consume $1,500 of gas for a $500 savings.

Now, how long does it take for the $500 savings to cancel the higher purchase price? That's the hybrid break even period.

Continue reading...

Posted by Philip May 5, 2008 8:27 am

Categories: Fuel Economy


May 2, 2008

Coming: Gas Sipper's Smackdown

(The smart fortwo and Ford Focus compete in the "Gas Sipper's Smackdown.")

For the past two days I've been driving. A lot.

We took four cars and selected three different driving routes to see which would win the "Gas Sipper's Smackdown."

Battling for the title was our flyweight 2008 smart fortwo,  our 2005 VW Jetta TDI, a 2008 Toyota Prius and our 2008 Ford Focus SES Coupe.

We drove from Los Angeles, through Death Valley and into Las Vegas to see which got the best gas mileage while cruising the backroads. Then we did a 131-mile city loop in Las Vegas which was absolutely gruelling. Then we did a highway-speed run back into LA.

Four cars, three different driving conditions. Which one took first in the Smackdown? The numbers are being crunched as I write this. But I can tell you, it's not who you think. And, while one of the cars lost in every category, it fought bravely and did better than we ever expected.

While I was in Las Vegas I read the Wall Street Journal because it appeared at my hotel room door. I read this interview with Chevron boss David O'Reilly. One exchange about gas prices was as follows:

Mr. O’Reilly: I can’t predict what the price is going to be. You would have to tell me what the economic situation in the world is going to be a year from now. I don’t think it is going to get back to those relatively low levels we experienced in the late ’90s and early 2000s.
WSJ: Ever?
Mr. O’Reilly: No.

I couldn't help but think of those words as I cruised around Las Vegas looking for a way to stretch an extra mile from every drop of gas.

Stay tuned for "Smackdown" results!


Posted by Philip May 2, 2008 8:52 am

Categories: Fuel Economy


May 1, 2008

Dealers Don't Make As Much Profit As You Think


Just as you are getting ready to sign on the dotted line, agreeing to purchase that vehicle for the price that is indicated, you will most likely be thinking, "could I have done better?" Thanks to decades of "wheeling and dealing" and playing "fast and furious" with the numbers, car dealers have garnered a reputation of being less than forthcoming when it comes to their "best price." While things are certainly changing, with information from Edmunds and the near ubiquity of the internet, old habits die hard, for both dealers and consumer alike. As a result, there is a bit of a disconnect between how much money consumers think dealers are making, verses how profitable a dealership really is, especially in this depressed economy.

According to the National Automobile Dealer Association (NADA), average dealership pretax profit for 2007 was 1.5% of sales, while over 20% of dealers lost money. Dealerships selling domestic branded vehicles generally did worse than those selling imported branded ones. Not surprising since sales of the former have suffered at the hand of the latter. Automotive News, an automotive industry weekly trade publication, recently conducted a survey of dealership profitability. According to the result of the survey, most dealers are cutting back on everything including the hiring new employees, donating to charity, spending on building improvements and reducing customer perks like loaner cars.

I point this out not to garner sympathy for dealers. Rather, I want our readers to understand that selling a car at, or near, invoice generally doesn't mean that the dealer is still making thousands of dollars on the backend from some secret fountain of money. When I talk about things like advertising charges or how the holdback works or even when Edmunds lists the invoice price, this is information is designed to educate and put the buyer on a more level playing field, Yes, there is other money the dealer gets that is not indicated in the invoice price, but also understand that this money often covers expenses other than the actual cost of the vehicle.

So the next time you sign on the dotted line, feel confident that your research has paid off and that you don't need to worry if you have made a good deal for yourself. Instead, you can drive off and worry instead on when you will get that first scratch or dent.

Posted by Lee May 1, 2008 5:00 am

Categories: Buying New Cars | Negotiation


 
 


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