Author Archives: Brian

Would You Buy American To Save Jobs?

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It is no secret for car buyers that right now, some of the best vehicles are not made by American companies.  In fact, Honda and Toyota, and perhaps even Hyundai makes some of the best vehicles that the average consumer can buy.  They last much longer than their American counterparts, they hold their value well, and are very enjoyable to drive.  It is no small wonder that Toyota is now the biggest car company in the world.

It’s also no secret that car companies in America are really struggling.  And this could mean the loss of many millions of jobs if something isn’t done about it.  So I pose this question to you, would you buy American automobiles to save American jobs?

Personally, I don’t think I would. That sounds harsh, but let me explain.  Many foreign vehicles are actually made America.  Did you know that? Down in the south, far from Detroit companies such as Toyota, build trucks and cars using American workers and American plants. So, is buying a foreign car actually destroying American jobs? Yes and no.

American jobs will be lost more because of poor management more so than from poor worker quality.  Of course, part of the blame does fall on the American auto workers union’s for being greedy all of these years, constantly wanting to get paid more even if they are producing less.  The whole industry is very shortsighted and is now reaping the rewards of their shortsightedness.

If you really want to help the American car companies, buy the best car that fits your needs the best and don’t worry about what company is.  If you buy a high-quality vehicle that shows the other companies that they are going to have to produce high-quality vehicle to get your business.  That is a lesson that every company needs to learn to succeed. If you really want to help the car companies and save American jobs in the long run, you should buy the best vehicle in your budget.

Buy Used, Save Thousands

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Right now is quite possibly the worst time in the history of car buying to buy a new vehicle. I’m not even kidding.  The car companies could fail, the banks don’t want to loan money, and to be honest with the recession economy being what it is it is hard to say whether you even have your job a year from now. So, if you’re thinking about buying a new car, don’t. It is a terrible idea.

Of course, buying a new car is almost always a terrible idea.  The only thing you get with the new car is an overpriced warranty, a sleazy salesman, and the new car smell. Oh wait, you also get saddled with thousands of dollars of extra car payments that you shouldn’t have to pay.  Compared to buying a used car, a new car is the scam of the century.

Once you drive a new car off the lot.  Its value drops by thousands of dollars.  In the first two or three years, the value can drop anywhere from 25 to 50%.  Yet, if you have a five-year loan, after two years your vehicle is likely to be worth less than what you owe. Not only that, but you are likely to be stuck with the vehicle because of it.  For that much longer. After 5 years, a used car doesn’t lose its value as fast, so you don’t get hit with the same depreciation penalty that you get with a new vehicle.

One time I actually sat down and ran the numbers, and I quickly realized that the difference between buying a new vehicle, or even a one-year-old vehicle to buying a three or four-year-old vehicle is staggering.  If you were to compare a five-year-old sedan for $7,000 and a new sedan for $15, 000, you’ll find that over the life of the vehicle, say over the five years you own it, you’re likely to pay well over $15,000 more for the newer vehicle.

Actually, if you were to hold onto the vehicles for 10 years, it gets even worse. the amount of interest you pay on a new vehicle is so much higher, that in 10 years, you could buy a used vehicle, drive it for a few years, pay off the loan and get another one, and still end up paying less than the purchase price of the new vehicle. What a deal right? That doesn’t even figure in the extra cost of interest on the new vehicle.

Don’t be a fool, by used and save yourself thousands of dollars.  Also, I’m pretty sure new car smell rots the brain anyways, so you’re not missing out.

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Cheap Gas Means Big Trucks Again?

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I’m sure you’ve probably noticed by now that gas prices have dropped back down to under two dollars a gallon.  That’s 50% lower than they were this summer at their peak.  The reasons for the high and low gas prices are somewhat complicated, but at the same time they’re pretty simple.  Because our economy hit a recession before the rest of the world did, our dollar value was very weak compared to other currencies such as the euro.  The difference in currency value meant that gas prices in Europe didn’t actually change that much last year, but since our dollar value dropped dramatically the price of gas skyrocketed.  Now that the rest of the world’s economies are hurting like ours, gas prices go back to normal because our dollar value relative to other currency values has increased.

All this is interesting, but you really have to wonder what the end result of cheap gas once again will be.  Will people go back to buying their Hummer H2’s?  I’m not really sure.  One thing I do know is that people have a short memory.  Sure, gas prices were high, not so long ago, but when used see that big truck next time you’re buying a vehicle and gas prices are cheap, are you going to remember the four dollar gas? My guess is most people won’t.

Recently Google released some of their yearly keyword trend data, and there is a fascinating trend.  As gas prices skyrocketed people’s interest in hybrid vehicles and alternative fuels increased with it.  Now that gas prices have gone back down, interest in hybrid cars has gone down as well.  Coincidence? I doubt it.

It would be better for every one if people stopped buying these huge trucks just to drive around town.  It’s always fascinating to drive to the richer part of town to see soccer moms driving Cadillac Escalade’s just to go shopping at the grocery store.  Why on earth does anyone need an eight passenger vehicle just to go get groceries? Couldn’t they just have a small vehicle that they run around town in?

Gas prices are going to go back up.  It’s only a matter of time. Next time they hit four dollars a gallon, will we be ready? It’s hard to say but one thing is for sure, we’ve been warned.

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Drivers Ed Saves Lives

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We all probably went through the same experience when we were growing up.  When we turned 16, we probably took driver’s ed and got our driver’s license. I was not a huge fan of drivers education, because it was a very boring class.  Yet, looking back, it is an extremely valuable class that everyone should be required to take.

I don’t think a day goes by that I don’t see someone run a red light.  Is getting to be the wintertime now.  I really start to wonder how many people are going to get in car accidents  just because they were impatient.  It’s a terrible thing.  While driver’s ed doesn’t really solve this problem, it does teach you to drive more defensively and can keep you safer in the midst of so many other bad drivers.

Also, even though drivers education was a very high stress environment, especially the driving tests, that does do a good job of teaching you to be alert in high stress driving environments.  Many people live in large urban areas, with four or eight lane highways that get cramped and congested during rush hour.  I’ve driven in more than my fair share of this kind of traffic, and I can tell you that it is extremely stressful.  People make mistakes, and at 75 miles an hour, that usually means someone dies or is badly injured.

I can’t help but wonder, when I see bad drivers if they ever took drivers education class themselves.  I’m sure they did, but what happened to them that they all of a sudden decided that safety of themselves and others was not really worth paying attention to? Is getting to work or to the store a couple minutes quicker, worth killing someone? I don’t think so, but it seems like a lot of other people do.

With all the distractions in our vehicles and outside of our vehicles, it is more important than ever to have a solid foundation of drivers education to keep people safe behind the wheel.  The more safe drivers, we can have better.  Even if you know how to drive, a defensive driving course. might save your life. Aefensive driving isn’t sexy, but neither is a horrific accident. Think about it.

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Ford Is The Strongest Of The Big 3

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Last week, once again, the big three automakers went to Washington to beg for money.  Actually, that’s not exactly true.  GM and Chrysler both went to Washington to beg for money, while Ford went to secure loan guarantees, which is a bit different.  You see Ford is a company that has realized in the last few years that they’re in trouble.  That is a stark difference from GM and Chrysler, which once the economy tanked, they realized that they were completely hosed.  Up until then, they thought everything was fine.

Ford has been in a restructuring cycle for the past two years.  They hired a new CEO from Boeing, who has a very simple goal.  Instead of overproducing to make the numbers look good, but being stuck with the financial mess later, he’s going to take Ford and make them a leaner, meaner, and more intelligent company.  He is going to do this by reducing their output to meet actual market demand.  It sounds almost too simple, but for various reasons, the old strategy in the automotive world is to overproduce to make your quarterly numbers look good.  Even if people aren’t actually buying your cars.  Then, tie up all the money in your financing operations and make it look like you’re making money.  When in fact, you’re really not.

It’s too bad that Ford is getting lumped in with the other two car companies as “one of the big three”. while they are one of the big three, they are two years into their restructuring.  And if it wasn’t for this recession, they would’ve hit profitability next year.  As it stands now, they are likely to make money in 2010.  That’s a big difference from General Motors and Chrysler threatening bankruptcy if they don’t get money yesterday.

The real sad thing is that even though Ford is the best, even if General Motors or Chrysler were to go out of business it would hurt Ford tremendously.  Ford relies on the same parts manufacturers that everyone else does.  If Chrysler or GM were to go under, that would take down the whole auto parts industry potentially as well.  The unintended consequences would be that Ford and other companies would have to find a way to rescue the auto parts companies.

It’s a pretty ugly time for American automakers, but one thing is clear: Ford has a plan.  You can’t say that about General Motors and Chrysler.  Sure, GM has their Chevy Volt that they’re preparing, but that won’t save Chevy.  At this point, I’m not sure if anything will.  They have too much junk on their books and need to be willing to cut.  Companies like Pontiac, Saturn, and maybe even Buick.  These are tough times, and if these automakers don’t act, they’ll go under and take all the jobs with them.