A friend of mine alerted me to a radio article by NPR about how some new cars are cheaper than used cars.  I’m always up for a good debate, so let’s have some fun and debunk the claim that “Some New Vehicles Selling For Less Than Used Ones.”

Claim #1: “Some new cars are actually cheaper than used…”

• Truth Meter: Low
• Comment: This is true only under certain conditions. As a used car buyer, you CAN always pay more than a new car but you would only do this if you got tricked into paying too much!
• Reality: Used cars are still much cheaper than new cars. The idea that new car prices are plummeting and therefore making used cars relatively more expensive makes little sense. Car pricing is partly based on the price of similar alternatives. Therefore, if new cars prices come down, used car prices follow suit.

Claim #2: “Honda Civic Hybrid” is an example of a car where the new car is cheaper.

• Truth Meter: Even Lower
• Comment: A new Honda Civic Hybrid will cost you about $21,000 plus tax, title, and license. This is more than $3,000 less than the suggested retail price. However, I just used Carsala to do a price check, and I can buy a 2007 or 2008 for $17K (19% cheaper). Even better, I found the following ad on AutoTrader. It’s a Certified Pre-owned (CPO) car and the asking price is $1,000 less than the new car price. CPO means the warranty will be extended by one year and 12,000 miles so it has the same warranty as a new car.

Claim #3: Used cars are getting more expensive because if you’re “not producing as many new cars, then you’re not producing as many used cars.”

• Truth Meter: Very Shaky Grounds
• Comment: The statement if taken entirely literally is true. However, the used cars you want to buy now are two years old (see here for why), and the current decrease in car production will have minimal effect on the used car market. How many people are in the market to specifically buy a used car that is only three months old? Hogwash.

Claim #4: To buy a new car you will have to do some “serious research”, “shop well for financing rates”, and shop for “deals in your area.”

• Truth Meter: Finally something true!
• Comment: Buying a new car is a colossal pain. For me, it ranks with getting ALL my teeth pulled - without a painkiller. Read my past post about The Top 10 Things a Dealer Absolutely Won’t Tell You in case you need to be reminded about what car dealers will do and say to make as much money as possible from you.
• Reality: Buying a used car is much easier. With Carsala, all you need to do is (1) choose the car, model year, features and colors that you prefer, then (2) let Carsala find your cars and negotiate a price of up to 25% off Blue Book, then (3) inspect and drive the car in person, with the option of buying at the Carsala price. It doesn’t get much easier than this…

As you go through life, there are certain memories that stick with you. You are not sure why, but then later in life it comes full circle. For me … 18 years later it has come full circle.

It might have been eighteen years ago, but I remember it like it was yesterday. I was at my Grandfather’s house in Hawaii for Christmas Break. I had just played golf and was hungry. I opened up the refrigerator and was trying to figure out what I wanted to eat. I kind of stood there and was trying to make a decision … probably between a sandwich or a quick snack.

“Courtney, shut the refrigerator door.” “I’m just getting something to eat.” “Decide what you want to eat BEFORE you open the refrigerator door.” “How can I make that decision when I don’t know what’s in the refrigerator?” “You have to plan ahead or you will waste electricity.”

That was my exchange with my Grandfather and I thought it was ludicrous. I remember tellling my Mother I thought the discussion was a bit extreme. She told me it is part of what happens when you grow up in a Depression.

I also remember when I received my Driver’s Permit and my Grandmother told me I could drive her around. I was so excited (even though it was a HUGE Chevy Caprice Classic). She told me I could take her to the grocery. We would be going to 3 different groceries because that is where her coupons could be applied. I remember thinking … they live in this huge house … why is SHE cutting coupons??? Once again, my Mom explained it was part of growing up in the Depression.

Fast forward to about 5 years ago. Life was good … we were selling a ton of cars and my Dad decided to give me this “lecture”. “You have NEVER been through a BAD time in the car business. You don’t know what it’s like. You have no idea what bad times are like.” He used to tell me that sometimes when you build a relationship with a bank, it’s not all about rate. Sometimes you will take a higher rate in return for availability of funds. Let’s just say this makes a whole lot more sense now than it did five years ago!

Guess what? We can now check bad times off the “bucket list”!! My generation has arrived and now we are getting first hand experience! Yes, we have our story. I wonder what my Grandfather would think today. When he was a Dealer, GM had over 50% of the market share. Do you think it ever occurred to him that they might go bankrupt? In today’s thinking, I suppose it would be like thinking that Google would go bankrupt? Maybe it is a hard comparison because right now, it does feel like ANYTHING can happen.

So as I reflect on the refrigerator door incident, cutting coupons, and the availability of funds, what have I learned? What will I tell my kids and Grandkids?

* Accountability during the good times is a necessity because the bad times will expose the sins of the good times.

* Pay down debt. If everything is paid for, you can survive all kinds of situations.•We all have relationships with the factory, but we need to learn to operate our stores independent of the factory because you never know what could happen.

* Constant learning and training is a necessity. If you are willing to change, you will be fine. The people that do NOT embrace change are getting ready to close their doors.

* Keep your priorities in order. There will be a ton of stress over the years but if you have Faith, Family, and then work … you will have the ability to keep everything in perspective. This will probably add years to your life.

The good news is that my Grandfather served in WWII and the store was basically “closed” for 3 years. When they returned, he told me they made more money than they ever imagined. When the smoke clears, there will be some big wins to offset these days.

There are many more items and I would love to hear what everyone is learning from these times. With that said, what is YOUR STORY?

_____________________________________________________________

Courtney Cox Cole, Hare Chevy

This is a guest post by Courtney Cox Cole, owner of Hare Chevrolet in Indiana. She has worked for 13 years in the automotive industry and she and her sister Monica recently purchased the business from their Father. Hare Chevrolet is the largest GM retailer in the State of Indiana and has been for 4 years. Hare has the distinction of being the oldest transportation business (since 1847) in the Nation … Courtney is 6th generation. There is an article in the February 2009 edition of Car and Driver Magazine that gives an excellent history of their business.

[Commence scary music here!]

As Spring begins to become the determining season buyers are trending towards thinking about Summer travel plans. As usual this affects the car market because buyers are thinking about how their car purchase can increase their summertime pleasure. This year, like a butterfly flapping its wings in the hemisphere of our own backyards, the Spring car season is also being affected by the economy and another interesting trend: minivans are coming back in favor.

“People have come to realize the modern minivan is a tremendous buy for the money,” said Jeff Gann, owner of Lakeshore Motors in E. Lake Weir, Florida to Used Car News this week.

[Fade to Little Miss Sunshine Theme song]
Fluctuating gas prices has led many buyers to consider minivan over their typically gas guzzling cousins, the SUVs. Also, their lack of popularity in recent years combined with rental fleets of minivans being liquidated mean that minivans are showing up in the used marketplace for a lot less than SUVs. When rental fleets show up at auction and dealers can buy blocks of minivans for low prices the savings can then be translated to the spending conscious buyer who wants to spend around $200 a month on car payments.

“Buying a block from a rental company was a good opportunity”, said Tom Stehouwer, owner of Tom Stehouwer Auto Sales in Grand Rapids, Michigan who recently bought a block of a rental fleet for his inventory.

Consumers like Robert Gonzalez, father of 5 and car savvy commentator said to me, “I have seen a moderate push toward them [minivans]…as several family members, friends and neighbors have picked up a minivan within the last year.”

Gonzalez also adds, “I know there is a downward trend in production of medium to large size SUVs. I would guess though that Toyota and Honda more than likely own the minivan “quality” category while domestic manufacturers like Chevrolet, Ford and Chrysler probably own the “value” category. Of course this is entirely speculation on my part.”

And his speculation is right! A used Honda Odyssey (2005-2008) averages about $12,000.00 in Carsala’s database of used inventory of what is currently available on the dealer lots. 2008 Odysseys are currently $20,000.00 to $32,000, according to Edmunds while Chrysler Town & Country (2005-2008) averages about $7000.00.

In any case, both are examples of how accessible late model minivans can be for buyers. Just don’t forget your Hot Rod Minivan Accessories!

It is with great pleasure that I announce Michelle Naranjo, aka Miss Motor Mouth, will be joining Carsala to lead Digital Communications, effective immediately.

Michelle is an excellent addition to our team and we are absolutely delighted to have her on board.

Here’s the formal release:

Carsala, an online application revolutionizing the car buying
experience, announced today the appointment of Michelle Naranjo, also
known as Miss Motor Mouth, to lead Carsala digital communications.
Naranjo will assist with ongoing public relations, market strategy and
contribute to growing the venture funded company’s business
development.

Carsala CEO, Tyler Elliston said of the appointment, “Michelle is a
wonderful addition to our team.  Her industry savvy, expertise with
online media, and distinct voice will be invaluable as we pursue new
ways of communicating how we are revolutionizing the used car buying
process.”

Naranjo brings to Carsala editorial, business development and public
relations experience from the online automotive industry and running
her site, missmotormouth.com, combining experience with enthusiasm for
the automotive world. She is a Yahoo Knowledge Partner in the Cars
category specializing in used and online car transactions.

“Carsala is a timely product that fills a need in the car buying
process,” said Naranjo, “Buyers are often intimidated by the
negotiations and dealers, more than ever, need to connect with serious
buyers. I love the technology behind this idea which results in the
successful connection of people doing business.”

Based in Berkeley, California, Carsala offers used car buyers peace of mind,
price validation, outsourced research, and professional negotiation in 48
hours or less.  Carsala’s primary product is a used car buying service that
saves auto buyers money, time, and hassle.  Whether the buyer is still
choosing a make and model, knows the model and is looking for the car, or
has found a specific car to buy, Carsala offers the best source of unbiased,
valuable help.

—

Walk into a new car dealer and your heart is pumping and thumping.  Adrenaline rushes through your body as you see the beautiful car on the showroom floor that has every feature you want and is in your favorite color!  What should you do now???  Turn around, and walk out because you’re about to waste more than $10,000 on a new car - as if it were a 50 cent piece of candy at the corner store when you were 10 years old.  If you don’t have the courage to walk out, then read my Top 10 Reasons To Buy a Used Car to boost your confidence and help you to understand why buying a used is always in your best interests.

1. Car Dealers Are Hurting

• If you haven’t been following the news, car dealers are having a hard time selling new cars. However, cars manufactures can adjust to this change by producing fewer cars. The problem lies in the used car market. People are turning in their leased cars and not buying them back partly because dealers set the buy-back prices too high and partly because people leased more car than they could afford. You can take advantage of this trend by buying a used car at an incredible discount.

2. Certified Pre-Owned Programs

• Imagine this: you buy a two year old used car in perfect condition with 24,000 miles for $10,000 less than a new car and the warranty is extended from 3 years/36,000 miles to 4 years/48,000 miles. Sound too good to be true? It’s not - you just need to read a little more about Certified Pre-Owned cars to understand why they are an amazing deal.

3. Price

• New Cars are expensive and contrary to what a dealer might tell you, they are NOT a good investment. Tax, title, license and depreciation over the first two years on a $25,000 new car will cost you from $10,000 to $15,000. Ouch! When you buy a used car, you avoid steep depreciation and high taxes on an inflated price. Buying the same $25,000 car, but one that is two years old, will cost you about $11,000 less than its new counterpart. Thinking differently, the cost of owning a new car for two years could even buy you a very nice used car!

4. Used Car History Transparency

• Twenty years ago, we had to believe some stranger about the reliability of a used car. Today, services like CARFAX provide us with complete information about a car’s service, accident, or lemon history. We no longer have to worry about a used car’s history!

5. It’s Environmentally Friendly

• A Toyota Prius is a great car to own if you want to save on gas. However, it takes the equivalent of 1,000 gallons of gas to make a new Prius. When you buy a used car, you aren’t putting another car on the road. Instead, you are trading the energy it took to make your old car, with energy it took to make the used car you just purchased.

6. Depreciation

• Cars depreciate the most during their first two years. By my estimate, a typical new car will depreciate about 40% over the first two years. However, don’t take my word for it. Check out Car.com’s great residual value tool and see how much that new car you are considering will depreciate in two years.

7. More for Less

• Are you thinking about buying a Honda Accord, but really want the Acura TL? Maybe a Ford Taurus is on the top of your new car list, but you really want be seen in a Jaguar X-Type? The great news for you is that you get A LOT more car for less money when you choose to buy a used car.  Check it out for yourself with Carsala’s online price quoting tool.

8. Low Insurance Rates

• Insurance rates are partially based on a car’s value and that car’s safety features. When you an equivalent used car, your comprehensive and collision coverage is lower. If you choose to upgrade your car type when you buy used, there may be other insurance discounts for safety features such as a better anti-theft security system, stability control, or VIN etched windows.

9. Used Cars Have Never Been More Reliable

• I’m not saying that every car on the road is reliable. However, modern cars are incredibly reliable and with cheap services like Consumer Reports, we have easy access to information about the reliability of used cars.

10. You Can Use Carsala

• Buying a used car is suddenly easy. Choose the car, model year, features, and colors you prefer and then let Carsala find the car and negotiate the price for you. They will save you up to 25% off of Kelley Blue Book and you still get to inspect and drive the car before deciding to buy it. The car industry is filled with schemes to trick you into paying too much for a car. Carsala is different because what you pay for their service is based on how much you save, not how much you spend like every other car buying service.

Do you think I missed something?  Let me know by leaving a comment!

You have been looking for a nice car in your price range for a month and your heart starts to beat a little faster as you walk up to a shining used car that is in perfect condition!  Or is it in perfect condition?  Inspections are tricky and if you think intuition will guide you to a good car, you’re wrong.

First of all, there is no replacement for having a mechanic look at a car before you buy it.  Make sure somebody has put the car up on a lift, checked out all the mechanicals, and given you a full report on the cars problems (or not).  Mechanics will be able to find leaks, wear, and problems that aren’t visible to an untrained eye looking down at an engine with the hood up.

Now that the mechanic has done his or her job, it’s time for you to do your own inspection and make the final decision.  After all, it’s your own money.  Bring a small magnet,a rag or box of tissues (to clean your hands), and a print out of this blog so that you won’t forget about the insider tricks that will help you make sure you’re getting a quality car!

A. Rust

• Rust is cancer so finding it is important.
• TRICK 1: Magnets will not stick to car body fillers, so use your small magnet to check panels, wheel wells, fenders and door for rust and body damage.

B. Body

• TRICK 2: The factory alignment of exterior car panels is extremely precise. Look at the gaps between panels, doors, hood, and trunk. If the gaps are not even, this could be a sign of major damage.

C. Paint

• A new paint job is a sign of past distress for a car.
• TRICK 3: Open the hood and look for overspray in the engine compartment. Also, lift the molding edge on windshield at the paint line to check for repainting.

D. Tail Pipe

• TRICK 4: Check the deposits in the inside of the tail pipe with your finger. If it’s white or gray, everything should be okay. Black and sooty may mean a tune-up is needed. Black and gummy means something is wrong and the car is burning too much oil!

E. Oil

• TRICK 5: Oil that is murky brown, gray, or bubbly has water in it and is a sign of a cracked engine block.
• TRICK 6: Feel the oil with your fingers. Grit or gum means the oil hasn’t been changed often enough.

F. Doors

• TRICK 7: Open and close the doors without slamming them. If they hit and bounce or just don’t close easily, this could be a sign of major damage.

G. Trunk

• TRICK 8: Lift up the mat in the trunk and look for signs of rust while you are checking out the spare tire.

H. Hitch

• TRICK 9: Check for signs of a hitch being attached the car. Towing can be ruinous to an engine and transmission.

I. Tires

• TRICK 10: Look at tires for even tread wear. Uneven tread wear could be a sign of major damage.
• TRICK 11: Make sure all four tires are the same tire. If tires are rotated frequently, properly inflated, and there is no damage to the car, all four tires will always be replaced at the same time.

J. Shocks

• Check to see if any of the shocks are leaking.
• TRICK 12: If you bounce the car five times, it should only bounce once after you stop.

K. Seats

• Sit in every seat and make sure they aren’t lumpy. Look for tears, damage, and that they don’t move when they are locked in position.

L. Floor Mats

• TRICK 13: Look under all the mats for signs of rust.

M. Pedals, Armrest

• TRICK 14: Check to make sure the wear on the pedals and the driver’s side armrest look appropriate for the mileage on the car.

N. Smell

• If the car is has a very strong deodorant, it may be covering up a musty smell that resulted from water damage, leaks, or something worse.

O. Instrument Panel

• Make sure everything works - radio, heater, AC, clock, horn, etc.
• TRICK 15: When you turn the car on, make sure ALL the lights on the dashboard light up. Lights that don’t work could be burnt out (usually not easily replaceable) or could have been disconnected to hide a problem.

P. Lights

• Check to make sure all lights work (brake, turn, reverse, headlights, interior, etc)
• TRICK 16: Make sure the signals self-cancel after turning.

Q. Windows

• Check that all windows operate smoothly and don’t make any unexpected noises.

R. Glass

• Check for broken or cracked glass.

S. Transmission Fluid

• TRICK 17: Low fluid means a leak, brown means no maintenance has been done on the transmission, a burnt smell means the transmission has a lot of wear, pieces of metal in the fluid means the gears are being ground off.

T. Engine

• Check for leaks.
• TRICK 18: Steam cleaning and engine is a way to hide leaks. Make sure the car has been driven enough after the cleaning so that leaks can still be identified.
• TRICK 19: Squeeze water hoses to make sure the soft and flexible as compared to hardened and cracked.
• TRICK 20: Make sure there isn’t too much play in the fan blade which can mean the water pump drive shaft may fail soon.

U. Belts

• Check for frayed, cracked, and loose belts.

V. Steering

• TRICK 21: Look out the window at the wheel when you are turning the steering wheel. If it doesn’t turn in the first two inches of steering wheel movement, there may be major suspension problems.
• With a power steering car, turn and lock the wheel in both directions. There should be no screeches or bouncing.

W. Exhaust

• TRICK 22: While you’re driving, check the exhaust. Blue smoke means excessive oil burning, black smoke means it may need a tune-up, white smoke on startup is just water in the exhaust line, and white smoke while driving means there is water in the cylinders.

X. Brakes

• TRICK 23: Make sure there is at least two inches between the pedal and the floor when the brake is fully applied.
• TRICK 24: Brake suddenly when driving and listen for screeches. A car that pulls or dips to one side means brake or potentially costly suspension problems.

Y. Leaks

• TRICK 25: Drive the car through a car wash to check for water leaks.

Z. Underneath

• If you really want to picky, TELL the salesperson to put the car up on a lift for you to take a look. Look for engine leaks, transmission leaks, brake line leaks, shock absorber leaks, accident damage or repair, frame welds, and rust.

Thanks to Massey for writing an excellent and well hidden article titled “Inspecting Your Purchase - Six Ways to Identify a Lemon” which has a lot of great information about inspecting cars.  Also, if you think I have missed something in this list or want to discuss the inspection process then please leave a comment!  Thanks!

Need to save some money?  Thinking about buying a motorcycle to save money and gas?  According to my research, buying a motorcycle may be good for your weekly gas bill, but it could also sets you up for an extended trip to the hospital - or worse.

There are some enticing reasons to buy a motorcycle. Consider this:

• Mid-size motorcycles get 40-50 mpg
• Used mid-size bike costs $3,000-$6,000

What’s not in this short list are the safety concerns associated with driving a motorcycles.  The National Highway Traffic Safety Commission did a study and put together a laundry list of conclusions.  If I assume all the conclusions are causal, then it translates into this list of “lessons learned”:

• Wear a helmet
• Stay of rural roads
• Don’t drink and drive
• Be really careful going around turns
• Stay off undivided roads
• Don’t speed
• Don’t drive a night
• Stay away from fixed objects
• Learn to brake and steer in emergencies
• Don’t age (my favorite)
• Get a license

With a list like this, it feels like you should keep your motorcycle in the driveway.  The report also says that when looking at accidents from 1990 through 1999, if you are in an accident on a motorcycle, there was a 3.6% chance that you would die in that accident!  Put differently, that’s almost a 1 in 25 chance.

Another study showed how knowing how to drive a motorcycle and being formally trained is really important.  In this study, 92% of motorcycle drivers were self-trained or trained by friend and family.  Furthermore, more than half of all the accidents were from drivers that had less than 5 months of driving experience on the accident motorcycle and less than 3 years of total riding experience.  For anyone who’s thinking about buying their first motorcycle, you are in this demographic.

I don’t want to be too much of a cynic, because motorcycles are a lot of fun and there are many great motorcycle drivers who will never get in an accident.  I used to drive a motorcycle and so did my dad.  Lots of my friends have driven motorcycles too.  I stopped driving my motorcycle after a bid accident and at least one of my friends stopped driving after his dad was killed on his motorcycle.  It’s grim, but that’s my personal story and it’s consistent with the studies I quoted above.

If I’ve convinced you that driving a motorcycle may not be right for you, then consider putting that $5,000 towards a different car that you will be happier driving.  It could be nicer to drive, get better gas mileage, or both.  Happy driving - whatever you might choose to drive!