Pushing Your Advantage

The sales results from September are in, and in the words of one analyst, they are ghastly. Consumers are staying away from car dealerships in unprecedented droves. Maybe you feel you should join them, standing on the sidelines. If your finances and future prospects are cloudy, that is just where you should be. But if you feel relatively secure, there hasn’t been a better time in the last 20 years to buy a car and truck than right now. The incentives and offers from the auto manufacturers are gigantic. In some instances you can save as much as 40 percent off the manufacturer’s suggested retail price (MSRP) of a new vehicle. But if you’re going to get the best deal out there, you can’t just sit back and hope it happens. Instead, you have to negotiate, and negotiate hard. And that means haggling.

Though many consumers profess to hate haggling over the price of their vehicle, there are those who don’t feel they could get a good deal if they didn’t haggle. They feel they must engage the dealer in negotiation or they are leaving money on the table. And the fact is, if you don’t negotiate, you probably will not purchase the vehicle as cheaply as you otherwise might. 

How do you avoid transferring vast sums of your money into the dealer’s bank account while keeping your sanity and dignity largely intact? First, understand that the new-vehicle acquisition process involves several transactions. Try to treat them as discrete negotiations rather than lumping them together. This will allow you to examine each more clearly than trying to make sense out of a multiphase deal. Second, arm yourself with information. The Web has made it much simpler to get key pre-negotiation information like list prices, invoice prices, incentives and even “street prices.” Equipped with this knowledge, you can better assess each individual transaction and the acquisition as a whole before you shake hands on the deal. 

One potential tripping point is the trade-in. Anyone who trades in her or his vehicle as part of the purchase of another vehicle is really engaging in two transactions simultaneously. And since used-car values are hardly set in stone, the concept of the trade-in by necessity guarantees that some sort of negotiation will take place. One part of that negotiation is the trade-in value (i.e., purchase price) of the vehicle going to the dealer, and since that is already in play, it is not a stretch to throw the purchase price of the new vehicle up for negotiation as well. Add the bargain around possible dealer financing of the vehicle, and you have the basis for a complicated and often murky series of negotiations. Only by treating each as a separate entity can you look at them with any degree of rationality.  

One final bit of advice: Don’t try to wring every last dollar out of the deal. There are diminishing returns to prolonging a negotiation, especially in light of the fact that you could well spend hours to capture that last 50 bucks. Instead, aim for a mutually satisfying deal, a win-win, and you’ll be more satisfied in the long run.

Strange Analogies

When one attends the Moscow International Automobile Salon (or MosIAS), it is hard to ignore the similarities between the Russian and the American market, despite the wide disparities between the two countries’ cultures and economies. In both Russia and the United States, the domestic auto manufacturing industry has come to be largely dismissed by significant segments of the country. After having virtually monopolized the market in the past, the domestically based auto makers in each country are now facing tough times as their potential constituents turn to import brands for their quality and innovation. In the face of this heavy competition, the domestic car builders are fighting back -- raising the style and build quality of their offerings -- but these efforts are met with skepticism from the buying public. 

The huge difference between the United States and Russia, however, is that the Russian market is forging to a new sales record every month, while the U.S. market, in 2008, has sagged to one of the poorest sales levels in two decades. Last year the Russian auto industry shot up some 50 percent, which makes it one of the fastest-growing markets in the world. Meanwhile, the U.S. is still the biggest, but it is struggling to maintain its pace, much less get still bigger.

While American OEMs have been taking a beating in the U.S. market, they have been on the forefront of the recent increases in Russia, grabbing significant influence and market share. Ford Motor Company gained an early foothold in the post-Soviet Russian economy, and it has been using that to its advantage ever since. After establishing operations in Russia in 1997, Ford became the first overseas manufacturer to build vehicles in the country. Its St. Petersburg plant was established in 2002 with an annual production volume of 25,000. Soon, production capacity will jump all the way to 125,000 with the addition of the Mondeo to the Focus production line. Domestic production is a very important advantage for Ford in its battle against its rivals in the Russian market since both import duties and logistics favor production close to the customer. And as a country with 11 time zones, Russia’s logistics, as you can imagine, are a major factor.

Certainly the challenges in Russia are many -- a scattered populace, a host of competitors and a surplus of bureaucracy among them -- but the potential rewards are great. This year Russia is quite liable to overtake Germany as the largest light-vehicle market in Europe, and vehicle ownership per capita is still far from American or even Western European levels. This translates to a giant potential upside. In fact, the Russian vehicle market is growing so fast that it has simply zoomed by many facets of the car-buying Americans take for granted. For example, an oddity in the tax laws has made used-vehicle sales by dealers to be a very pricey proposition versus private-party sales, so there are very few used-car dealers. Additionally, because of arcane banking restrictions, credit is much less available in Russia than it is in the U.S. or Western Europe. Last year about one-half of the three million cars sold in Russia were paid for with cash. Leasing of vehicles to private individuals is nearly unheard of. So in spite of some similarities, things are quite different in Russia -- and it is Russia’s car market that is heavily on the rise. Go figure.

Will Buying a Gas-saver Save You Money?

“I don’t want to pay $100 for a tank of gas!”

We at Driving Today have heard consumers say that over and over in the past few weeks, and many of them are acting on it by ditching their current ride and buying a new vehicle that offers better miles per gallon. They’re saving money, they think. But are they really?

Certainly with fuel prices at an unprecedented and painful level, many people are looking for ways to save. And the general media is pouring gasoline on the flames with its ongoing coverage of the fuel price issue. But as a rational consumer, there is a question you should ask yourself: Do you want to save fuel, or do you want to save money? And while at first blush, they might seem like the same thing, they can actually be very different. The good news is that there are simple, cost-effective things you can do to save both fuel and money. The bad news is that they are not the most obvious steps people are taking today.

Let’s take a long hard look at the idea of replacing the car you drive today with a new model that gets better fuel economy. That seems an obvious money-saver, but even if you go from a notorious gas guzzler to a super-mileage champ like a Toyota or Honda hybrid, while you will certainly save gas, you are very unlikely to save money. Why? Because you are almost always better off financially keeping your current vehicle than buying a new vehicle. The reason can be summed up in one word: depreciation. Very likely your current ride has already taken a huge value hit in depreciation, but at the same time, it likely has a great deal of useful life left in it. To this, when you factor in the losses in passenger- and cargo-carrying abilities that you are likely to suffer, and the premium prices hybrids are commanding in today’s marketplace versus conventional vehicles, what seems like an obvious money-saver becomes a pretty serious money-loser.

From a strictly dollars-and-cents point of view, you are far better off to look into keeping your current vehicle and optimizing its fuel economy with low-cost maintenance items. For example, experts recommend that consumers strategically invest in short-term maintenance tactics to achieve long-term savings from improved engine efficiency and fuel mileage. Specifically, replacing air filters, fuel filters, oxygen sensors and spark plugs will help boost fuel mileage. And usually this efficiency increase will be more than enough to offset their modest costs.

Properly cleaning, maintaining and replacing air filters when necessary will ensure better air flow through the entire engine system. Since an engine is essentially an air pump, this simple step to help it “breathe better” will improve engine efficiency and result in more power and better fuel mileage. According to a recent EPA study, air filters can increase fuel mileage by as much as 10 percent, and the EPA estimates that the payback for replacing a clogged air filter may amount to more than 25 cents per gallon, based on current fuel prices.

In addition to a free flow of air, efficient combustion also needs a well-regulated flow of fuel and strong, consistent spark. When fuel filters become plugged, sensors signal a car’s computer to send more fuel into the engine, resulting in poor fuel economy, emission testing failure and engine system wear. Regular cleaning of fuel filters will help reduce consumption by not triggering the sensors. Spark plugs are subjected to extreme conditions in the engine’s combustion chamber, which can result in the engine misfiring and fouling. Replacing spark plugs at regular intervals will help keep the engine operating at an optimum level, while improving fuel economy and reducing emissions.

Finally, properly functioning oxygen sensors, which regulate airflow into the engine, are good for the environment and can save hundreds of dollars in fuel costs over the life of the sensor. Replacement intervals for oxygen sensors are similar to those for spark plugs and range from 30,000 miles to 100,000 miles, depending upon the type of sensor. U.S. Department of Energy studies and others have shown that replacing worn oxygen sensors can increase fuel mileage by up to 40 percent.

World Record Road Warrior Names Top Towns

If you ask Irv Gordon, the guy who set a world record by driving his car for more than 2.7 million miles, about road trips, he’ll tell you to ditch the fancy resorts and theme parks and take a drive to a small town. Gordon, a retired science teacher from Long Island, N.Y., clocked his historic two millionth mile in his shiny, red 1966 Volvo P1800 in 2002 while driving down Times Square in New York City. Now he is only 300,000 miles from reaching the three million mile mark. Gordon estimates he has stopped his Volvo at more than 5,000 small towns over the past 42 years for coffee and conversations with the locals.

"Folks are anxious to have a relaxing, inexpensive summer vacation under the warm sun," Gordon said. "Make it easy on yourself this year and get off the gridlocked interstates. Take a state highway toward one of our thousands of peaceful small towns. Each small town is a gem, packed with bizarre attractions, important history and plenty of fun."

Gordon suggests nine great towns (some with a Swedish twist) to drive to this summer:

  • Newburyport, Mass.
    "This small town, birthplace of the U.S. Coast Guard, is just a few miles north of Boston and has a rich maritime history heritage. You can still find shipyards, as well as New England-style saltbox homes and rather large federal- and colonial- style homes all over town. Be sure to visit Lowell's Boat Shop, the country's oldest boat-building business still in operation."

  • Shelburne, Vt.
    "This beautiful area is nestled between the mountains and Lake Champlain. It's home to the Shelburne Museum, the Vermont Teddy Bear Company, Shelburne Farms and the Ben & Jerry's Ice Cream factory."

  • Lindsborg, Kan. (aka Little Sweden) "Lindsborg is a real taste of Sweden hidden 150 miles west of Kansas City. The town is beautiful, neat as a pin, and the townsfolk are just as friendly as can be. Swedish pancakes and other specialties are served in almost every restaurant in town. Swedish Midsommar celebrations with Swedish folk-dancing take place in June each year. Don't forget to stop by the bison ranch nearby and check out the wildlife."

  • Mitchell, S.D.
    "Home of the Corn Palace. It's a building like you have never seen before. Approximately 275,000 ears of corn, as well as other grains, stalks and grasses cover the building's exterior, forming elaborate murals designed by local artists. The murals are changed periodically but always depict local history. If you want to get the feel of a real Old Western town, this is a terrific place to start."

  • Wamego, Kan.
    "This small town's claim to fame is the OZ Museum. The attraction contains more than 2,000 OZ artifacts dating back to 1900. If you loved the story of Dorothy and Toto, you will love spending time here. Wamego is another friendly Midwestern town with welcoming residents."

  • New Sweden, Stockholm and Westmanland, Maine
    "These three tiny towns, first settled by 51 immigrants from Sweden, boast a rich Swedish heritage and easily allow you to 'get away from it all.' If you live in the Northeast and feel a drive to Lindsborg, Kan. (Little Sweden) is a bit far, this will give you a bit of Swedish hospitality closer to home."

  • Groveland, Calif.
    "This former gold-mining town of the 1840s is home to the oldest continually operating saloon in California and sits 30 miles from the entrance to Yosemite National Park. Amidst beautiful woods and lakes, the town is at the top of Priest Grade, a road once used to haul gold down the mountain and one of the steepest inclined roads in the U.S. Just the ride up the mountain is worth the trip."

  • Vermilion, Ohio
    "Here you'll find New England charm on the shores of Lake Erie and the Vermilion River. Lighthouse and sailboat enthusiasts will be right at home. Stores, shops and the Inland Seas Maritime Museum remind you of decades past. During the summer months, you can hear concerts and sample hand-dipped ice cream cones in the town square. Don't forget to visit Thomas Edison's birthplace in Milan, just a few miles away."

  • East Sweden, Texas
    "This is another Swedish heritage spot, now considered a ghost town. If you like getting a bit off the beaten path and seeing things as they used to be, this would be a great choice. It's easy to reach on U.S. Route 190 in the beautiful Texas Hill Country. The town remains show what happened when the railroad bypassed the settlement almost 100 years ago."

Gordon has learned a lot about small-town America since he purchased his P1800 in June 1966 from a neighborhood Volvo dealership for $4,150. His 125-mile daily commute to and from work, his passion for driving and his meticulous care for his car enabled him to clock the miles. In 1998, The Guinness Book of World Records honored Gordon's car as the vehicle with the "highest certified mileage driven by the original owner in noncommercial service." Gordon breaks his own world record every time he drives his celebrated car. With nearly 2.7 million miles on his car now, Gordon is aiming to achieve a near impossible milestone: driving three million miles in the same car.

Finding the Right Used Car

There has never been a better time to buy a used vehicle than right now. Previously owned vehicles are built better, last longer and deliver more reliable service than ever before. At the same time, many used vehicles can now be purchased with warranty and roadside assistance coverage, something that was unheard of in the day of buying a used vehicle “as is.” But, while used-vehicle bargains are out there in vast numbers, choosing the right one for you is still fraught with challenges. Making a bad buy can haunt you -- and perhaps your credit -- for years. Before purchasing a used vehicle, it’s essential to find out as much as you can about the vehicle’s maintenance history and any mechanical problems it might have.

“A rigorous test drive and a thorough inspection done by an ASE-certified automotive technician are the best ways to make sure the used vehicle you are considering buying is in good condition,” says Bob Arlotta, NAPA’s 2008 Technician of the Year.

According to Arlotta, inspections typically cost around $90, but if the technician discovers a major defect, you have saved yourself a big headache and potentially thousands of dollars. When inspecting a used vehicle, experienced technicians traditionally check the following areas for existing problems and possible warning signs:

  • Body
    Floor wells, doors and rocker panels should be checked for red stains and dimpled or bubbled paint, which can be signs of impending rust. The vehicle’s panel surfaces should also be inspected for hail damage and overall fit, since loose side panels may indicate past accident damage.
  • Under the hood
    The overall appearance of the vehicle’s engine bay is important because any buildup of dirt or oil can indicate mechanical problems. Dirty and/or thick engine oil and noticeable sludge in the engine may indicate a lack of routine maintenance by the previous owners. Also, grey or milky engine oil may signify the presence of water, which can cause serious engine malfunctions. Any rattling noises heard while the engine is idle can mean incorrect tuning or excessive wear.

When inspecting the transmission, technicians test for smooth gear changes and listen for any rattles or knocking noises. On front-wheel drive vehicles, these noises can indicate worn constant-velocity joints. Radiator coolant should be clean and bright-colored. Oil in the coolant may indicate a cracked cylinder head or a leaking gasket. Radiator cooler fins and core tubes should also be checked for corrosion or damage. Additionally, check the vehicle’s battery for corrosion and remaining life.

  • Underneath the vehicle
    Tires must be checked for uneven wear, which may indicate worn or misaligned steering or suspension. At the same time, the engine, transmission, axles, brakes, power steering and shock absorbers should be assessed for oil leaks. The exhaust system should be tested for fumes or excessive noise, which can indicate holes or rust in the pipes or muffler.
  • Road test
    During a test drive, technicians are trained to look for excessive body lean or wandering on straight roads, which can be a sign of worn suspension or misaligned steering. A properly operating vehicle should stop smoothly and in a straight line. The pedal should not sink to the floor or feel spongy, and the steering wheel should not vibrate.

“Unless you have experience repairing vehicles, it’s probably a good idea to have the vehicle inspected by your regular automotive technician,” says Arlotta. “Spending a little bit of money to learn about a vehicle’s history and find out its current mechanical state will help you make an educated decision about your used-vehicle purchase.”