Dispatches from the New York Auto Show

Auto shows are usually filled with fun, frolic and hoopla. Usually the press conferences are stuffed with optimism, even from brands that have no real right to be optimistic. But at the recent New York International Auto Show, there was no shortage of dreariness filling the halls of the Jacob Javits Center. And it’s not hard to reason why. The background economic news was certainly disheartening: the home mortgage business largely a mess, home equity plunging in virtually every major urban market, home-building slow and a major financial house teetering on the brink of the abyss. It is no wonder that there was no move to pull out the paper party hats and noisemakers and have a celebration. 

But when others saw the glass half empty, we chose to see it as at least half full.  And despite what executives euphemistically call “headwinds,” there remains a lot of vibrancy in the new light-vehicle market, which should make 2008 a very interesting year. Of course, you can understand why so many car company executives and industry observers are pessimistic. Certainly there were negative signs at the New York show. The number of interesting concept vehicles introduced at the show was down drastically from previous years. Big players like Ford Motor Company didn’t have a press conference (though one broke out “spontaneously” on their show stand), and Toyota cancelled its previously scheduled press conference. Additionally, some of the “news” smacked of rehash -- either vehicles that had previously been seen at the Geneva motor show just weeks before or derivatives of vehicles we have seen before elsewhere. Given the tenor of the times, this was not unexpected. As a top design executive for a major global automaker told us, “When economic circumstances are difficult, you are much less likely to commit resources for that pie-in-the-sky concept vehicle. You’re much more likely to back projects that have complete production intent.”

In spite of all that, there were still several very interesting developments.  Perhaps the most interesting of all was the fact that General Motors’ Pontiac brand took center stage with not just one but three concepts that all offer production feasibility and could point to a strong revival of that brand. Once Pontiac built excitement, but it has been years since the brand built the excitement it created at the New York show with a GXP performance version of the G8 sedan (surely meant for production), plus a “Sport Truck” version of the G8 that channeled the old Chevrolet El Camino, and finally, an exceptionally sweet-looking coupe version of the Solstice -- the model that marked a significant change in direction for Pontiac a few years ago.

Several other important vehicles were unveiled to American audiences for the first time in New York. Among the production vehicles that deserve mention were new versions of the Acura TSX, Honda Fit, Nissan Maxima, Infiniti FX, Mercedes-Benz SL and a fleshing-out of the white-hot Dodge Challenger line. To those were added several new models, including the Hyundai Genesis Coupe, which has gained a remarkable amount of interest on the Kelly Blue Book site in its previous “concept car” incarnation, and the extremely attractive Volvo XC60 crossover, which marks a new design direction for the veteran Swedish make. 

For those who love concept vehicles -- whether they are bound for the market or not -- the New York show had some daring stuff. Intended for those who favor tattoos and body piercings, the Scion Hako Coupe and Nissan Denki Cube blazed new trails that baby boomers might not understand, while the more traditional Suzuki Kizashi 3 concept sedan and the Kia Koup concept (yes, it is a coupe) marked departures for those brands into new, challenging segments. Finally, the Saab 9X BioHybrid, a Geneva star, indicated a budding revival at Saab.

So while others might have looked at New York and seen nothing there, our opinion is that there was plenty to see -- and get excited about. One marked trend was the fact that the vast majority of the most interesting production and concept cars came from brands that are not generally regarded as first tier. That means new-car buyers will have even more great options from which to choose in the years ahead.

Car-Buying 2008

A lot of folks -- perhaps you are among them -- regard the necessity to purchase a car as something akin to being sentenced to purgatory. But I’m here to tell you, it doesn’t have to be that way. Sure, there are decisions to be made and contracts to be signed, but if you approach the process methodically, assessing your needs, desires and financial realities in a forthright manner, you can get through this. In fact, it can even be fun.

These days, a key early decision that must be made is whether you should lease or buy your next vehicle. Lease payment options seem compelling when compared with the payments to purchase that same vehicle, and many people think that leasing a vehicle gives them more flexibility than buying a car. But that is definitely not the case. In actuality, buying a car gives you more flexibility because you are not limited to a specified number of miles you can drive; you can modify the car at will; and, most important of all, you can sell it whenever you want to -- even if you still owe money on your car loan. In contrast, if you lease, you are held to a certain number of miles driven each year or you face a rather stiff per-mile penalty if you drive too much. You are not allowed to modify the car by adding things like bigger wheels and tires unless you return the car to its original condition before you turn it in. And getting out of a lease before it has run its course can be very difficult if your circumstances change or if you simply want a new vehicle.

With all this being said, some people are good candidates for leasing. For example, if you feel strongly about replacing your vehicle with a new one every two or three years, you are certain you will drive your vehicle fewer than 12,000 miles a year, and you find it very unlikely that you would want to switch to a different vehicle before the two or three year lease term is up, then you are a logical candidate to lease a vehicle. One thing you should keep in mind, however, is that if you lease you will build no value in your car. Instead, all payments you make -- both the initial payment and the monthly payments -- are simply expenses, or money paid out that you will never see again. 

If, on the other hand, you purchase a vehicle, your down payment and a portion of the monthly payments you make subsequently will buy you “equity” or ownership in the vehicle. If you make all your payments over the course of the car loan, you will then own a tangible asset -- your car. A good financial strategy is to “buy-and-hold.” In other words, choose a vehicle you think you can live with over time and then commit yourself to maintaining that car, paying off the loan and driving it several more years -- monthly payment-free!

A great deal has been written about “the right time to buy.” It is true that dealers usually want to hit monthly and yearly sales targets, so shopping at the end of the month or end of the calendar year might net you a slightly better deal. Bad weather -- snow, heavy rain, floods -- also keeps most buyers away from dealerships, so if you venture out in inclement weather when dealerships are empty, dealers might be inclined to cut you a better deal than in times when their stores are filled with shoppers.

However, none of this outweighs your personal preparedness to get a good deal.  So in reality the best time to buy is a time when you are mentally fresh and you have done your homework on the vehicle you hope to buy. If you are trading in a vehicle you should also have a very good idea what that vehicle is worth. Rushing into an “end-of-the-month” deal without a good analysis of that deal is asking for trouble. With a little preparation -- all done in front of your computer screen -- you can get all the information you need to turn acquiring a new ride into an enjoyable experience.

Will 2008 be Year of Gloom & Doom?

Pundits are predicting that 2008 won't be kind to auto manufacturers. Many experts opine that sales could fall nearly a million units from last year's so-so results, which doesn't make carmakers happy. But a quick tour of the year's first two major auto shows -- the North American International Auto Show in Detroit and the Chicago Auto Show -- demonstrates that they plan to do anything but pull in their horns. (And when it comes to Chrysler, we can say that quite literally, since its Detroit show press event featured a full-on cattle drive.) The fact is, the NAIAS was one of the most diverse and absorbing in recent years, featuring a virtual potpourri of technology, designs and concepts that foretell very clearly that the future of the automobile will be interesting but the path to that future will be littered with failures and missteps as well as triumph. And Chicago added to the mix with important introductions from Chevrolet, Volkswagen and Dodge, among others. Perhaps the most heartening idea to emerge from the show was the realization that "environmentally conscious" doesn't have to translate as "dull." 

Not only were the shows literally stuffed with various environmentally friendly vehicles -- both concepts and production cars -- but, interestingly, among the vehicles that could claim some kind of "green" label were several high-performance, enthusiast-vehicle offerings, something that was unprecedented.  Among the vehicles were the highly touted Fisker Karma all-electric sports sedan, and cars from such mainstream makes as BMW, Audi and even Ferrari.  BMW took the occasion to acquaint consumers with the idea that a twin-turbo diesel could more than adequately power "the ultimate driving machine," while Audi took a similar effort to an even greater extreme with its R8 V12 TDI turbo-diesel-powered sports car complete with 500 horsepower. Ferrari showed of an "experimental" F430 re-tuned to run on predominantly ethanol E85 and emblazoned it with "BioFuel" graphics. 

The U.S. manufacturers weren't to be outdone, either. For example, Saturn showed its Flextreme Plug-In Hybrid concept; Cadillac showed off its Provoq hydrogen fuel cell-powered crossover; Ford exhibited several vehicles with its coming ecoBoost direct fuel injection-turbocharging technology including the Ford Explorer America concept; and the Dodge ZEO took its very name from "zero-emissions." One of the concept cars we were most taken with was the Chrysler ecoVoyager, a vehicle that proved the impossible -- that a "one-box" van shape could be elegant. The four-door, four-passenger sedan offered arresting details like its short front overhang and boat tail rear. Equally avant-garde was its drive system with power supplied primarily from a lithium-ion battery pack capable of a 40-mile range from its 200-kilowatt (268-horsepower) electric motor.  (After the juice in the battery is exhausted a hydrogen fuel cell kicks in to recharge it.) So on the concept front, at least, it seemed a "conventional" powertrain was a rarity while various alternative forms took center stage.  

The Chicago debuts were not as abundant but equally impressive. Dodge showed off its Challenger SRT8, a throwback to the musclecar era that offers modern amenities like traction control and a navigation system unheard of in 1970 when the first Challenger rolled our way. Chevrolet showed off its Traverse crossover vehicle, joining the highly successful troika of Buick Enclave, GMC Acadia and Saturn Outlook.  And Volkswagen burst through with its Routan minivan, a Chrysler minivan in a very convincing VW disguise. All in all it is obvious that the car companies will keep swinging, whether the economy is vibrant or not.

Driving Today Contributing Editor Tom Ripley writes about the auto industry and the human condition from his home in Villeperce, France. 

The Leaders in Buzz

This is the age of "consumer-generated content." The Internet has granted everyone with a computer, a modem and a thought the ability to publish his or her opinions to the world, and many consumers are looking at the opinions of other consumers as a valuable source of "authentic" information. Now a vehicle awards program, the Consumer Voice Awards by BrandIntel, is designed to tap into that zeitgeist. The awards recognize top vehicles according to consumer discussions and sentiment as expressed online via blogs, discussion forums and other social media outlets. Winners are based on BrandIntel's consumer sentiment index, which takes into account over 200 vehicle attributes such as quality, safety, performance, style and reliability.

This was a year of big changes generating big buzz. Major model redesigns were major contributors to several vehicle award-winners this year, with five out of seven awards going to models with completely revamped interior and exteriors. Nissan and General Motors had two winners each, while vehicles from Dodge, Mitsubishi and Mercury also collected wins.

Consumers' positive response to the newly redesigned Mitsubishi Lancer propelled it to the top of the Compact Car category, largely based on the vehicle's aggressive new styling and high performance. In the minivan segment, the redesigned Dodge Grand Caravan swept the category due in large part to its innovative "Swivel 'n Go" seating system and other new convenience features.

Despite consistent competition from the Toyota RAV4 year-over-year, the Mercury Mariner took honors in the Midsize SUV category. It was lauded by consumers for its interior and exterior styling, as well as for its performance and quality. In a similar vein, the Nissan Titan pushed the Ford F-Series out of the top spot in the Large Pickup Truck category, and the Nissan Rogue, a new contender in the Sport Tourer segment, got the winning nod over the Subaru Forester due largely to its Xtronic CVT transmission.  The two GM winners -- the Chevrolet Malibu and Cadillac CTS -- were lauded for their value-for-dollar-spent versus import competitors.

In this case, how the awards were determined might be as interesting as the awards themselves. To choose the winners of the Consumer Voice Awards, BrandIntel captured and analyzed online consumer-created content from January 1, 2007, to December 31, 2007. The analysis focused on the automotive brands that generated the most positive discussion and sentiment in online consumer communities. Using its proprietary technology, BrandIntel tracked tens of millions of raw search hits on the Internet and refined those results through technological filters and human analysis to utilize only the highest quality data for this study -- totaling nearly 450,000 consumer mentions.

"The Internet and word of mouth marketing has radically changed the way in which consumers research automobiles and formulate purchasing decisions," said Alan Dean, VP of research, BrandIntel. "Year-over-year we continue to see how positive online consumer discussion by enthusiasts influences mainstream automotive discussions. For automotive companies, consumer-generated content can have a positive effect on their brand awareness."

In this era it seems it is not nearly as important what you actually accomplish as what people are saying about you. Welcome to buying decisions by consumer buzz -- word-of-mouth on steroids.

Driving Today Contributing Editor Tom Ripley writes about the auto industry and the human condition from his home in Villeperce, France.  The buzz on him is, frankly, mixed.

The Ins (and Outs) of Auto Insurance

It is something that virtually all of us buy, yet when the subject of car insurance comes up, most people's eyes glaze over like a chub in a deli case. And while you might think older drivers have a better handle on the nuances of car insurance than younger, less experienced drivers, the statistics say that's fallacious.

In an online survey of 1,000 teens and 1,000 adults, the Progressive group of companies found that adults were no more knowledgeable about how auto insurance works than were teens. While the adults scored better in some categories, they scored worse than the teens in others.

Here are three auto insurances facts that might be worthwhile to know:

  • The majority of drivers (teens and adults) don't believe information about their credit history affects their insurance rates. Some 71 percent of teens and 63 percent of adults think that credit problems won't drive up the cost of their insurance coverage. But what they're not reckoning on is that those with messy credit also are messy drivers. Because there is a direct, proven correlation between a driver's credit history and the likelihood he or she will be involved in a future crash, most auto insurance companies consider information about credit histories when calculating individual's rates.
  • Oddly, nearly a third of adults and a quarter of teens think the color of their car affects their insurance rates (30 and 22 percent, respectively). But while insurance companies have noted a correlation between credit rating and crashes, no correlation has ever been found between the color of a car and the likelihood of the driver being involved in a future crash. Because of that, color has no bearing on rates at all.
  • There also seems to be a great deal of confusion in both teens and adults on a key factor that does help determine their insurance rates -- place of residence. Only 57 percent of teens and 71 percent of adults know that where they live affects rates. But research has shown insurers that if you live in a more congested neighborhood (i.e. the city), chances are you are more likely to be involved in a crash and/or have your car stolen, so data about where you live is generally taken into account by auto insurers.
  • The final disconnect between reality and belief involves simple cost. Nearly a quarter of teens (23 percent) and 18 percent of adults think auto insurance rates are pretty much the same from company to company. But the reality is that rates vary widely from company to company because each company has different costs of doing business and different experiences paying claims. In fact, a recent study by Progressive showed rates for different companies vary an average of $586 for every six months of coverage. What does that tell you? To get the best rates, shop around.

Driving Today Managing Editor Jack R. Nerad writes frequently about the expenses involved in owning a car.