Hunting Down Automotive Value

What do you value in a friend? Is it an absence of faults or the presence of positive qualities?  Very likely it is a little of both, and if you think of your automobile as your friend, you might well look at things the same way. Not only do you seek an absence of negatives, but you would also like the presence of factors that satisfy and delight you -- great looks, superior handling, or a killer sound system, for example.

In putting together its annual Total Value Award and Total Value Index, San Diego-based Strategic Vision attempts to put a box around all those positive and negative aspects of car ownership. It believes that true value is about much more than the cheapest deal. Reliability, a solid warranty, strong anticipated resale value, durability, and innovation are all part of its definition of "total value."

With that as backdrop, the brand leaders in Total Value come as no surprise. BMW and MINI topped all brands for 2006, while Honda headlined the list of "full-line" manufacturers. Perennial value leader MINI Cooper led its segment for the fifth year running, and it was the overall Total Value winner among all vehicles and segments. With the BMW 3 Series and MINI Cooper Convertible leading Total Value in their respective segments, BMW and MINI vehicles turned in the highest levels of "believed" resale value, which was validated by outside sources. BMW's Ultimate Service program differentiated it from other luxury brands in the maintenance/service arena.

As you might guess, Honda's key strength was in its "expected" reliability scores among its owners.  With each Honda model excelling in that area, Honda Civic, Accord Coupe, and Pilot led Total Value in their respective segments. The Honda Ridgeline also topped its segment, proving that delivering superior product experience, innovative features and standard equipment can overcome the hurdle of premium pricing to deliver total value.

"The calculation of Total Value clearly incorporates explicit statements that owners make about value, but those statements do not alone provide sufficient differentiation to give us the diagnostic power we want or to be able to herald one brand or vehicle as the leader in a segment," said Strategic Vision Founder and CEO Darrel Edwards, Ph.D. "By incorporating the importance of the variables that make up the experience and the economic factors which impact the perception of value, we find convergent, stable indices of true value."

General Motors took honors as the top domestic corporation with four 2006 Total Value winners -- Chevrolet Corvette Coupe and Convertible, Saturn Vue, and Chevrolet Silverado 2500/3500. With the recent introduction of a five-year 100,000-mile warranty, Strategic Vision believes GM is poised for significant gains in the index if the Total Value message is clearly recognized and communicated for individual models.

"GM's new warranty will bring new prospective buyers to the brand, who otherwise might have felt the quality, durability and value was missing," said Alexander Edwards, president of Strategic Vision automotive research group. "If GM can communicate the right quality cues and value in current and future vehicles, then they will be poised for success in the near future."

Korean brands Hyundai and Kia also turned in strong performances. On the strength of interesting styling, good quality and long warranties, the new Kia Optima and Hyundai Azera were Total Value leaders in their respective car segments, and the Kia Sedona topped the Honda Odyssey in the minivan category. The Hyundai Tucson finished at the top of the Small Sport Utilities segment in a tie with the Saturn Vue. According to Strategic Vision analysis, the challenge for both Hyundai and Kia remains gaining consideration from buyers, and success rests on communicating foundational issues of expected reliability and durability along with clear cues of quality.

Toyota's best showing came from its Scion and Lexus brands. Scion continues strong, with the long-in-the-tooth Scion xB proving that vehicles can continue to deliver value throughout their production cycle, demonstrating Total Value is not exclusively the domain of new vehicles.  The Lexus LS 430, another vehicle toward the end of its life cycle, turned the same trick in the Luxury Car class.

Nissan had three Total Value leaders, including the Xterra and Armada. It also achieved a  milestone with the Titan replacing the Ford F-150 as the Total Value winner in full-size pickups. Innovation and the level of standard equipment helped nudge Titan ahead in the tightly contested segment.

"Total Value is absolutely critical now in the US market," concluded Alexander Edwards, president of Strategic Vision, Automotive Group. "It is even important for brands with strong reputations, but is critical for everyone else. Total Value is more than price paid or deal, and it is more than initial quality (TGW) divided by price -- which some profess. Total Value encompasses the complete ownership experience with emotional components and priorities."

The Total Value Study surveyed over 64,000 new vehicle buyers who purchased their vehicles between October 2005 and March 2006, asking an extensive array of questions about their first 90 days of ownership.

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

Why GM Extended its Warranty

For seven decades General Motors has been the leading carmaker in the world, the acknowledged industry leader and bellweather.  But for the past decade the number one crown has been harder to bear, especially here in the United States, where increased competition, especially from Japanese manufacturers, has continued to dog the auto giant. Over the past five years GM's market share erosion has become increasingly obvious, while the rise of Toyota and Toyota has also been closely chronicled. 

Now, in a move that GM Marketing and Advertising Vice President Mike Jackson told us is "an expression of confidence in our products," General Motors has introduced what it calls "the best warranty of any full-line automaker."  With powertrain coverage of up to 100,000 miles or five years across its entire 2007 car and light-duty truck lineup in the United States and Canada, Jackson says the move reflects the company's success in dramatically improving the quality and durability of its vehicles.

GM's new 100,000 Mile Warranty coverage is a fully transferable five-year, 100,000-mile powertrain limited warranty with no deductible. The customer car package also includes roadside assistance and courtesy transportation programs to match the powertrain warranty term.  Altogether, GM claims it's the best coverage in the auto industry.

So why has General Motors taken this unprecedented step? In recent years manufacturers who were battling reputations for dubious vehicle quality have extended their warranties in an effort to indicate their confidence in their products and to allay the fears of potential buyers who might have heard negatives about their brands.  In the 1990s Korean automaker Hyundai brought itself back from nearly moribund status by introducing a warranty significantly longer than other manufacturers.  The ploy was a big hit, and Hyundai has since charged up the sales charts.  Hyundai's sister brand, Kia, and two Japanese brands, Isuzu and Mitsubishi, have also made significant extensions in their warranty coverage. Their moves were also well-received though they haven't had the dramatic effect that Hyundai's did.

But warranty actions from smaller brands don't have the impact that a move from the market leader does.  GM's no-deductible, fully transferable limited powertrain warranty covers more than 900 components related to the engine, transmission, transfer case and final drive assemblies on all 2007 model-year Chevrolet, Pontiac, Buick, GMC, Hummer, Saturn, Saab and Cadillac cars and light-duty trucks sold in the United States and Canada.  In short, the new coverage is now offered on a significant percentage of all vehicles sold in the United States. GM also extended the existing roadside assistance plan to 100,000 miles or five years, and now provides courtesy transportation for a covered warranty repair. The new warranty will apply retroactively to 2007 GM cars and trucks already sold.

"This is a matter of putting our money where our mouth is," Jackson said, referring to his company's assertions that GM vehicle quality has improved markedly and is now world class.  "For several years now our employees all around the world have put their emphasis on product quality, and the results are there.  Our warranty costs are down 40 percent in the last five years.  Any GM dealer will tell you that."

GM's goal is to send a message that its products are worthy of consideration.  So what should car buyers take away from the move?

"If you currently own a General Motors car, you should be proud," Jackson said, "and if you don't, you should take another look at GM products."

Driving Today Managing Editor Jack R. Nerad has reported on the auto industry for more than 25 years.

British Want Elderly Off Roads

Perhaps you dream of a pleasant retirement in a small cottage outside London. How lovely it could be -- tea, scones and bangers for breakfast with a paisley shawl over your shoulders and nights spent in conversation with colorful locals at an English pub.  Well, if you'd like to drive during your Golden Years in the United Kingdom, feggediboutit. A shockingly high percentage of drivers polled by British online insurance broker Motor Insurance have a novel solution for their traffic problems: they want to ban elderly drivers from the roads altogether.

In a shocking display of blatant and unfounded ageism, almost half of drivers polled (49 percent) said that banning elderly motorists from driving during peak hours would ease congestion on Britain's roads. Nearly two-thirds (62 percent) of the 300 drivers polled believe that elderly drivers cannot cope with modern-day road conditions and nearly as many believe (49 percent) that their slow and erratic driving causes accidents. Despite these findings, the insurance brokerage firm is reluctant to push for a ban on elderly driving altogether.

"The impact of congestion on the UK economy in terms of lost time, fuel costs and general stress runs to billions, yet we continue to drive our cars more and drive further than the rest of Europe," Paul Cosh, managing director of Motor Insurance, said. "However, I do not think that picking on this nation's most careful and experienced drivers is really the answer. To be honest, the views shown by this poll are quite shocking and simply do not stand up against the facts." 

After an analysis of United Kingdom safety statistics, Cosh is solidly in the corner of older drivers.  He noted that increased age brings its challenges, but healthy older drivers typically try to compensate for deficiencies. If anything, he asserts, they also drive more carefully and avoiding risk-taking in general.

"To suggest that older drivers are a danger on the roads is a statistically unfounded stereotype and if anyone wants to debate the safety record of an 80 year-old compared with the average 20 year-old, my door is always open," Cosh said.

Instead of kicking older drivers off the roads, Cosh suggests adopting measures that ensure travelers enjoy free-flowing traffic, efficient public transport, as well as providing adequate space for walkers and cyclists. The wider aim is to make life, particularly in urban areas, less stressful, healthier and more enjoyable for everyone of all ages, he said.

An expert on older persons and aging was appalled by the results of the poll.

"These shocking findings highlight blatant discrimination towards older drivers," David Sinclair, senior policy manager at Help the Aged, said. "The evidence of competence in relation to age doesn't back up the assertions made. Older drivers are not inevitably either bad or good drivers and it is ability and capability, not a person's age that should be used to assess suitability to drive safely."

We think those who called for a ban on elderly drivers should be old enough to know better.  If it weren't for the elderly who would be in restaurants at five pm?

Driving Today Contributing Editor Tom Ripley is not quite elderly, but he's getting there.  He reports on automobiles and the human condition from his home in Villeperce, France.

Don't Shoot Money Out the Tailpipe

Gasoline is expensive, and many consumers are complaining about the high cost of fuel.  But, as the Noble Bard once instructed, instead of blaming our stars, sometimes we must blame ourselves.  We suggest you look at your own behavior to see if you are wasting precious fuel and thus sending your hard-won cash right out the exhaust pipe.

Take a look at the results of some recent tests by Ford Motor Company to see if your driving habits fit the efficient or the profligate profile.  We're betting you don't know how much your bad habits might be costing you.

"There is a direct correlation between fuel economy and the driver's behavior and vehicle care," said Ford hybrid vehicle engineer Stephen Hunter. "These tests illustrate just how much control the driver has over his or her fuel bill."

For the test, a pair of identically equipped Ford Fusions were driven over a 500-mile route, the only variable being driver behavior, highlighting the three most common poor driving habits that lead to decreased fuel economy.  In the test, the inefficient driver idled the engine for 20 minutes.  This included a five-minute warm-up before embarking on the 500-mile drive, five minutes of idling while sitting in a fast-food drive-through, and two five-minute periods of idling during rest stops. Each of those stops with the engine idling meant that the car was operating at a zero efficiency rate -- 0 mpg.  In contrast, the efficient driver started the engine and left immediately and shut off the engine both at the fast food restaurant and the two break stops.

"Warming the car up before departure or idling for more than 30 seconds is a waste of fuel," Hunter said. "Modern cars actually reach operating temperature faster if you start the car and leave immediately."

Also within the confines of the 500-mile drive test, the inefficient driver applied full throttle at every opportunity, trying to reach the posted speed limit as quickly as possible. For freeway driving an average speed of 75 miles per hour was set and the inefficient driver used constantly varying throttle positions in an effort to maintain that target speed. The efficient driver applied moderate throttle and made every effort to avoid unnecessary acceleration or deceleration. For freeway driving, an average of 65 mph (instead of 75) was set for the efficient driver with an emphasis on maintaining a smooth, consistent speed instead of constant changes in throttle application.

"Aggressive driving is one of the biggest culprits in fuel economy," Hunter said. "Just slowing down 10 miles per hour on the highway can save you 15 percent."

As the third leg of the test, the inefficient driver used the maximum air conditioning setting for the full 500 miles. (We hope he had a jacket.) The efficient driver set the Fusion's electronic climate control to 68 degrees, letting the system automatically select the most efficient use of the air conditioning compressor.

"Saving money can be as simple as turning down the air conditioning just to bring the cabin to a comfortable temperature," the engineer told us. "Try parking in the shade so that the cabin doesn't heat up while the car is parked. If the cabin temperature is greater than the outside temperature, open the windows to let the heat out of the cabin, rather than relying on the AC alone."
 
When the results of this simple test were analyzed they showed that inefficient driver habits alone can sap up to 21 percent of their possible fuel economy.  In other words, you can save up to 21 cents on every dollar of gasoline you spend simply by avoiding idling, slowing down slightly and maintaining a constant speed and by moderating use of vehicle air conditioning.  Now that doesn't seem too painful, does it?

A notorious cheapskate, auto journalist Luigi Fraschini writes frequently about fuel economy and environmental issues.

Finance that New Ride Right

You've got the new-car itch. You've scoured all the automotive consumer Web sites and armed yourself with plenty of information, including a hard look at things like the "transaction price." You know what color you want and what options you just have to have, and you might even have checked out some dealer sites to get a handle on what is available in your area. Now what?

If you just charge over to a dealer, you're missing a step.  Car-buying experts recommend you research financing options and get pre-approved for an auto loan before you go to the dealership.  Yet many consumers don't heed that valuable advice.  Most consumers thoroughly research vehicles before visiting a dealership, but according to AWARE (Americans Well-Informed on Automobile Retailing Economics), few do the same when it comes to financing vehicles.

"Everyone benefits when consumers understand vehicle financing," said Ford Motor Credit North America President A.J. Wagner. "We depend on repeat business, and so do our dealers. When customers get a fair deal on a great vehicle, they do business with us again."

Consumers should take the following steps, even before visiting the dealership, to get the best deal and make the financing process run smoothly:

1. Review your credit report.
You can get one free credit report from each of the national credit bureaus each year. Visit FactAct or call 877-FACTACT to request yours. Check your report for accuracy and report errors to that credit bureau. Remember that if you have a solid history of on-time payments, you will generally qualify for a better rate than if your payment history is spotty.  This can mean big dollars, so make sure your report is accurate.

2. Develop your budget.
Who wouldn't want to drive a fully loaded luxury car or a tricked-out sport-ute? But make sure your dream ride does not become a monthly payment nightmare. And remember that lenders expect you to carry insurance on your vehicle, so budget for that, too.

3. Shop around for financing.
Financing rates vary.  Not every deal is the same.  So get an idea of current rates and terms by checking with lenders, Web sites and newspaper ads.  And view all this realistically. If you tend to make payments late, have a lot of debt outstanding or have other factors that affect your credit history or capacity to pay, you are unlikely to qualify for the best rate.  This is the time to get pre-qualified for an auto loan from a bank, credit union or on-line loan source.

4. At the dealer ask about special offers and then negotiate.
Now is the time to visit your dealer.  There you can get a quick, convenient way to finance your vehicle, and you will have access to promotions from the vehicle manufacturer. Make sure you ask about special rates or programs such as first-time buyers program and college student programs. Contract rates and terms are usually negotiable, just like the vehicle price and trade-in allowance. But remember that a special promotional rate or cash bonus through the manufacturer may not be negotiable, and if you have a difficult or limited credit history, you may not be able to get the best rates.

5. Read the contract.
Double-check the cost of the vehicle, the trade-in allowance and down payment, the contract rate and terms, and other specifics -- before you sign the contract. Look hard at items like optional "credit insurance" (which makes your car payments if you become disabled or die and can't make them yourself), extended service contracts and guaranteed auto protection (GAP coverage pays the difference between what you owe on your vehicle and what you receive from your insurance company if your vehicle is stolen or totaled.) While you might sense some benefit from these, many financial experts say they are unnecessary and costly add-ons.

Remember, if at any time you don't understand an item, take the time to get it explained to you, to your satisfaction. At the same time, the words on the sales contract, not what the salesperson and finance and insurance person tell you, represent the terms of the deal.

Equipped with this knowledge, and the ability to get up and walk out whenever you feel uncomfortable, you will get yourself a satisfying deal.

Cleveland-based auto journalist Luigi Fraschini has purchased and sold innumerable vehicles without going into bankruptcy.