Buying a Car This Summer

If you are thinking of buying a new car, this could be your summer of discontent. Buying a new car is a challenging task under normal circumstances -- and this year, circumstances are anything but normal. Due to the Japanese earthquake and subsequent tsunami that occurred in March, supplies of Japanese-built cars are already down, and many could reach precariously low levels in the next few weeks. Further, because so many carmakers rely on Japanese-sourced parts, vehicle supplies around the world are being negatively affected. This situation and the gradual improvement in the economy have persuaded vehicle manufacturers that they don’t need to be quite as generous with consumer incentives -- offering low-interest financing and cheap lease deals, among other perks -- as they have in the past. This means getting a great car deal is getting harder, quite an unusual situation in an economy that is as anemic as the U.S. economy is right now.

The good news is that it is not impossible to get a great deal. The fact is, if you do your homework and stand your ground, you can emerge with a very satisfying car purchase. Here are a few tips that can help:

Don’t fixate on the monthly payment.
Yes, most of us have monthly budgets and consider expenses on a monthly basis, but one quick way dealers can lower your monthly payment is by increasing the length of the loan. If you go there, you almost always end up paying much more in the long run. A salesperson might also try to switch you from a purchase to a lease. There’s nothing wrong with leasing if the lease term is short (three years maximum), but a longer lease is a money pit. You end up paying a lot for a car you have to give back -- a miserable situation for your overall finances.

Do your homework on prices and values.
A car is one of the rare consumer products for which you can quickly and easily find out what the retailer paid for it. Plus, the Internet offers you several websites where you can learn what consumers like you are typically paying for the same car you are considering. That is extremely valuable information to have as you negotiate your purchase. Many of those same websites will also give you a precise idea of what your current car is worth. Again, that information can be invaluable at trade-in time.

Shop hard and be prepared to walk away.
Feel free to walk into a dealership, look at the vehicle you are considering and get information from the salesperson, but feel just as free to walk out that door with no questions asked. Don’t be intimidated into making a deal you don’t feel comfortable with because the salesperson tells you the deal is good “today only.” New vehicles are essentially a commodity. At any given time, thousands are for sale, and factories are churning out more. You’ll find a deal that is as good -- or better -- the next day and the day after that.

BMW 1 Series M Coupe: Furiously Fast

If you test vehicles for a living, you will eventually come to the conclusion that cars that are good on the street are not so good on the racetrack. Racecars are one-dimensional vehicles designed for going fast in controlled conditions. Street cars, on the other hand, have to perform a much wider variety of tasks. So we have to admit, we were a bit curious -- if not skeptical -- about what the all-new, limited-production BMW 1 Series M Coupe would feel like on the track. What we found is that the M Coupe can more than meet the rigors of a very challenging course. Yet, like Superman when dressed as Clark Kent, it is perfectly at home in more mundane settings, like commuting to work or picking a child up from school. In other words, it is one of those rare passenger cars that is in its element on the track, but also utterly practical for day-to-day use. It’s an amazing feat accomplished by judicious acquisitions from the BMW parts bin and a serious influx of engineering dollars.

If you follow performance cars, you know that BMW has been building highly tuned M versions of many of its models for decades. These cars raise the already high level of handling, acceleration and braking from those of the marque’s standard passenger cars, which carry the bold slogan “The Ultimate Driving Machine.” Plus, when putting the 1 Series M Coupe together, BMW engineers borrowed liberally from the same bag of tricks they used to make the M3 -- one of the most respected sports coupes in the world. So M’s are, put simply, the “Ultimate Ultimate Driving Machines.”

So why isn’t the M Coupe called the BMW M1? Well, the 1 Series M Coupe is to the 1 Series what the M3 is to the 3 Series, so it might logically be called the M1. However, that would be flying in the face of history. Back in the late 1970s, BMW introduced a sports GT called the M1, which became an instant legend. Like a Teutonic Ferrari, the M1 was all low, swoopy and super-exotic -- all things that the 1 Series M Coupe is not. What they share is an innate ability to go fast, but the last thing the BMW executives wanted to do with the 1 Series M Coupe was prompt comparisons to the M1. Thus, the new car is tagged with an unwieldy name.

Frankly, that’s the only thing about it that is unwieldy. With 335 horsepower and 332 pound-feet of torque available from its twin-turbo, all-aluminum, in-line six-cylinder engine, the M Coupe is a rocket sled. It will sprint from 0 to 60 miles per hour in just 4.7 seconds, and its top speed is electronically limited to 155 miles per hour. Offered only with a six-speed manual transmission, the car has EPA fuel economy ratings of 19 miles per gallon in the city and 25 on the highway -- a performance car with a conscience.

It’s also equipped with computerized electronic driver aids that allow you to push its limits, yet help prevent you from tumbling over the other side. For example, its standard Dynamic Stability Control keeps a sharp eye on overaggressive maneuvers that could dent its handsome sheet metal … or worse. But the DSC also has an intermediate M Dynamic Mode that M Brand Manager Matt Russell refers to as a “track training mode.” It allows yaw and wheel-spin, but if the electronics intrude upon your driving style in this mode while you are on the track, you are probably doing something wrong. Like a stern but loving kindergarten teacher, the DSC quickly nudges you back in line.

While we can’t say we were in love with our kindergarten teacher, we love the 1 Series M Coupe a lot. Our only regret is that so few will come to the United States, something on the order of 1,000 cars. Now that might be the extent of the market for a $50,000 car of modest dimensions equipped with a manual transmission, but we have to admit we are thinking very seriously of putting down a deposit and getting on the waiting list. The 1 Series M Coupe may have a clumsy name, but it is anything but clumsy.

Make Your On-Line Car-Buying Experience a Good One

"If it seems too good to be true, it probably is." - Everyone's mother

It might feel like a car buyer's dream: buying a car without having to talk with a car salesperson. It's like having perfect teeth without ever going to the dentist or losing weight while eating anything that you want. No, car salesmen aren't bad people, but there's no doubt that most people regard an encounter with one with the same distaste they reserve for dog catchers or politicians. So to get the opportunity to buy a vehicle without submitting oneself to the frustrating, time-consuming give-and-take that goes on in the typical dealership seems like a dream come true. And the magic of the digital world promises just such a scenario.

Go on line. Click a few boxes. Receive emailed price quote. Click okay. Pick up vehicle. And drive happily into the sunset.

That's the promise of the Internet. That's the way things might work if the world were a perfect place where every warm puppy found a home and every home team won its game in the bottom of the ninth, but welcome to the real world, people. The Internet can make the car shopping and buying experience far better than in those dreary pre-Web days, but there is no guarantee that just by logging onto a car-buying service you'll get yourself a good deal or a no-hassle experience. In fact injudicious use of the information gathered on the Information Highway can lead to frustration, irritation and symptoms similar to irritable bowel syndrome.

Why is this so? In the first place, it is so because you can't believe everything you read on the Internet, just as you can't believe everything you read in the newspapers. In fact, one of the Internet's greatest strengths - the ability it gives people to publish information quickly - is also its greatest weakness as a research tool. Information that appears in traditional printed publications most often is examined by several sets of eyes, many of them intent on "getting it right." In contrast, it seems as if information on the Internet goes through fewer of these accuracy filters, and the result is a significant amount of disinformation. This is not just our opinion either. As it relates to the car-buying process, a recent study points to serious problems.

In a recent study of the online auto information business, Bandon, Oregon-based CNW Marketing/Research has called online auto pricing "horribly misleading." It noted frequent errors and miscues by the information providers, saying "automotive price misinformation on the Web by some of the country's best known names is rampant, misstating actual prices by upwards of thousands of dollars."

The national study examined eight top auto information Web sites, comparing the sites' stated manufacturer's suggested retail prices (MSRPs) and dealer invoice prices for 86 different models against actual manufacturer data, and there effectiveness in providing accurate information varied widely. The study eyeballed top sites including AutoWeb, CarPrices, CarsDirect, ChromeData (through Vehix), Edmunds, IntelliChoice, Kelley Blue Book, and MSN CarPoint.

According to the study, of these online new-vehicle pricing sites, ChromeData was clearly the most accurate followed by IntelliChoice and Kelley Blue Book. The provider of the most inaccurate online pricing at the time the study was conducted and among these eight companies was CarPrices.

On a dollar-per-model basis, ChromeData missed the actual price mark by an average of only $84 per unit while CarPrices was least accurate with an average $888 per-unit inaccuracy. Among others examined in the study, Edmunds misstated MSRPs by an average of $570, IntelliChoice by $140, CarsDirect by $461, AutoWeb by $580, Kelley Blue Book by $324 and MSNCarPoint by $505.

Considering that nearly 40 percent of new-car buyers use the Internet as part of their shopping process, such misinformation is horribly misleading, the study concludes. Equally frustrating, said the study, was the sites' propensity to allow consumers to configure cars and options that automakers couldn't actually deliver. Since manufacturer's suggested retail prices are readily available from the individual manufacturers, there seems to be little excuse for these wide variations other than human error. But because these errors exist in online price data, the buyer relying on this information to help structure a deal must do so at his or her peril. One simple check is to gather price information from more than one service.

Another source of potential frustration is the Internet's often undelivered promise to provide actual firm price quotes. Most car buyers are aware that the MSRP is a price manufacturers and dealers would like buyers to pay, but also a price higher than most buyers actually pay. Using consumer buying Web sites, dealer Web sites and email as communication tools, the Internet has the potential to shortcut the offer-counteroffer dance that frustrates many car buyers. Sadly, it seems that in many instances the reality has yet to catch up with the potential.

Many auto dealers' Web sites fail to deliver the crucial price information necessary make a purchase decision, according to research results released by Friedman-Swift Associates, an automotive market research firm in Cincinnati, in conjunction with The Cobalt Group, an automotive industry Internet provider.

"Far and away, the hot button for shoppers is price," said Judy George, senior vice president of Friedman-Swift and coordinator of the research study. "An overwhelming majority of the shoppers, 92 percent, said that prices of vehicles in inventory were the most important items of information to include on dealer Web sites."

Most shoppers, about 86 percent of the 934 car shoppers surveyed, said they did get vehicle prices on dealer Web sites, but far fewer (65 percent) said they received an online price quote for a specific vehicle, a key factor in completing the purchase process. It seems as if many dealer sites will indicate MSRPs on the vehicles they have in inventory, but when it comes to discounting from that suggested list price they are far less likely to provide that information on the Web.

In fact, despite the Internet's promise of rapid communication, the survey noted that dealers were generally slow to respond to inquiries. When shoppers e-mailed dealers for more information, most dealers (55 percent) responded within 24 hours, the survey said, but one might have expected a higher percentage of dealers to respond that quickly to consumer inquiries. Even more damning, the survey reported that 19 percent of dealers never responded to shoppers' inquiries at all.

CNW Marketing/Research's recent consumer study "Computers, Cars and the Internet" comes to a similar conclusion. It reported about 41 percent of serious Internet new-vehicle shoppers sent an e-mail to a car dealer requesting information about price, product availability and other subjects. Of those, only 20 percent received a reply.

CNW also had a warning for perpetuators of the current way of doing business. Its report said, "This lack of response may be the single best argument for automakers and buying services to circumvent the franchise dealer system."

But when one considers the current Internet landscape of buying services, is the prospect for improvement that much better?

It would be comforting if car buyers could put themselves in the hands of Internet car-buying services and be confident that they were getting a good deal. Sadly, that is not necessarily the case. One must remember that, due to tradition and tight state franchise laws, virtually all cars sold in the United States are sold through franchise dealers. Because of this, most online buying services are, underneath, customer referral services for dealers. Further, in many instances, these services issue dealers territories, so your buying request will be referred to just one dealer. Will that single dealer offer you a great price on that vehicle? Perhaps, since the dealership knows that, as an Internet user, you have probably done more than your share of homework, but perhaps not, since the dealership might not get the impression it is bidding against other dealerships.

To address this issue, a couple Web buying sites now promise to carry your request for a firm price quote to several same-brand dealerships in an attempt to get them to bid for your business. This scenario may offer more promise of a great deal, but without significant research, it still may be difficult for the buyer to determine how good a deal he or she is getting.

The lesson here is, even in the digital world, there is no substitute for comparison shopping. If you want to get the best deal possible, shop around for good service and good prices. Feel free to enlist the services of more than one car buying service, and then compare what they offer carefully.

One thing you should know: as an individual who can afford to buy a new vehicle you are an incredibly valuable person to the car-buying services, car dealers and car manufacturers. Use that power wisely and well and be prepared to let your mouse (and your feet) do the walking whenever you encounter treatment that confuses or troubles you. After all, more information is better than less information, but no information is more valuable than good common sense.


Nerad is the author of The Complete Idiot's Guide to Buying or Leasing a Car. He currently teaches a quarterly car-buying class at a Southern California adult education institution.