Where Are All the Great Deals on New U.S. Cars?

This one's closing for good in December.

This one's closing for good this week.

Today GM announced plant closings of about two months (instead of the usual two weeks) this summer for all its North American operations. The reason for these 13 plant shutdowns is obvious: too much product in the pipeline.

That should translate into fantastic buying possibilities for all you GM-hungry, Chrysler-happy fans out there, right? With all that inventory, dealers should be jumping to give any bona fide buyer the keys. Well, it doesn’t always seem to work that way. While some have reported getting very good deals on cars, our informal Web survey finds just as many who found dealer intransigence, even insult.

As always, you’ve got to be an informed buyer. Do your homework on CarGurus and other sites to see where the bargains really are. The best deals still involve factory rebates, incentives like zero-percent financing, and year-end discounts on ’08 models. Inventory stocks obviously vary from dealer to dealer, so don’t automatically assume they have a glut.

There are numerous stories on the Web about finding either great deals or a great deal of frustration. Here’s a fairly typical one from Bill in New Hampshire:

Well, it turns out that the “new reality” of buying an American car is almost identical to the “old reality”, major recession notwithstanding. As I just learned (again) when an American manufacturer finally produces a “hot” car that could help them take back some market share, they are defeated by their very own dealership network that insists on price gouging. I talk specifically about the new Ford Fusion which, as I speak, is being routinely priced significantly (10%) above MSRP and thereby sufficiently annoying prospective buyers (like myself), who would like to ‘buy American’, to send then right back to the foreign manufacturers.  My experience is not unique and my reaction appears to be the same for 7 out of 10 of my friends, relatives and associates. After interacting with a local Ford dealership here in New Hampshire I am headed right back to Toyota for a Camry Hybrid.

I found lots of stories like that, and of course they don’t all have to do with Fords. Goldman Sachs, incidentally, just gave Ford stock its “buy” rating today.

Not surprisingly, the big market seems to be for used cars. Dealerships make more on used than on new cars anyway and always have. Our advice on new cars: Hang on a while longer, keep shopping, and never be afraid to walk away.

Tell us about your recent car-shopping experience. Did you find a great deal—or a great deal of frustration?


Cars at Costco: A Great Idea!


You know how it goes: Go to Costco for one thing, and end up walking out with $200 worth of flour, DVDs, Diet Coke, toilet paper, and beef jerky.

The whole Costco experience is about impulse buying as much as it is about bulk and convenience. Soon, as we briefly mentioned on this blog earlier, you could end up loading all that stuff into the ultimate of impulse buys: an electric car.

A Mexican company, GS Motors, currently imports Chinese cars for sale through big-box stores and has plans to do the same in the U.S.; they’re even building a factory in Mexico to build the Chinese-designed cars.

Chinese cars made a splash at the North American International Auto Show in Detroit earlier this year, but still get ridiculed for their design and questionable safety and reliability standards. That makes sales through a conventional dealer system risky, but absolutely ideal for sale in a warehouse club or box store. I love this idea! 

If the price can be kept around $5,000 to $6,000, these things will fly off the shelf faster than a Wii at Christmas. 

Costco shoppers love convenience, and if the cars are built well enough to drive them back and forth to work five days a week, people will adore them. Never mind the fact that they don’t have the fit and finish of a Honda or the zoom-zoom of a Mazda, because frankly, we won’t expect it. 

What we will expect is a noticeable drop in our weekly fuel costs and the satisfaction of knowing it’s being brought to us by the friendly folks in China, Mexico, and at Costco.

This is not to say I want cheapo Chinese cars to replace conventional domestic and import autos, but I think it would be dang cool if we had the choice of having one of each, at least until a domestic maker could offer something similar.

Would you buy a $5,000 electric Chinese car from Costco if it were available?


The Road Ahead for GM and Chrysler


Most informed analysts think we’re going to have a quick managed bankruptcy for both companies, with the U.S. emerging as majority shareholder. That’s the view of Steven Pearlstein, whom I respect as one of the least hyperkinetic and most measured observers of the economic scene.

Big haircuts will be the order of the day for all sides, because the government has the power to dictate a restructuring rather than putting the companies through liquidation and a piecemeal sale of assets. The UAW seems to recognize that it has no real leverage and has made concessions; it will have to go further.

Both Chrysler and GM bankers, however, are fighting for a lot bigger share of the pie than the government is offering. They want more cash and less equity in the failing companies, but it’s doubtful they will get it. Treasury asked Chrysler to slash 85 percent of its secured debt; the bankers yesterday offered 35 percent. It’s a high-stakes game of chicken, as some are calling it.

You can expect that this dispute will get hotter, since the government has already given a flat turn-down to the lenders’ proposal. Here’s Pearlstein’s scenario for the outcome:

Given the amount of money it is likely to put into the automakers, the government will be entitled to more than half of the stock of the reorganized companies. Then there is the union’s health fund, which will probably be entitled to stakes of 20 to 25 percent, reflecting not only the reduced cash payments it will receive but also all the other concessions made by active and retired workers. At Chrysler, there’s also the matter of Fiat’s contribution of technology and management services, which it offered for a 20 percent share.

That leaves only about 10 to 15 percent of each company. Bankers and bondholders will kick and scream and call it unfair, but in the end they’ll take it because, like everyone else in this adventure, they’ll conclude that it’s better than the alternative.

Yes, we are going to have an auto industry. What do you think it will look like after the presumed bankruptcy?


Car Blog Showdown: Currently Available Hybrids

2009 Saturn VUE Hybrid V6

2009 Saturn VUE Hybrid V6

Here’s our latest Car Blog Showdown. This week, in celebration of Earth Day, tgriffith and jgoods were each invited to select their favorite currently available hybrid vehicle. Which is your favorite?

jgoods’ 5 reasons why the 2009 Saturn VUE Hybrid V6 (sometimes called the VUE Green Line 2 Mode Hybrid) is his favorite currently available hybrid:

The VUE Hybrid V6 has a 500-plus-mile range and reports a 50 percent improvement in fuel economy over the standard V6 VUE (which translates to 28/31 mpg). This crossover uses state-of-the-art technology to couple with a 3.6-liter V6 for high torque and horsepower. The VUE Hybrid V6 will get you to 60 mph in 7.3 seconds and can tow up to 3,500 pounds (not at the same time). The Hybrid V6’s 2 Mode system uses regenerative braking, fuel shut-off during deceleration and idle, and two 55-kW electric motors integrated into the transmission. This provides all-electric, combustion engine power, or a combination as conditions demand. It’s the sharpest looking crossover out there. Despite Saturn’s projected demise, this car will likely continue as an Opel.

tgriffith’s 3 reasons to avoid a 2009 Saturn VUE Hybrid V6:

Saturn’s probably going out of business. Do you really need two more reasons not to buy one? I’ll keep going anyway. An all-wheel-drive system will not be offered with the VUE Hybrid V6. The Hybrid V6’s 2 Mode technology was co-developed with BMW and Chrysler, so look for models from them and hope they stay in business!

2009 Ford Escape Hybrid

tgriffith’s 5 reasons why the 2009 Ford Escape Hybrid is his favorite currently available hybrid:

It’s rated at 34 mpg in the city. The 2009 model has a new 2.5-liter engine and new brake system, eliminating concerns from previous versions. Available four-wheel-drive makes it a practical choice, even in areas that get a lot of snow. A 15-gallon gas tank gives the Escape Hybrid a range of about 500 miles. It’s a solid, efficient American vehicle from the strongest of the Big 3.

jgoods’ 3 reasons avoid a 2009 Ford Escape Hybrid:

As CarGurus reported, you may have trouble getting one, and even at its high price, Ford is still in the red with this car. You may well get better fuel economy with the VUE Hybrid V6 and enjoy its beefier engine. Ask New York taxi drivers (and riders) how they like these cars.

What’s your favorite currently available hybrid? Why?

Finally, a truck that gets 100 mpg!


Okay, that 100-mpg number is partly marketing, but still it’s something to get excited about.

Bright Automotive is a mostly unknown car company based in Indiana. Their CEO is the guy who developed the battery pack for GM’s infamous EV1, the first production electric car that some say was prematurely put down.

So Bright is a company with some credibility behind them, and this week they unveiled their IDEA (Yes, it’s called the Bright IDEA. Stop laughing.) on Capitol Hill in Washington, DC. 

Here’s the scoop on the IDEA:

It’s powered by a hybrid electric system and drives for the first 30 miles on pure electricity. After that, an electric/gas engine takes over. For the first 50 miles of driving, the IDEA is said to use half a gallon of gas, the equivalent of 100 mpg. Bright hopes the IDEA will be available in 2013 to commercial customers. It will not be offered as a consumer vehicle.  Bright says they will create about 5,000 jobs when they begin producing 50,000 vehicles per year by the end of 2012.

I think marketing the IDEA for commercial uses is absolutely brilliant. Imagine all the delivery trucks in America that are getting 9 miles per gallon. Replace them with a van like the IDEA and *boom*, global warming is solved.

Okay, that might be a bit too high an expectation for the IDEA, but it’s a step in the right direction and another example of how the world’s auto industry will evolve in the coming years.

Do you think Bright has a great IDEA, or will it turn out to be nothing more than hype?


Another PR Triumph for Chrysler


The guys from Cerberus, Chrysler’s majority owner, have been keeping a very low profile lately, and so has Chrysler Financial, major player in the company’s consumer and dealer lending. Now, however, CF is on the hot seat because of a story the Washington Post broke yesterday.

A condition for granting the Treasury Department’s $750 million loan was that executives sign waivers regarding their compensation, which some apparently refused to do. When Treasury gave Chrysler $1.5 billion in TARP funds back in January, conditions were less rigorous, and there were no limits set on executive pay,which is now one hot potato. Congress is still working out guidelines on the issue.

So in Chrysler’s defense, it appears the execs were being asked not only to sign away their rights to sue at a later time, but also to sign “without knowing what specific limits the Treasury might set.” Jgoods, PR counsel extraordinaire, would have recommended the company play up exactly that side of the story, that their folks were in effect being asked to sign a blank contract.

Treasury withdrew the offer, and so the company is getting hammered here and here—not only because their execs look like greedy pigs, but also because Chrysler went on to issue this ridiculous statement:

Chrysler Financial has determined that it has adequate private capital funding to cover the short-term needs of our dealers and customers and as such no additional TARP funding is necessary at this time.

They then went out and borrowed money from private banks, Citigroup and J.P. Morgan among them, and paid a higher interest rate than Treasury would have charged. So some draw the inescapable conclusion that they were obviously willing to pay more to avoid the government’s conditions.

Now comes a story today saying GM could get some $5 billion more from the federal government and Chrysler $500 million. The latter amount would also flow to include Chrysler Financial.

I think the government needs PR counsel, desperately.

What do you think of this avoidable mess? a) Chrysler just can’t win when public opinion is so stacked against them. b) Chrysler Financial is run by knaves and fools. c) Keep the government out of financing loans to automakers.


Baby Rolls: A Rolls-Royce for the masses?

2010 Rolls-Royce Ghost: coming soon to your neighbor's garage?

2010 Rolls-Royce Ghost: coming soon to your neighbor's garage?

Sometimes people like to point out to me that Rolls-Royce doesn’t advertise.

While it may be true that they don’t buy space in Cosmo, Rolls certainly does advertise, even though it’s normally through their PR department.

RR has been teasing auto fans for quite some time now with the prospect of a lower-priced “Baby Rolls.” Their flacks have generated all kinds of buzz… could it be true that our friends and neighbors might afford to park a legendary symbol of luxury and status in their garages?  

Not so fast. The company has officially unveiled their new baby, the Rolls-Royce Ghost, at the Shanghai Auto Show in China. Based on the BMW 7 Series platform, this “entry level” Rolls still measures 212 inches long and will have a 6.6-liter turbocharged V12 under the hood. 

With the introduction of the Ghost, Rolls-Royce expects to increase their annual production output to 1,600 cars per year. With numbers like that, you can bet the term “entry level” still won’t translate to an affordable price. Estimates have ranged anywhere from the low-$200,000 to the low-$300,000 range. 

I don’t think any amount of advertising will sell more cars at that price!

If you had the money, would you buy a Rolls-Royce or “step down” to something like the BMW 7 Series?


What Could Be Finah than Porsche in China?


We’ve written before that China is pushing past the U.S. as the world’s biggest auto market. With most all the other home markets tumbling, hope for the industry is focusing on China, where car sales may surpass 10 million units this year.

The Shanghai Motor Show has now come to represent something of a default market for the industry, with 13 new models unveiled and all major manufacturers represented. While Porsche grabbed headlines with its debut of the Panamera (its first sedan, above), other makes have come forward—or at least teased, as Jaguar did with the XJ (not to be formally shown until July in England). The best they could do was this plan-view photo which shows little more than a panoramic top.

But Porsche has been getting all the press with the Panamera, particularly since the company says it expects to sell 20,000 this model year. (If you contemplate buying one in China, with import and other taxes the turbo V8 will set you back 2.5 million yuan or $366,000, according to the NY Times. Prices here for the “entry-level” model, with Volkswagen’s 3.6-liter 300-bhp six, start at $89,000.) Still, the company has cultivated a strong presence in China since 2001 and, despite that country’s trend to small, fuel-miserly cars, there will be some luxo buyers out there who will surely hit on this machine.

The Wall Street Journal has a very interesting article on how Porsche has kept its head above water by teaming with VW (in which it holds a majority of shares), reducing its fixed costs by outsourcing to that firm, and making forays into China. It seems as if most other carmakers are trying to steal the Asian page from the Porsche playbook.

Whether the company can seriously look to sell Panameras against real worldwide competition such as the Maserati Quattroporte, the Benz CLS, and the Aston Martin Rapide is still anybody’s guess.

What’s your guess? Will Porsche sell 20,000 Panameras, and where will they be sold?


A Prius that sounds like a Lamborghini?

A simple solution to a growing problem

A simple solution to a growing problem

Back in January we wondered what would happen to the sound of acceleration as electric and hybrid cars slowly gain traction on the roads.

In a world of silent electric cars, would we miss the throaty rumble of a V8? Would the weed-wacker whine of a tuned Civic become a distant memory? 

Fear not, fellow cargurus, your Congress is stepping up to bring the noise back to hybrids! And it’s actually pretty cool.

The problem with silent acceleration isn’t just the omission of auditory engine feedback. It turns out driving without a sound is dangerous, especially to children and people who are blind.  

That’s the fundamental thinking behind a bill introduced by Congress this month:

To direct the Secretary of Transportation to study and establish a motor vehicle safety standard that provides for a means of alerting blind and other pedestrians of motor vehicle operation.

A new company called Enhanced Vehicle Acoustics has jumped on the opportunity and has created a device consisting of a computerized control unit and speakers placed under each wheel well that emit the sounds of a conventional gas engine. 

While the main intent of this device is to alert pedestrians that a car is approaching, the company also says that customers will have a choice as to what sounds their cars make.

Imagine your Prius accelerating to the sound of a horse clip-clopping on a cobblestone street. Or emitting the whine of a jet engine. Or roaring like a Lamborghini V12.

Hey, there’s no reason safety can’t be fun!

What sound would you want you electric or hybrid car to make while accelerating?


Height of Dumbness Video Awards

You didn’t know it, but today is Dumb Car Video Day. We think it’s an especially good way to bring on the weekend, and so here is Hyundai’s really stupid “tribute” to the Mustang‘s 45th birthday.

Then, for your viewing pleasure, we have dancing girls festooning the Alfa 8C Spider. Frankly, we think the car is better looking than the girls, and it certainly has better moves.

Finally, the smart fortwo, which we like, has been cruelly subjected to all kinds of tuning, hotrodding and pimping out. Here comes more noise and tire squealing, to the crowd’s delight. IIHS’s recent crash tests, one of which involved a fortwo, might have pleased them even more.

So, have fun this weekend, and give us your vote on which of these dumb videos deserves first prize.