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Why Cash for Clunkers Could Devastate Auto Sales

The end of Cash for Clunkers

Cash for Clunkers is over.

More than 625,000 vehicles were sold as a result of the program, so I can’t imagine anyone who wanted to take the government up on its $4,500 offer missed out. Needless to say, the Cash for Clunkers program was hugely successful at luring people into dealerships to buy new cars.

But without the program, what happens next? Who will buy new cars now?

Well, guess what - I have a prediction: Auto sales will languish once again, and dealers will have one heck of a hard winter trying to sell enough cars to keep their heat on. The recovery of the auto industry will probably take even longer than it would have had the government just kept their hands off.

I don’t think Cash for Clunkers actually increased auto sales, I think it condensed auto sales into a single month. Which means the next few months are going to hurt for dealers and auto manufacturers.

Americans just binged on buying cars. The binge made us feel good. It gave us a sugar high of sorts that quickly spread across the country, resulting in even more binging. Now comes the big crash.

The fact that Ford, GM, and Chrysler all increased production of fuel-efficient vehicles made popular by Cash for Clunkers, combined with no more government assistance for consumers, means we’ll soon see an overstock of cars on dealers’ lots with no one to buy them.

Somehow dealers are going to have to lure people into their stores without powerful rebates, and we’ll be right back where we started.

Was Cash for Clunkers worth it?

-tgriffith

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Good News and Bad for Chrysler and GM

gm-and-chrysler-logos

So GM’s eBay program is a smashing un-success. Chrysler is discontinuing it’s lifetime powertrain warranty. GM is rumored to be considering a $4,000 car. Chrysler’s Deputy CEO is leaving.

Ahh, the week in auto news!

When GM launched its eBay program, we were quick to pan the idea as nothing new. I guess consumers agree, because according to this article, GM listed 16,228 vehicles and 45 have sold. Not forty-five hundred, but 45. Total. Nice.

Chrysler introduced a lifetime powertrain warranty in 2007 in an effort to lure consumers to the company’s lackluster product and one-up the likes of Hyundai, Kia, and Suzuki. Now the company is yanking that warranty off the table. There is some good news though: The replacement 5-year, 100,000-mile warranty will apply even to vehicles that weren’t covered by the lifetime warranty (including SRT models and the Dodge Viper).

You know the world has gone topsy-turvy when GM follows in the footsteps of Tata Motors. Just months after the official introduction of the world’s least expensive car, the Tata Nano, GM announced plans to pursue a sub-$4,000 car to compete in emerging markets. We Americans know from experience that GM is really good at producing cheap cars, and now one will finally have the price tag to match. Not in the U.S., though. Pity.

Finally, Chrysler’s Deputy CEO Jim Press will reportedly quit his job by the end of the year. Press began running Chrysler in 2007, but was demoted when Fiat’s Sergio Marchionne took over as the new CEO. This is good news, as removing Chrysler’s old blood can only result in better management and ultimately, better products.

Have a nice weekend, and drop us a comment if you see any other car news, good or bad, you think people should know.

-tgriffith

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Will Young People Ever Buy a Buick?

Looks good, but will young people buy it?

I’ve been thinking a lot about Buick today.

I know that’s not a phrase most 32-year-olds are caught uttering, but I’m conflicted about where the brand seems to be headed.

Naturally, the word “Buick” still conjures images of Florida retirees driving with their left turn signals flashing on the way to a 3 p.m. dinner at the buffet. It’s such a common scene that I sometimes wonder if 1990s-era Buicks were even equipped with right-turn signals.

So when I think of people who drive a Buick, I see old people with blue hair and a pair of knuckles poking up over the steering wheel.

But then I’ll drive past a blinged-out Buick Enclave and remember that, oh yeah, Buick does have some sweet-looking rides now. But even though the Enclave looks good, I’ve still not seen anyone younger than 60 driving one. I’d never buy a Buick for the simple reason that I’m not old enough to own one yet.

Buick sure wants me to consider buying one, though, as evidenced by the completely lame and nearly insulting TV ad that attempts to lure a younger audience into the 2010 Lacrosse. All the ad does is make me think of my grandpa trying to act cool in front of a group of teenagers. Watch the video below and judge for yourself (the last scene is especially hilarious and slightly disturbing).

I do have to give the Lacrosse credit, because it’s following in the Enclave’s footsteps of looking more Lexus-like than traditional Buick. But until I drive one and am convinced that it’s not just another 2-ton floating cruiser, I think anyone who still works for a living will pass it over.

While Buick has always gone down the “bigger is better” path, I’m hearing rumblings of a possible new crossover based off the (get ready for this) Chevy Aveo platform.

My first instinct is to trash-talk that decision, too, but after thinking about it, it might actually be a good idea. If Buick can put together a vehicle that rivals the MINI Crossman crossover, and not just rebadge an Aveo, the brand might be on the right track to finally getting younger people behind the wheel of a Buick.

Would you consider buying a Buick before retirement age?

-tgriffith

GM Looks in the Face of Liability and Laughs

chevrolet_lumina_burned On this Monday morning, I want to open the week with a quote from a favorite movie:

A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don’t do one.

That’s from Fight Club and is pretty accurate, considering the state of auto companies today. If it’s cheaper for a company to just pay off people hurt by its products, why issue a recall and face potentially damaging PR? Those liability payments are costs car companies have to count on.

Unless of course you’re the “new GM.”

As part of GM’s bankruptcy filing, it’s possible it will no longer be liable for injuries or deaths caused by vehicles built by the “old GM.” Our friends at Autoblog reported that GM may be reconsidering, but Chrysler set a precedent earlier this month when they emerged from bankruptcy free from such liabilities.

So if you’re driving around in an ‘06 Cherokee or a ‘94 Lumina, and it suddenly bursts into flames, the folks at Chrysler can just let out a sigh of relief knowing the third-degree burns their vehicle gave you are not their responsibility. Awesome, huh?

News like this doesn’t exactly instill the kind of trust GM and Chrysler so desperately need. Why are we supposed to believe that the “new” GM will be run any differently than the old, considering most of the top execs are still in place? At least Chrysler has the advantage of an all-new CEO and top management team.

I don’t think the world’s auto buyers will just forgive and forget a century of mediocre vehicles and start buying cars from a post-bankruptcy Chrysler or GM. Especially if they keep showing signs of continuing in their old ways, only with a brand new set of government-issued credit cards.

A company can’t hide in the shroud of bankruptcy and keep screwing its customers. Eventually we’re going to catch on.

Would you buy a pre-owned GM or Chrysler if you knew the company wouldn’t assume liability if it malfunctioned?

-tgriffith

Is GM on the verge of inventing a new kind of engine?

GM-hcci-engine If GM can pull off this new bit of technology, I’ll officially recommend the company as the new definition of awesome.

It seems the General is experimenting with ways to combine the fuel efficiency of a diesel engine with the cleaner burning traits of a gas engine. It’s being called an HCCI engine, which stands for homogeneous combustion compression ignition.

A traditional gas engine uses a spark from spark plugs to ignite the fuel. A diesel engine uses compression to accomplish that goal, essentially squeezing the diesel and air mixture until it ignites.

Until now no one has been able to create a gasoline engine that works on compression, which is more efficient because it burns the available fuel all at once rather than from a source point (the spark). To save all the other technical details, it translates into about a 15 percent jump in fuel economy.

GM is developing the engine to run on combustion from idle to about 3,000 rpm, above which it would switch over to traditional ignition for power at highway speeds. While the HCCI engine will run like a diesel, it won’t provide the massive torque of diesel and will power only small cars. GM hopes to have the technology available within the next decade, but I wonder if by then it’ll be too little too late.

It’s been a long time since a company has changed the way fuel is burned in an engine. While I commend GM on their innovative thinking, HCCI is the kind of technology we desperately need right now.

Come on GM, get this thing to market in two or three years! Do that and we’ll all think you’re awesome.

How much extra would you pay for a vehicle equipped with a four-cylinder HCCI engine?

-tgriffith

What happens when an auto writer becomes an auto buyer?

lexus-rx330 My wife’s car has given us trouble since the day we got it.

This weekend we’re finally succumbing to the reality that we probably need to replace it before it leaves us stranded somewhere in the middle of Wyoming.

And so begins the process of shopping for a car. As an automotive writer, it’s easy for me to dish out advice and recommend certain makes, models, and strategies for getting the best deal. But when me-the- writer turns into me-the-consumer, things get more complicated.

My wife decided she wanted to look at a pre-owned Lexus RX 330 and a pre-owned Nissan Murano. After looking online at CarGurus.com and searching local listings, we headed first to the Lexus dealership and then the Nissan dealer. What a difference in experience between the two!

At Lexus, we were warmly welcomed, shown a few cars, and then asked to test drive one. The salesman quickly sent us on our way. We returned wanting to look at a few other older models that would save us some money. The Lexus salesman never put pressure on us and even asked us what we wanted to happen next. He’s crunching some numbers as I type this.

nissan-murano Next we drove to Nissan, where the environment was completely different. We parked in front of a group of 5 salesmen and were approached by one before we even got out of our car. He showed us a few Muranos, but wouldn’t let us drive them alone as the Lexus dealer did. During our test drive they managed to take our car for a trade-in appraisal, assumed we were going to buy the Nissan, and acted shocked when we said we weren’t interested in it.

Then they played the whole “let me go find your keys” game while we stood and waited as someone else tried to talk us into buying the Murano.

The idea of car shopping is exciting and fun. Actually doing it can be frustrating as heck.

Today we want to look at Mazdas, Subarus, and Volkswagens. I can only hope we run into more dealers like Lexus! Tomorrow I’ll fill you in on the deals I’m seeing and provide insights from the dealers on the state of their business. I’m surprised at what they’ve said so far!

What family-friendly domestic models would you consider buying? If you have advice or experience on car shopping, let’s hear it!

-tgriffith

The Chevy Vega: Motor Trend’s Car of the Year?

When auto writers make lists of the worst cars ever, the Chevy Vega is nearly always on that list, along with a Renault or two.

1983 Renault Alliance

Look back through the years, however, and you’ll see something fascinating: Vegas and Renaults on some very well respected lists of annual BEST cars. Shocking, I know! Now, Car and Driver magazine is attempting to right those wrongs by formally apologizing for missteps like this: naming the Renault Alliance to their 1983 10 Best Cars list.

The apology is proof that even the highest profile automotive magazines can easily get sucked up into the hype of a new product or a new brand entering the market. Using their own words:

It’s always a risk making judgments based on the initial exposure to a car, and sometimes a vehicle’s ultimate crappiness only reveals itself with the fullness of time.

Other cars of ultimate crappiness that have received past accolades are now notorious stinkers.

2002 Ford Thunderbird

The 2002 Ford Thunderbird has been exposed as an overweight and overpriced clunker whose good looks initially stole the hearts of many. This was Motor Trend’s Car of the Year.

Also winning Motor Trend’s coveted Car of the Year award was the infamous 1971 Chevy Vega. That’s a completely laughable notion today, but think of the poor people who went out and bought one on that advice. Seems like those folks need more than a simple apology; perhaps a reimbursement of towing costs incurred throughout the ‘70s!

1980 Chevy Citation

Remember the 1980 Chevy Citation? I sure do, but I think it’s only because my brother became trapped in the backseat of one by a seatbelt that refused to detach. Maybe we only had it because my dad was a Motor Trend reader and this, once again, was a shameful Car of the Year choice.

I’m sure some cars getting attention today will turn out to be serious stinkers or simply fade into automotive mediocrity, but I also think some of today’s cars will be remembered and collected as classics for years to come.

What award-winning cars of today will fade away, and which will go down in automotive history as true classics?

My votes: The North American Car of the Year, the Hyundai Genesis, will be discontinued while the Motor Trend Car of the Year, the Cadillac CTS, will be remembered as the car that brought Caddy back.

-tgriffith

Get a Free Fiesta from Ford!

ford_fiesta_five_door_hatchback_1

I want a CarGurus reader to get a free Ford Fiesta.

As part of Ford’s plan to finally launch their little European superstar in America, they’re giving 100 Fiestas away to deserving drivers for a 6-month test drive.

What makes someone any more deserving than anyone else? Well, that’s for you to prove. Ford is using this website to ask for a 2-5 minute video that explains why you deserve an opportunity to take a…well…Fiesta!

Here’s a sample entry:

There does seem to be a catch to the promotion, though, which could end up being either a ton of fun or a serious road block on the way to wherever it is you want to go:

You’ll receive monthly secret assignments from Ford Mission Control that will take you to places you’ve never been, to meet people you’ve never met, and to experiences you’ll never forget.

Secret assignments from Ford Mission Control? Maybe the 100 winners are actually being wrangled into a gold-smuggling scheme, like the MINI Coopers in The Italian Job.

More likely, the winners will make scheduled pit stops at malls across America to promote their ride, but still, it could be a real adventure! I think going anywhere in a vehicle that could redefine the American economy-car class would be a real kick in the pants.

Expect the Fiesta to actually be fun to drive, have useable interior space, and spoil drivers with innovative technology and a comfortable cabin, a combination of features that hasn’t ever been seen in a car of this size from an American automaker.

Personally, I believe the readers and friends of CarGurus are more deserving than anyone to get a shot at the Fiesta before they go on sale, so we want to see you enter and win! We’d also love to see your videos, so if you do enter, be sure to leave a link to your video in the comment section!

Do you plan on entering to win a Ford Fiesta? What do you think of this promotion?

-tgriffith

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