From The New York Times:
By MATTHEW L. WALD
Published: July 31, 2009
WASHINGTON — The House of Representatives voted to provide an emergency $2 billion for the “cash for clunkers” program on Friday, and the White House declared the program very much alive, even though new-car shoppers appear to have already snapped up all the $1 billion that Congress originally appropriated for it.
The House shoved other business out of the way on its last day before the August recess to rush through a measure to address the cash shortage of the car program. The vote was 316 to 109, with significant support from Republicans as well as Democrats.
The Senate, which will be in session next week, will take up the program then. A spirited debate is likely, as some senators are expected to use the opportunity to push for tougher fuel-efficiency requirements. If the Senate does not go along with the House’s version, the House might have to return to work on a compromise.
The sudden legislative action was prompted by the overwhelming response to the program, formally known as the Car Allowance Rebate System, which its backers say has helped not only car-buyers but the struggling American automobile industry.
Earlier Friday, Robert Gibbs, the chief White House spokesman, offered assurances that the administration was looking for ways to continue the popular new program, which offers $3,500 to $4,500 for people who trade in an old car for a new one with higher fuel economy.
“If you were planning on going to buy a car this weekend using this program, the program continues to run,” he said. “If you meet the requirements of the program, the certificates will be honored.”
Mr. Gibbs declined to say how long the program could continue without an infusion of funds.
“We feel confident that we’ll have a solution that people can agree on moving forward, and that the program continues,” he said.
The $2 billion infusion approved by the House would come from money already set aside for an Energy Department’s loan guarantee program and give it to the rebate program.
“Consumers have spoken with their wallets,” Representative David R. Obey, Democrat of Wisconsin of chairman of the House Appropriations Committee, said in urging quick passage.
The panel’s ranking Republican, Jerry Lewis of California, complained that Democrats, who have a 256-to-178 majority in the House, were rushing the measure through with too little thought, let alone debate — “shoveling another $2 billion out the door,” in his words.
But in the end, there was enough support from Republican in states that rely on the auto industry to speed the measure along.
Before the House vote, Senator Carl Levin, Democrat of Michigan, said it was not clear how long funds for the program would last, “so people should go to their car dealers now if they want to take advantage of the program.
Representative Steve Israel, Democrat of New York, predicted that $2 billion would be enough until Congress returns in September. But he added, “there’s going to be a lot of confusion among consumers. We need to wrap this up today.”
The program has proved a boon to the battered auto industry as it struggles to regain its footing, drawing crowds of customers to some showrooms as dealers aggressively promoted the rebates in ads over the last week.
Representatives of the nation’s car dealers said Thursday that they had been told by the Transportation Department to stop offering the rebates because the funds had been quickly exhausted.
But a White House official then said the program had not been suspended, creating confusion about its status.
There was wide support for an additional appropriation for “cash for clunkers,” with members of the Michigan delegation in the forefront. But support was not unanimous and some members of Congress thought the requirements should be tightened.
Senators Dianne Feinstein, a California Democrat, and Susan Collins, a Maine Republican, said in a joint statement that “we will insist that any extension of the program requires that the minimum fuel economy improvement for newly purchased vehicles be at least two miles per gallon higher than it is under the enacted Clunkers program.” For cars, the current minimum improvement is five miles a gallon. And, they said, to help low-income car owners take part, they would include vouchers for fuel-efficient used vehicles.
But Representative Ed Markey of Massachusetts, one of the authors of the original bill, called for a simple extension. He declared Thursday night, “Cash for Clunkers may have run out of cash, but America’s consumers haven’t run out of clunkers.” He said it should be extended to cover 1 million vehicles, about four times the number covered so far.
Helene Cooper contributed reporting from Washington, and Micheline Maynard from Detroit.
Friday, July 31, 2009
Thursday, July 30, 2009
6 New Cars Worth Waiting For
From U.S. News and World Report
By Hamooda Shami
With the economy showing signs of life and plenty of great car deals to be had, many people may be more eager than ever to purchase a new car. A major added incentive has even appeared in the form of the federal government's Cash for Clunkers program, which offers up to a $4,500 rebate when you trade in your old car. It's quite the deal, but if you don't qualify and are still inclined to drop some cash on a new vehicle, here's a suggestion.
Wait. It may be tempting to head to the dealer today and walk out of there with a set of keys. But in this case, patience definitely has its rewards.
The automotive industry has witnessed the perfect storm over the last two years. Drastic drops in sales, unpredictable rises in gas prices, a punch-drunk economy trying to get its legs -- all of this has culminated in auto manufacturers being forced to make major modifications. Stagnant brands have been downsized and eliminated, while automakers have moved their focus from behemoth SUVS to small, fuel-efficient cars.
However, the time it takes for a car designed from scratch to make it into production is significant. Cars that have been in the works for the last year or two will only be rolling out on dealer lots starting next year and into 2011 and 2012. What that means is, eventually, the fallout from the automotive crisis will result in a whole slate of efficient, innovative cars making it to the market in true lemonade-out-of-lemons fashion. We've put together a list of our favorites. Start putting money aside now and you won't be sorry later.
Chevrolet Volt
Projected Release Date: Late 2010
When you're discussing anticipated autos, it would be poor form not to begin with the Chevrolet Volt. One of the most talked-about cars in the industry, it will be the first Extended-Range Electric Vehicle (E-REV) in mass production. The Volt is an electric car that employs a gasoline engine in order to expand its range. Price estimates place the Volt at around $40,000.
Ford Fiesta
Projected Release Date: Early 2010
Ford is taking a throwback approach to fuel efficiency with the nifty Fiesta. Instead of going with hybrid technology or a newfangled electric powertrain, the Ford Fiesta will simply be a small, lightweight car. In addition to being a lot cheaper to produce than its alternative-fuel contemporaries, it will match and surpass most of them in fuel economy. Pricing is unknown, but many expect it to be in the neighborhood of a lower-end Ford Focus.
Nissan EV-02
Projected Release Date: 2012
Gas-sipping cars are nice, but cars that don't use any gas at all are even better. Nissan hopes to be among the first to bring an affordable electric vehicle to production with its EV-02. Nissan has already made an EV mule available to the press (in the form of a Nissan Cube outfitted with components of the EV technology) for testing purposes. CNET says the "drivetrain was whisper quiet" and they were "quite impressed with the linear acceleration exhibited by the EV-02, and its willingness to move " Many details are yet to be revealed, such as the exterior, price and eventual name but for green drivers on a budget, the Nissan EV is an interesting proposition.
Chevrolet Spark
Projected Release Date: 2011
The second Chevy on our list, the Spark is the domestic answer to the Smart ForTwo. Where it has a leg up on the ForTwo is that it will be for four -- as in four passengers, and four doors for easy access. With a motorcycle-style instrument panel and a painfully cute exterior, the Spark is bound to have a large fan base. Pricing has not yet been announced -- though speculation is that it will be priced along the lines of the budget Chevy Aveo.
Chrysler Town & Country EV
Projected Release Date: Late 2010
Last fall, Chrysler shocked the industry when it unveiled a lineup of electric vehicles that are in development. While the Dodge Circuit has garnered the most attention for its mind-numbing performance and flashy styling, the Town & Country EV is innovative in its practicality. Most of the electric cars that are going to hit the streets are either sports coupes or miniature econo-boxes. The idea of an electric minivan that can transport the family while producing zero emissions sets the Town & Country EV apart from everything else in the works. Pricing information has not been released.
Scion iQ
Projected Release Date: Late 2010/Early 2011
The iQ is Toyota's attempt to take on the Smart ForTwo and the aforementioned Chevrolet Spark. To be released under their "alternative" brand, Scion, the iQ will feature a 3+1 seating arrangement (two in the front, one in the back) -- just don't expect to fit a full-sized adult in the rear seat. The price of the iQ hasn't been released as of yet, but expect it to be somewhere close to the $14,650 MSRP of the Scion xD.
By Hamooda Shami
With the economy showing signs of life and plenty of great car deals to be had, many people may be more eager than ever to purchase a new car. A major added incentive has even appeared in the form of the federal government's Cash for Clunkers program, which offers up to a $4,500 rebate when you trade in your old car. It's quite the deal, but if you don't qualify and are still inclined to drop some cash on a new vehicle, here's a suggestion.
Wait. It may be tempting to head to the dealer today and walk out of there with a set of keys. But in this case, patience definitely has its rewards.
The automotive industry has witnessed the perfect storm over the last two years. Drastic drops in sales, unpredictable rises in gas prices, a punch-drunk economy trying to get its legs -- all of this has culminated in auto manufacturers being forced to make major modifications. Stagnant brands have been downsized and eliminated, while automakers have moved their focus from behemoth SUVS to small, fuel-efficient cars.
However, the time it takes for a car designed from scratch to make it into production is significant. Cars that have been in the works for the last year or two will only be rolling out on dealer lots starting next year and into 2011 and 2012. What that means is, eventually, the fallout from the automotive crisis will result in a whole slate of efficient, innovative cars making it to the market in true lemonade-out-of-lemons fashion. We've put together a list of our favorites. Start putting money aside now and you won't be sorry later.
Chevrolet Volt
Projected Release Date: Late 2010
When you're discussing anticipated autos, it would be poor form not to begin with the Chevrolet Volt. One of the most talked-about cars in the industry, it will be the first Extended-Range Electric Vehicle (E-REV) in mass production. The Volt is an electric car that employs a gasoline engine in order to expand its range. Price estimates place the Volt at around $40,000.
Ford Fiesta
Projected Release Date: Early 2010
Ford is taking a throwback approach to fuel efficiency with the nifty Fiesta. Instead of going with hybrid technology or a newfangled electric powertrain, the Ford Fiesta will simply be a small, lightweight car. In addition to being a lot cheaper to produce than its alternative-fuel contemporaries, it will match and surpass most of them in fuel economy. Pricing is unknown, but many expect it to be in the neighborhood of a lower-end Ford Focus.
Nissan EV-02
Projected Release Date: 2012
Gas-sipping cars are nice, but cars that don't use any gas at all are even better. Nissan hopes to be among the first to bring an affordable electric vehicle to production with its EV-02. Nissan has already made an EV mule available to the press (in the form of a Nissan Cube outfitted with components of the EV technology) for testing purposes. CNET says the "drivetrain was whisper quiet" and they were "quite impressed with the linear acceleration exhibited by the EV-02, and its willingness to move " Many details are yet to be revealed, such as the exterior, price and eventual name but for green drivers on a budget, the Nissan EV is an interesting proposition.
Chevrolet Spark
Projected Release Date: 2011
The second Chevy on our list, the Spark is the domestic answer to the Smart ForTwo. Where it has a leg up on the ForTwo is that it will be for four -- as in four passengers, and four doors for easy access. With a motorcycle-style instrument panel and a painfully cute exterior, the Spark is bound to have a large fan base. Pricing has not yet been announced -- though speculation is that it will be priced along the lines of the budget Chevy Aveo.
Chrysler Town & Country EV
Projected Release Date: Late 2010
Last fall, Chrysler shocked the industry when it unveiled a lineup of electric vehicles that are in development. While the Dodge Circuit has garnered the most attention for its mind-numbing performance and flashy styling, the Town & Country EV is innovative in its practicality. Most of the electric cars that are going to hit the streets are either sports coupes or miniature econo-boxes. The idea of an electric minivan that can transport the family while producing zero emissions sets the Town & Country EV apart from everything else in the works. Pricing information has not been released.
Scion iQ
Projected Release Date: Late 2010/Early 2011
The iQ is Toyota's attempt to take on the Smart ForTwo and the aforementioned Chevrolet Spark. To be released under their "alternative" brand, Scion, the iQ will feature a 3+1 seating arrangement (two in the front, one in the back) -- just don't expect to fit a full-sized adult in the rear seat. The price of the iQ hasn't been released as of yet, but expect it to be somewhere close to the $14,650 MSRP of the Scion xD.
Thursday, July 16, 2009
Cars Hurt Most by the Recession
From U.S. News and World Report
By Rick Newman
Last summer, when the prospect of a General Motors bankruptcy started to materialize, CEO Rick Wagoner was insistent: A Chapter 11 filing would be ruinous.
He was wrong, but not by a lot. GM and Chrysler are both still in business following unprecedented bankruptcy filings—but only thanks to billions in federal aid and government guarantees backing their products. And the two automakers will look quite different in their new incarnations. At GM, Wagoner is gone. His replacement, Fritz Henderson, has cut half of GM's eight divisions, leaving Chevrolet, Cadillac, Buick, and GMC. Chrysler is now owned by Italian automaker Fiat and desperately awaiting fresh technology and new models needed to become competitive. Many current Chrysler models may simply disappear.
Those are the biggest headlines, but the rest of the auto industry is reeling as well. Overall sales are down about 35 percent from last year, which itself was a bust, thanks to $4 gas and an incipient recession. Toyota, the world's biggest automaker, lost nearly $5 billion last year and might fare no better this year. Other bankruptcies may be on the horizon, with conglomerates in China and India prowling for bargains and Western know-how amid the wreckage. While some familiar brands could vanish, new ones may soon arrive in U.S. dealerships. Warren Buffett, for instance, believes a Chinese firm called BYD is one of the world's most promising electric-car companies—and has invested about $230 million in it.
The next several years are likely to represent the biggest shakeout in the U.S. auto industry since the 1930s, and I decided to gauge who's falling behind in what has become a frenzied race to survive. With the industry in a tailspin, sales at every major automaker are down, so I used data from J.D. Power & Associates to measure which automakers have been losing the most market share. That reveals which models and manufacturers are doing worst relative to their competitors.
Since brand loyalty matters most when money is scarce, the automakers losing market share today are likely to flounder even if there's an upturn in the economy. These seven nameplates have lost the most market share so far in 2009, compared to 2008:
Chrysler (1.9 percent market share, down 0.9 percentage point from 2008). Fire sales at shuttered dealers may have attracted a few bargain hunters, but Chrysler is proving that bankruptcy is bad for business. Sales of every Chrysler model except the Town & Country minivan are down more than 50 percent in 2009, and there's little on the way over the next 12 months to brighten the picture. The parent company is now officially Chrysler-Fiat, but the Fiat-made Eurodarters we've been hearing about won't arrive until 2011 at the earliest. They could help revitalize the Chrysler brand, the weakest and smallest under the corporate umbrella (which also includes Dodge and Jeep). But it's also possible that the whole Chrysler division could be folded into other parts of Chrysler-Fiat—or sold or dissolved.
Dodge (5.5 percent market share, down 0.8 point). Chrysler's sister division is suffering from the same double whammy: trying to survive bankruptcy with a product lineup that's middling at best. The Ram pickup is the strongest Dodge vehicle, with sales down less than the industry average. A rebound in housing and construction could help turn Ram sales around. The flashy new Challenger muscle car gives the popular Ford Mustang and Chevy Camaro some competition. And the Journey crossover is thrifty and practical. But the rest of the Dodge lineup is aging and underwhelming.
Chevrolet (12.4 percent market share, down 0.6 point). There's reason for optimism at Chevy—GM's biggest division—which can boast a mainstream hit in the Malibu sedan and an exciting "halo vehicle" in the hot new Camaro. But nearly every other vehicle in the lineup has lost market share over the past year, evidence that GM's bankruptcy has hurt even its strongest division. With GM folding Pontiac and selling Saturn, Chevy needs to make a strong recovery if GM is ever going to return to profitability.
Saturn (0.9 percent market share, down 0.5 point). There are still a few loyalists, but Saturn's sales and market share began to plunge on the news that GM would sell its "no hassle" division. The new owner, Penske Automotive Group, hasn't said yet what kinds of cars the new Saturn will sell, but they could be imports from Korea or even China. Until those arrive in a year or two, GM will continue to provide lame-duck vehicles to help keep Saturn's 350 dealerships open.
Toyota (13.6 percent market share, down 0.4 point). The big loser for Toyota has been its Tundra pickup truck, which has failed to wrest key turf from Ford and Chevy even though it's made at an expensive new plant in Texas. The new Honda Insight hybrid undercuts Toyota's Prius on price, and Honda's Accord has been a tough competitor to the Camry. But one reason Toyota has lost market share is that is hasn't cut prices as much as competitors or offered the same costly incentives. Share is likely to bounce back as some GM and Chrysler buyers flee to more stable carmakers.
Scion (0.5 percent market share, down 0.4 point). The trio of small, inexpensive cars that make up Toyota's Gen Y division—the tC, xB, and xD—should appeal to buyers in lean times. But competing thriftmobiles like the Honda Fit and Mazda3 have more mainstream appeal than Scion's funky designs. And other compacts like the Kia Rio and Hyundai Elantra come cheaper.
Suzuki (0.8 percent market share, down 0.3 point). Yes, Suzuki still sells cars here, although it suspended production of its XL-7 SUV last year and pulled the Reno and Forenza sedans from its lineup. What's left? The Grand Vitara crossover, the SX-4 compact, and a pickup called the Equator. That's a pretty flimsy lineup, but if you buy an SX-4, at least you'll get three months of free gas. Better hurry, though: The last company that tried a promotion like that was Chrysler.
By Rick Newman
Last summer, when the prospect of a General Motors bankruptcy started to materialize, CEO Rick Wagoner was insistent: A Chapter 11 filing would be ruinous.
He was wrong, but not by a lot. GM and Chrysler are both still in business following unprecedented bankruptcy filings—but only thanks to billions in federal aid and government guarantees backing their products. And the two automakers will look quite different in their new incarnations. At GM, Wagoner is gone. His replacement, Fritz Henderson, has cut half of GM's eight divisions, leaving Chevrolet, Cadillac, Buick, and GMC. Chrysler is now owned by Italian automaker Fiat and desperately awaiting fresh technology and new models needed to become competitive. Many current Chrysler models may simply disappear.
Those are the biggest headlines, but the rest of the auto industry is reeling as well. Overall sales are down about 35 percent from last year, which itself was a bust, thanks to $4 gas and an incipient recession. Toyota, the world's biggest automaker, lost nearly $5 billion last year and might fare no better this year. Other bankruptcies may be on the horizon, with conglomerates in China and India prowling for bargains and Western know-how amid the wreckage. While some familiar brands could vanish, new ones may soon arrive in U.S. dealerships. Warren Buffett, for instance, believes a Chinese firm called BYD is one of the world's most promising electric-car companies—and has invested about $230 million in it.
The next several years are likely to represent the biggest shakeout in the U.S. auto industry since the 1930s, and I decided to gauge who's falling behind in what has become a frenzied race to survive. With the industry in a tailspin, sales at every major automaker are down, so I used data from J.D. Power & Associates to measure which automakers have been losing the most market share. That reveals which models and manufacturers are doing worst relative to their competitors.
Since brand loyalty matters most when money is scarce, the automakers losing market share today are likely to flounder even if there's an upturn in the economy. These seven nameplates have lost the most market share so far in 2009, compared to 2008:
Chrysler (1.9 percent market share, down 0.9 percentage point from 2008). Fire sales at shuttered dealers may have attracted a few bargain hunters, but Chrysler is proving that bankruptcy is bad for business. Sales of every Chrysler model except the Town & Country minivan are down more than 50 percent in 2009, and there's little on the way over the next 12 months to brighten the picture. The parent company is now officially Chrysler-Fiat, but the Fiat-made Eurodarters we've been hearing about won't arrive until 2011 at the earliest. They could help revitalize the Chrysler brand, the weakest and smallest under the corporate umbrella (which also includes Dodge and Jeep). But it's also possible that the whole Chrysler division could be folded into other parts of Chrysler-Fiat—or sold or dissolved.
Dodge (5.5 percent market share, down 0.8 point). Chrysler's sister division is suffering from the same double whammy: trying to survive bankruptcy with a product lineup that's middling at best. The Ram pickup is the strongest Dodge vehicle, with sales down less than the industry average. A rebound in housing and construction could help turn Ram sales around. The flashy new Challenger muscle car gives the popular Ford Mustang and Chevy Camaro some competition. And the Journey crossover is thrifty and practical. But the rest of the Dodge lineup is aging and underwhelming.
Chevrolet (12.4 percent market share, down 0.6 point). There's reason for optimism at Chevy—GM's biggest division—which can boast a mainstream hit in the Malibu sedan and an exciting "halo vehicle" in the hot new Camaro. But nearly every other vehicle in the lineup has lost market share over the past year, evidence that GM's bankruptcy has hurt even its strongest division. With GM folding Pontiac and selling Saturn, Chevy needs to make a strong recovery if GM is ever going to return to profitability.
Saturn (0.9 percent market share, down 0.5 point). There are still a few loyalists, but Saturn's sales and market share began to plunge on the news that GM would sell its "no hassle" division. The new owner, Penske Automotive Group, hasn't said yet what kinds of cars the new Saturn will sell, but they could be imports from Korea or even China. Until those arrive in a year or two, GM will continue to provide lame-duck vehicles to help keep Saturn's 350 dealerships open.
Toyota (13.6 percent market share, down 0.4 point). The big loser for Toyota has been its Tundra pickup truck, which has failed to wrest key turf from Ford and Chevy even though it's made at an expensive new plant in Texas. The new Honda Insight hybrid undercuts Toyota's Prius on price, and Honda's Accord has been a tough competitor to the Camry. But one reason Toyota has lost market share is that is hasn't cut prices as much as competitors or offered the same costly incentives. Share is likely to bounce back as some GM and Chrysler buyers flee to more stable carmakers.
Scion (0.5 percent market share, down 0.4 point). The trio of small, inexpensive cars that make up Toyota's Gen Y division—the tC, xB, and xD—should appeal to buyers in lean times. But competing thriftmobiles like the Honda Fit and Mazda3 have more mainstream appeal than Scion's funky designs. And other compacts like the Kia Rio and Hyundai Elantra come cheaper.
Suzuki (0.8 percent market share, down 0.3 point). Yes, Suzuki still sells cars here, although it suspended production of its XL-7 SUV last year and pulled the Reno and Forenza sedans from its lineup. What's left? The Grand Vitara crossover, the SX-4 compact, and a pickup called the Equator. That's a pretty flimsy lineup, but if you buy an SX-4, at least you'll get three months of free gas. Better hurry, though: The last company that tried a promotion like that was Chrysler.
Monday, July 13, 2009
America's Most Overpriced Cars
From Forbes:
By Hannah Elliott
These days, car buyers have the upper hand when they walk into the showroom. They have access to dealer invoice prices and day supply data on the Internet--not to mention a recession that has spurred lowest-ever financing deals and unprecedented cash-back incentives.
But that doesn't mean every vehicle is a bargain; plenty are still overpriced. Right now, according to Vincentric, a firm that tracks vehicle ownership costs for the auto industry, several cars on sale now have market values far below their manufacturer's suggested retail price.
The Jeep Liberty, for example, has a true market value 20.9% lower than its MSRP; the Dodge Ram 2500 is worth 26% less; and the Chevrolet Trailblazer is worth 16.4% less than its MSRP.
Those three models, in particular, tell the story of the most overpriced autos currently on the market: Our entire list is comprised of vehicles manufactured by Detroit's Big Three. No foreign brands make the list, as those automakers' cars tend to be priced fairly when considering supply and demand as well as their high rankings on consumer-satisfaction surveys.
Behind the Numbers
To find America's most overpriced vehicles, we first looked at market price figures supplied by Vincentric. These are updated each month to reflect marketplace inventory, demand, rebates and incentives, and to represent the price that a buyer typically pays. We ruled out any vehicles where the gap between market price and MSRP was less than 10%--a natural breaking point in the data that left a list of about 150 overpriced vehicles to pare down.
We then used two pieces of customer-satisfaction information to better determine whether certain vehicles meet the expectations their brands promise--essentially, whether they justify their sticker price.
We used J.D. Power's 2008 Automotive Performance, Execution and Layout (APEAL) survey results, and ruled out vehicles that won their segments or scored better than two-and-a-half stars out of five: Any vehicle that scores less than 50% is likely not delivering on the thousands a consumer must shell out to buy it.
The list was further shortened by Consumer Reports' Owner Satisfaction results, data from a survey that asks owners--considering a wide range of factors, including price--whether they would buy a particular car again. Vehicles that scored less than 50 (on a scale of 100) made our list. We then ranked the remaining 15 vehicles by the amount overpriced (the difference between market price and MSRP).
The three most overpriced cars are the Dodge Ram pickup (worth 26% less than its MSRP), Mercury Grand Marquis (worth 21.4% less) and Jeep Liberty (worth 20.9% less).
Close the Gap
When it comes to the price of a car, the most important factor to consider is market value vs. MSRP, says Dave Freed, a managing partner for Vincentric. Even big cash rebates or 0% financing won't ensure you're getting the best deal on the lot, he says, and Vincentric's true-value information should give you a sense of how tough a negotiator you can be.
After that, research the top factors that cause a price to balloon out of proportion: availability, depreciation and gas prices. These points, in particular, are why American-made models comprise our entire list. Fleet sales and overproduction by GM and Chrysler has led to a dilution of resale value--and to dealers' lots overflowing with identical models. The Dodge Nitro is one of the worst offenders of this, according to Ward's, an automotive data and analysis firm.
Some cars tend to be overpriced partly because of their weakened brand image, which can lead to poor resale value. Vehicles that have this problem include the $17,430 GMC Canyon pickup truck, which has a resale value of 11.9% less than its MSRP; as well as GMC Envoy, with a resale value of 16.1% less than its MSRP.
"Where you might pay a higher price for a Honda Civic, you get it back at the end because it has a high resale value," says David Zoia, the editorial director for Ward's.
Lack of Luxury
While luxury vehicles cost thousands more than their non-luxury counterparts, none made our list. They all invariably receive extremely high satisfaction rates and APEAL scores. A Mercedes-Benz CL550 may cost a lot ($107,900 to be exact), and the E-Class costs a more reasonable $48,000, but the people who drive these cars think they're worth the price. It doesn't hurt that Mercedes keeps a tight rein on production levels too--you won't see a CL550 at your local Enterprise office anytime soon.
The $29,270 Mercury Grand Marquis sedan, however, is one to watch. Its market value is 21.4% lower than its MSRP, and it received low APEAL (2) and satisfaction (43) scores as well. So someone with her heart set on this vehicle shouldn't--in theory--pay more than roughly $23,000.
The Grand Marquis is the victim of a general move in the market away from larger, heavier sedans, says James Clark, general manager of Automotive Lease Guide, a California company that compiles automotive residual values. Those cars get worse gas mileage and cost more to insure, meaning they cost more to own in the long run. Similarly, U.S. consumers' move away from trucks and SUVs--also prominent on our list--has driven down those vehicles' true market values as well.
"It's a shift that we've experienced this past year due to the high gas prices we had last summer," says Clark. "With trucks and SUVs, a lot of those are showing up at the top of the list in terms of the highest cost to own."
America's Five Most Overpriced Cars
1. Dodge Ram 2500
2. Mercury Grand Marquis
3. Jeep Liberty
4. Dodge Nitro
5. Dodge Durango
By Hannah Elliott
These days, car buyers have the upper hand when they walk into the showroom. They have access to dealer invoice prices and day supply data on the Internet--not to mention a recession that has spurred lowest-ever financing deals and unprecedented cash-back incentives.
But that doesn't mean every vehicle is a bargain; plenty are still overpriced. Right now, according to Vincentric, a firm that tracks vehicle ownership costs for the auto industry, several cars on sale now have market values far below their manufacturer's suggested retail price.
The Jeep Liberty, for example, has a true market value 20.9% lower than its MSRP; the Dodge Ram 2500 is worth 26% less; and the Chevrolet Trailblazer is worth 16.4% less than its MSRP.
Those three models, in particular, tell the story of the most overpriced autos currently on the market: Our entire list is comprised of vehicles manufactured by Detroit's Big Three. No foreign brands make the list, as those automakers' cars tend to be priced fairly when considering supply and demand as well as their high rankings on consumer-satisfaction surveys.
Behind the Numbers
To find America's most overpriced vehicles, we first looked at market price figures supplied by Vincentric. These are updated each month to reflect marketplace inventory, demand, rebates and incentives, and to represent the price that a buyer typically pays. We ruled out any vehicles where the gap between market price and MSRP was less than 10%--a natural breaking point in the data that left a list of about 150 overpriced vehicles to pare down.
We then used two pieces of customer-satisfaction information to better determine whether certain vehicles meet the expectations their brands promise--essentially, whether they justify their sticker price.
We used J.D. Power's 2008 Automotive Performance, Execution and Layout (APEAL) survey results, and ruled out vehicles that won their segments or scored better than two-and-a-half stars out of five: Any vehicle that scores less than 50% is likely not delivering on the thousands a consumer must shell out to buy it.
The list was further shortened by Consumer Reports' Owner Satisfaction results, data from a survey that asks owners--considering a wide range of factors, including price--whether they would buy a particular car again. Vehicles that scored less than 50 (on a scale of 100) made our list. We then ranked the remaining 15 vehicles by the amount overpriced (the difference between market price and MSRP).
The three most overpriced cars are the Dodge Ram pickup (worth 26% less than its MSRP), Mercury Grand Marquis (worth 21.4% less) and Jeep Liberty (worth 20.9% less).
Close the Gap
When it comes to the price of a car, the most important factor to consider is market value vs. MSRP, says Dave Freed, a managing partner for Vincentric. Even big cash rebates or 0% financing won't ensure you're getting the best deal on the lot, he says, and Vincentric's true-value information should give you a sense of how tough a negotiator you can be.
After that, research the top factors that cause a price to balloon out of proportion: availability, depreciation and gas prices. These points, in particular, are why American-made models comprise our entire list. Fleet sales and overproduction by GM and Chrysler has led to a dilution of resale value--and to dealers' lots overflowing with identical models. The Dodge Nitro is one of the worst offenders of this, according to Ward's, an automotive data and analysis firm.
Some cars tend to be overpriced partly because of their weakened brand image, which can lead to poor resale value. Vehicles that have this problem include the $17,430 GMC Canyon pickup truck, which has a resale value of 11.9% less than its MSRP; as well as GMC Envoy, with a resale value of 16.1% less than its MSRP.
"Where you might pay a higher price for a Honda Civic, you get it back at the end because it has a high resale value," says David Zoia, the editorial director for Ward's.
Lack of Luxury
While luxury vehicles cost thousands more than their non-luxury counterparts, none made our list. They all invariably receive extremely high satisfaction rates and APEAL scores. A Mercedes-Benz CL550 may cost a lot ($107,900 to be exact), and the E-Class costs a more reasonable $48,000, but the people who drive these cars think they're worth the price. It doesn't hurt that Mercedes keeps a tight rein on production levels too--you won't see a CL550 at your local Enterprise office anytime soon.
The $29,270 Mercury Grand Marquis sedan, however, is one to watch. Its market value is 21.4% lower than its MSRP, and it received low APEAL (2) and satisfaction (43) scores as well. So someone with her heart set on this vehicle shouldn't--in theory--pay more than roughly $23,000.
The Grand Marquis is the victim of a general move in the market away from larger, heavier sedans, says James Clark, general manager of Automotive Lease Guide, a California company that compiles automotive residual values. Those cars get worse gas mileage and cost more to insure, meaning they cost more to own in the long run. Similarly, U.S. consumers' move away from trucks and SUVs--also prominent on our list--has driven down those vehicles' true market values as well.
"It's a shift that we've experienced this past year due to the high gas prices we had last summer," says Clark. "With trucks and SUVs, a lot of those are showing up at the top of the list in terms of the highest cost to own."
America's Five Most Overpriced Cars
1. Dodge Ram 2500
2. Mercury Grand Marquis
3. Jeep Liberty
4. Dodge Nitro
5. Dodge Durango
Sunday, July 5, 2009
Blazing a new trail for a muscle car
Appeared in Daily Report, Monday, July 06, 2009
Blazing a new trail for a muscle car
The 2009 Dodge challenger picks up where its '70s predecessor left off, but adds a few modern tweaks
By Karl W. Ritzler, Special to the Daily Report
2009 Dodge Challenger:
Buy this car if: You want a trip back down memory lane with up-to-date technology.
Not for you if: Muscle cars are a turn off.
Look at me factor: In red, it looks like an invitation for a ticket.
Competitors: Chevrolet Camaro, Ford Mustang
What others are saying:
“The 2009 Dodge Challenger lunges off the corners and swallows the straights, its sustained thrust complemented by long riffs of resonant mechanical music.”—Edmunds.com
“While it's here, we'll enjoy the Challenger as a successful exercise in retro styling and Hemi muscle.”—Car & Driver
“What a fun, fun, hot car. It drives as fun as it looks, and that's pretty damn impressive.”—Automobile Magazine
The inferno red 2009 Dodge Challenger is a good ol' boy magnet.
From the thumbs up outside a McDonald's to a lively discussion outside a Wal-Mart about the Challenger's Hemi engine and what she'll do on the highway, guys gravitated to the car that's a faithful successor to the '70s muscle car.
Not everyone knew what they were looking at, though. Both a mom at a mall parking lot and a knowledgeable car guy both thought it was a Ford Mustang at first glance.
Right era, wrong car.
The Challenger in the new-for-2009 R/T (road and track) trim with the 5.7-liter, 370-horsepower Hemi V-8 under the hood evokes the pure muscle of earlier Challengers that toed the line with muscular Mustangs and uncaged Camaros.
Dodge's timing is nearly perfect, with the revived Camaro due out soon and the Mustang seeing its own revival. The Big 3 of Detroit's muscle car era are at it again. It's almost enough to make you forget about the nasty realities of expensive gas and automakers' bankruptcy.
The Challenger also comes in a new, wimpy 250-horsepower V-6, if you are worried about the price of gas. If not, the holdover SRT8 from '08 is still available with its 6.1-liter, 425-hp V-8.
Tune the satellite radio—a distinct upgrade from earlier times—to the '70s music channel, and the picture is complete, right down to the rumble of that luscious Hemi.
Not everything is out of the '70s, however. Start with the Challenger's profile. Below the beltline, it has the look any guy would want—what he had in the '70s. The front is that classic bandit look, with the “mask” wrapping around the headlights and grille. An air dam and fog lights reinforce the aggressive look.
The taillights are full width, topping the dual exhausts and tucked beneath a spoiler that looks like it really belongs there.
The greenhouse, however, is 21st century. It has the low look of contemporary Mopar products, giving the car an overall sleekness that one-ups its predecessor. The driver does pay a price, however, with reduced visibility.
The Challenger is built on the same platform at the Chrysler 300 and Charger sedans, but the wheelbase is four inches shorter than the Charger.
Dodge wants to make sure everyone knows there's a Hemi under the hood with bold lettering along the scoop line. Switch on the ignition, and it's a nostalgic trip back to the muscle car era. And the rumble from the exhaust rekindles the memory of 50-cent-a-gallon gas.
Stomping on the accelerator is satisfying, especially if you're next to an unsuspecting BMW. Handling is pure muscle—crisp and sure and powerful. Straight-line power is plentiful, if not race-track fast. Dodge claims zero-to-60 times of less than 6 seconds with the Hemi-equipped Challenger. But unlike its ancestor, the new Challenger is much better able to handle tight turns.
The engine is matched to a five-speed automatic transmission, but a six-speed manual is available.
Challenger buyers aren't necessarily worried about fuel economy. It's OK at 16 mpg city and 25 mpg highway, definitely on the low side for what the EPA considers a compact car.
Inside, the sport bucket seats are supportive. The black plastic and cloth and touches of chrome have been described as bland. There's no Euro, techy feel to the inside of the Challenger. Besides not being overpowered by gizmos and gadgets, the climate and audio controls are clearly marked and easy to use. Even the steering wheel stalks are uncluttered.
Don't plan on taking the gang for a ride in the Challenger, though. There's room in back only for a child car seat or a duffle bag for the gym. The trunk, however, is enormous. The 60/40 split back seat folds down for even more room, up to a maximum of 16.2 cubic feet.
Standard equipment on the R/T package includes side curtain front and rear air bags, stability and traction control, antilock brakes, air conditioning, tachometer, AM/FM/CD/MP3 audio, 18-inch aluminum wheels, performance tires and halogen headlights.
The R/T has a base price of $29,320, plus $675 destination charge. The test vehicle had only one option, satellite radio, at $195. But with the difficulties faced by the auto industry and Chrysler in particular, look for a deal.
Karl W. Ritzler is a freelance contributor to the Daily Report.
Blazing a new trail for a muscle car
The 2009 Dodge challenger picks up where its '70s predecessor left off, but adds a few modern tweaks
By Karl W. Ritzler, Special to the Daily Report
2009 Dodge Challenger:
Buy this car if: You want a trip back down memory lane with up-to-date technology.
Not for you if: Muscle cars are a turn off.
Look at me factor: In red, it looks like an invitation for a ticket.
Competitors: Chevrolet Camaro, Ford Mustang
What others are saying:
“The 2009 Dodge Challenger lunges off the corners and swallows the straights, its sustained thrust complemented by long riffs of resonant mechanical music.”—Edmunds.com
“While it's here, we'll enjoy the Challenger as a successful exercise in retro styling and Hemi muscle.”—Car & Driver
“What a fun, fun, hot car. It drives as fun as it looks, and that's pretty damn impressive.”—Automobile Magazine
The inferno red 2009 Dodge Challenger is a good ol' boy magnet.
From the thumbs up outside a McDonald's to a lively discussion outside a Wal-Mart about the Challenger's Hemi engine and what she'll do on the highway, guys gravitated to the car that's a faithful successor to the '70s muscle car.
Not everyone knew what they were looking at, though. Both a mom at a mall parking lot and a knowledgeable car guy both thought it was a Ford Mustang at first glance.
Right era, wrong car.
The Challenger in the new-for-2009 R/T (road and track) trim with the 5.7-liter, 370-horsepower Hemi V-8 under the hood evokes the pure muscle of earlier Challengers that toed the line with muscular Mustangs and uncaged Camaros.
Dodge's timing is nearly perfect, with the revived Camaro due out soon and the Mustang seeing its own revival. The Big 3 of Detroit's muscle car era are at it again. It's almost enough to make you forget about the nasty realities of expensive gas and automakers' bankruptcy.
The Challenger also comes in a new, wimpy 250-horsepower V-6, if you are worried about the price of gas. If not, the holdover SRT8 from '08 is still available with its 6.1-liter, 425-hp V-8.
Tune the satellite radio—a distinct upgrade from earlier times—to the '70s music channel, and the picture is complete, right down to the rumble of that luscious Hemi.
Not everything is out of the '70s, however. Start with the Challenger's profile. Below the beltline, it has the look any guy would want—what he had in the '70s. The front is that classic bandit look, with the “mask” wrapping around the headlights and grille. An air dam and fog lights reinforce the aggressive look.
The taillights are full width, topping the dual exhausts and tucked beneath a spoiler that looks like it really belongs there.
The greenhouse, however, is 21st century. It has the low look of contemporary Mopar products, giving the car an overall sleekness that one-ups its predecessor. The driver does pay a price, however, with reduced visibility.
The Challenger is built on the same platform at the Chrysler 300 and Charger sedans, but the wheelbase is four inches shorter than the Charger.
Dodge wants to make sure everyone knows there's a Hemi under the hood with bold lettering along the scoop line. Switch on the ignition, and it's a nostalgic trip back to the muscle car era. And the rumble from the exhaust rekindles the memory of 50-cent-a-gallon gas.
Stomping on the accelerator is satisfying, especially if you're next to an unsuspecting BMW. Handling is pure muscle—crisp and sure and powerful. Straight-line power is plentiful, if not race-track fast. Dodge claims zero-to-60 times of less than 6 seconds with the Hemi-equipped Challenger. But unlike its ancestor, the new Challenger is much better able to handle tight turns.
The engine is matched to a five-speed automatic transmission, but a six-speed manual is available.
Challenger buyers aren't necessarily worried about fuel economy. It's OK at 16 mpg city and 25 mpg highway, definitely on the low side for what the EPA considers a compact car.
Inside, the sport bucket seats are supportive. The black plastic and cloth and touches of chrome have been described as bland. There's no Euro, techy feel to the inside of the Challenger. Besides not being overpowered by gizmos and gadgets, the climate and audio controls are clearly marked and easy to use. Even the steering wheel stalks are uncluttered.
Don't plan on taking the gang for a ride in the Challenger, though. There's room in back only for a child car seat or a duffle bag for the gym. The trunk, however, is enormous. The 60/40 split back seat folds down for even more room, up to a maximum of 16.2 cubic feet.
Standard equipment on the R/T package includes side curtain front and rear air bags, stability and traction control, antilock brakes, air conditioning, tachometer, AM/FM/CD/MP3 audio, 18-inch aluminum wheels, performance tires and halogen headlights.
The R/T has a base price of $29,320, plus $675 destination charge. The test vehicle had only one option, satellite radio, at $195. But with the difficulties faced by the auto industry and Chrysler in particular, look for a deal.
Karl W. Ritzler is a freelance contributor to the Daily Report.
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