Tuesday, March 6, 2012

This month, it’s all about The Wheel…

Petroleum is Aghast

CNN ran this editorial last week calling on Americans to quit whining about our gas prices.  By design perhaps, this prompted outrage from several of my well-educated friends citing plain logical fallacies.  “Why should we shut up because you’re paying more?”  Good point.  The fine folks in the UK should be whinier perhaps, but let’s make sure we have all the facts first.

Point 1:  Gasoline (or petrol if you’re from the Isles) costs $9.85 a gallon in England. 

Terrible, right?  Let’s take a closer look at this because there’s more than meets the eye with such a statement.

A cursory examination of gasoline prices in England today yielded an average of 138p or £1.38 per liter.  How many liters in a gallon, you ask?  Good question.  Many people are ignorant of the fact that the UK uses a different measurement for a gallon than we do here in the US.  A standard US Gallon works out to just under 3.8 liters, whereas an imperial gallon (sounds like something George Lucas dreamed up, doesn’t it?) comes in at over 4.5 liters.  It is not known whether the CNN gent meant a US or imperial gallon, but it’s an 18% difference.  Let’s do the math and find out.

At today’s conversion rates, £1.38 = $2.19.  Multiply that times 3.78541178 liters and you get $8.29/USG.  What is it for an imperial gallon?  $2.19 x 4.54609 liters and you get $9.96/IG.  It appears that the correspondent meant imperial gallons.  Not quite apples-to-apples if you want to get technical about it.  Even so, a US gallon of gas costs around $8.30ish across the pond, and that’s for the cheap stuff.  Ouch.

Point 2:  “America needs petrol prices to double if people are to permanently park up their 15mpg pick-up trucks.”  Never happen.  We may drive them considerably less, but most truck owners actually use them for work or the regular maintenance of (by European standards) their vast estates.  The writer made a much better point in a preceding paragraph.  “Admittedly Americans have to cover greater distances than Europeans. But you don't need a glorified double bed powered by a throbbing great V8 to do that. A sensibly-sized car with a two-liter turbo will do the job just as comfortably.”  That’s an agreeable statement.  Look, when times are tough, Americans largely do their part.  Look back to the late 1970s.  We cut our speed limits and manufacturers magically conjured models with 50+ mpg.  That begs the bigger question and perhaps what Americans should be whining about instead—choice.

Point 3:The Volkswagen Polo I now drive is the same size as the first ever Golf.”  Congratulations Mr. Foxall, you’ve discovered the crux of the real problem for us whiney Americans.  You may be paying double what we are for a gallon of gas—and that’s understandable for a non-petrol producing, tax-gouging island located half a globe from any major oil field—but you have a far superior selection of vehicles doubling our best fuel consumption rates.  Do Americans have access to a VW BlueMotion Polo touting 80+mpg combined?  Not even close.  Fiat Panda?  How about Ford’s Focus hatch with a 1.0L diesel ecoboost?  No, we’re stuck with the basic Golf with 2.0 TDI option, which at best produces 36 mpg combined.  I suppose that’s our fault?  Diesel price disparity leaves Americans without much incentive, you know.  The model pricing is around 20% more expensive, and you can add another 10% on average for diesel fuel.  Those combined kill the savings.  After 10 years you might make up for it, but is that worth the lackluster performance?  Doubtful.  We’ll need a much better reason to pay premiums (car price) to keep from paying premiums (gas price).  A $30,000 Prius?  A $32,000 Leaf?  Seriously, the $10,000 extra price buys a lot of gas, utility and style with conventional vehicles.

Complain? Yes.  About gas?  That doesn’t hurt anyone except British editorialists, evidently.  Solve our problems?  No.  We can complain about the price of gasoline all we want.  Between government taxation, speculative trading, and cartel-controlled supply, the only flint to flick is under the manufacturers’ collective ass.  Sounds like a job for 60 Minutes, but it would be far more entertaining if James May investigated.  James?  


She Bought a Car!

That’s right, I started with a spoiler.  Chances are you scrolled down, saw Jessica’s photograph, and guessed the outcome of all this text below, but what a journey getting there!  If you’ve been keeping up with this blog, you’d know that we’ve been casually car shopping for several months.  Now if you’re like me, your money is ready, and there is probably a couple of weeks’ hard diligence involved.  Specifications, test driving, model availability, etc.  When your daughter is buying her first car things become a bit more complicated. After all, it’s a big decision that will impact your daily life for the next several years unless you’re leasing or an urban transport patron.  Along the way you might make a few compromises.  The model might have a cup holder in the wrong place, or you prefer knobs instead of buttons.  The manufacturer may not have your preferred interior/exterior colors, or they actually have them, but an automatic transmission means a trim level upgrade of several thousand dollars.  You’re always over-budget it seems.  Jessica’s criteria were simple.  Starter compact sedan, excellent fuel economy, automatic transmission, blue with tan or grey interior.  Lots of choices out there, I thought.  “This should be easy!”  Oh, those famous last words…

Test Drives

The first car lot we dared to set foot on was a Kia dealer down the street, and the Forte EX magnetized us as quickly as the salesman rushing to make our acquaintance.  We liked the styling, the interior controls were well placed and intuitive (less distracting, I thought), the ride was smooth, engine peppy, miserly fuel consumption, and the price seemed reasonable by today’s standards.  Zero complaints.  After the salesman completed his pitch, we took a brochure and parted ways.  One and done, or so we thought.  “They don’t have it in blue unless you buy the most expensive model.”  Jessica wanted to cry already.  The cost would have been well over budget by our calculations.  Although the car came with upgraded sporty suspension and sporty façade upgrades, the sporty engine meant sporty fuel consumption at a pedestrian 27 mpg combined.  We wanted better than 30.  Better shop around, as the song goes.

Next door was a Hyundai dealership, and we had heard about their Elantra’s 40mpg boasts.  Thing is, Jessica instantly panned the anime styling—the bulbous head and taillight plastics and the happy happy face on the grill.  Please, no stereotypes!  No bother with a test drive, we bolted for the nearest Ford dealer to sample their latest Focus sedan.  She wasn’t keen on its styling either, especially the ostentatious black plastic grill, but an insistent pitchman made sure we didn’t leave without a drive.  Laudable fuel consumption, a decent ride, and it had a shade of blue she liked, but the interior killed it by becoming claustrophobic the moment you moved the front seats forward.  This was necessary to get anything adult-sized in the back without being “helped” by an extra lumbar support.  Peculiarly, Ford found it wise to do away with a conventional fuel cap, but place a cheap flip cap over its 12V receptacles.  Last about two months I said to myself, gazing down the road towards a Mazda dealership.  Our afternoon almost spent, we escaped the clutches of Ford’s sales scrum and shortly arrived at the bosom of Jessica’s infatuation.

Long smitten with the 2004-2009 Mazda3, we knew that car would be The Standard from which all others would be judged by our daughter.  That partiucular 3 came in her “perfect” midnight blue metallic paint, the gas mileage was decent, it had sporty looks, sporty engine, sport…(here we go again with the sporty-everything), it was her dream car, her Vin Diesel.  Thing is, it had been replaced with a new version in 2010.  Would she still like it?  No.  There was that anime happy face again, and its black plastic creepy leer could end up on a Jimmy Kimmel segment.  “Ew!”  Worse, no midnight blue.  The interior felt cheapened over the previous model too.  Flimsy plastics on the dash, a cardboard-like headliner with thin fabric, and I actually had to grab an ankle to fit through the rear doorway.  The test drive also went poorly.  Sure, the ride was still brisk, the steering taught and so forth, but it felt less capable than the previous model.  Vin Diesel’s run was over.  The divorce was final.  Honda was just down the street and we had about one hour before they closed.  Might as well give them a shot, we thought.

On the day, Honda’s dealer experience was best.  A highly knowledgeable salesman who took the time to know all of his competitors, he made a Civic sound like the perfect choice.  And, it nearly was.  Excellent fuel conservation, best in class build quality, legendary reliability, lifetime basic service agreement, more than reasonable price, and it came in the blue Jessica liked.  At last, every parent’s dream!  Nope.  She absolutely hated the shortened nose, and the split dash design was a turn-off, no matter how intuitive.  Granted, the style dates to 2006 and is due for an update in 2013, so she was probably on to something.  As much as I thought the Civic was the best for her, it wasn’t going to make her happy.  She’s going to pay for it, so that mattered most.  The day ended and we had no clear choice.

During the process, Jessica discovered that her credit wasn’t quite up to snuff to afford a new car.  Even though some of the offers were attractive, she couldn’t qualify for a lease either.  A few more months on the job were in order, and the break would give her more time for research.  We spared the pavement for the internet and decided our next targets would be a Nissan Sentra, Toyota Corolla, Volkswagen Jetta, and a Chevrolet Cruze.  If she didn’t like any of those, we would begin the search for a used Mazda3.

Fast forward to February 2012.  Jessica had been working for several months and creating a substantial down payment along the way.  A couple more models entered the mix as well, but were quickly disqualified.  While we liked the styling on the 2012 VW Jetta, the pricing, colors, and poor performance specs handily disqualified its contention.  What?  Yes.  Note to VW:  Americans will notice if your model is missing 25 horses from the average stable.  Toyota’s Corolla suffered from Honda’s dated design, and as well from yawn-producing performance specifications.  Off to the Nissan dealer then…

We liked the Sentra’s styling although it will likely see an update soon.  It didn’t wow us, mind you, but it kept itself in the running.  The ride and handling were excellent, the performance was on par with the others.  The fuel consumption, however, was noticeably below average.  The price, well, could have been better too.  In all, it failed to impress us, so we stepped over to an Altima and drove it for comparisons.  Excellent.  Beautiful styling and color choices, perky engine with good consumption and a range seen only by a few diesels.  Now, if we were looking in that class of sedan, the Altima is a no-brainer.  After researching a few of those stickers and performing some fast math, sadly it was no longer an option.  It was time to drive our last prospect.

The search was practically over as soon as we came to a stop in front of a metallic blue, 1LT-RS packaged 2012 Chevy Cruze.  With a front clip reminiscent of her favorite Mazda3 and a rear styled much akin a BMW 3-Series, Vin Diesel had been replaced by Dwayne Johnson in a Speedo.  Jessica said it screamed “BUY ME!” as soon as she saw it.  Hang on, now!  Let’s have that test drive.  No free passes here, I reminded her.  Granted, the car was drop-dead gorgeous for that price class.  The RS package included some lower trim help, fog lights, and a small spoiler.  It whispered sporty without shouting it to the police.  Yes, it was at the top of her affordability, but it had it all—looks, fuel specs, abundant power, top safety rating, quality interior, and other perks such as free OnStar for a few months and upgraded instrumentation, which by the way, used blue lighting.  Yoda would say, “Sold, you are.”  And, we were.  That was the car—no question.  If I had one eensie weensie complaint it might be the spongy brakes, but those were hardly a deterrent; the car stopped fine.  Particularly enticing was the fact that she would be buying an American car, helping thousands of our nation’s workers keep their jobs, and hopefully digging GM out of their government debt.  Perfect. Let’s buy this thing and get back to life.

The Fool

That’s what the stereotypical car salesman believes you are the moment you walk onto the lot.  You are a mark, nothing less.  He has a historically-proven line-by-line negotiation system to extract the most money from you as possible.  This is nothing new.  At best, you can walk into the lion’s den armed with some loosely derived internet research giving you a “fair price” and the dealer’s so-called costs.  That may help, but you’re biggest weapon has been and always will be the simple “no”.  Don’t like the numbers?  “No.”  Get them changed until you feel comfortable saying yes.  You don’t have to explain anything.  There’s no reason to debate, although the salesman would have you think differently.  Negotiations are rather simple beasts in essence.  Either you agree or you don’t.  Fortunately, our Chevrolet dealer behaved differently.  He claimed to be a 21-year sales veteran and absolutely loathed the stereotype.  Actions would confirm his words or prove him as yet another huckster.

After determining Jessica’s financial needs, we revisited a lease.  In short, the salesman couldn’t make the lease numbers jive…wait…just realized I need to disclose something.  As a young lad, I once worked at a dealership and gained a wealth of knowledge in the sales game.  I also have an extensive retail and management career with an education in management that included a rigorous financial curriculum.  In short, your numbers belong to me, and they had better dance to my Mozambique.  Okay, where were we?  Ah yes, a lease.  No, his numbers didn’t line up with mine.  Price (or CAP in lease terms), money factor, residual, etc.  We weren’t even in the ballpark.  No problem, many Chevy dealers in the sea.

Now, there is a novella length story I need to spare for this blog entry.  Here’s the extremely curt version…

Contacted “Dealer B” online and began lease negations.  They didn’t have our desired model.  Informed that a dealer transfer meant less price concession due to internal fee structure.  (red flag!)  Since they did not have the car we wanted, no deal could be worked.  Next.  Arrived at Dealer C in an adjacent county one week later.  Chevy’s national inventory showed desired model available, but salesman said it had just sold.  He said he could get any car without additional expense (chuckle).  We tasked him for Dealer A’s car which was still available.  We went through lease qualification, but Jessica was reportedly not ready.  We wondered, since I was co-signing.  We were told that we both had to qualify individually for the lease alone (red flag!), so he asked why we weren’t buying.  We hadn’t considered it due to cash flow estimates, but those assumptions were based on old 6% interest rates at 60 months term.  We recalculated at 72-months and 3.5%.  Doable depending on price. We hit a snag with the dealer transfer issue again.  Deal went cold.  Two days later, Dealer C calls back to say that he had been mistaken, the inventory was correct—they had our car, but it hadn’t been taken off the truck yet while we were there.  (red flag!)  Arrived following day with checkbook in hand.  Vehicle test-driven, all good to go.  Price negotiated, we walked to the closing table.  It was located in a soundproofed glass office at the end of a hallway of soundproofed glass offices which were behind a soundproofed waiting room at a far corner from the showroom. (suffice to say, red flag!).  And here came the paperwork.  The finance guy threw everything in my face from service plan upgrades to credit union memberships.  I knew the drill.  “No, no, no thanks, no, don’t bother, and please get to the end, it won’t work, this is your second friendly warning to please not upsale me on extended service plans, you’re wasting your time, you’re wasting my time, and finally—what happens if I don’t sign this section for binding arbitration agreements?”  To that, the finance man said, “Then you’ve just wasted three hours of our time.”  We got up and abruptly left.  Jessica was stunned and silent, but she knew something was very wrong.    

During the process, I noticed lines stating “you agree to 55cents per mile if financing fails to occur”, and “interest rates may change if bank does not finance this agreement.”  Those pages were in the package even though we were assured as financially qualified at a certain rate.  It’s the sort of scenario you hear about in consumer crime features on the local television networks, or on aluminum foil hat-wearing conspiracy websites.  Would a supposedly reputable dealership attempt one of the oldest scams in the car business?  I was told later that my terminology is slightly archaic, but I recognized the potential for an elaborate yo-yo finance scheme (good explanation HERE).  Before anyone says it, yes, we checked with our credit union and their rates were not quite as good.  Close, though.  We were rolling the dice in the face of conventional wisdom.  We pondered the motivation behind the scam.  Times that tough for car dealers?  Supposedly the Cruze is a sales winner, so why all the risky tactics?  Oh, wait.  The stereotype is there for a reason, and no salesman should ever wonder why customers emanate contemptuous vibes so long as the vermin salesman exists.

Alas, our deal was dead.  I half expected a callback within minutes of departure Dealer C.  The two salesmen that worked our deal surely wouldn’t let us go without a fight, right?  Crickets.  That’s what we heard for the next three days and nights.  Actually, it was a blissful and blessed silence.  During that time I reeducated myself on current sales schemes and decided that if Jessica was to have the exact car she wanted, our only approach was Dealer A.  I wrote them off after the lease fell through.  Our email exchanges also ended with a sense of contention.  This could be a hostile negotiation, but I felt they would deal with any devil for a vig, including me.  The real question was, did their contracts contain arbitration language, and if so, would they wave it?

With one cordial email, the salesman and I were back to the task at hand.  He was delighted for the opportunity as I had hoped, and in kind, worked an acceptable deal for the car Jessica had originally driven within one short phone call moments later.  Financing was officially in place, paperwork mostly completed, insurance at the ready, and no BS paperwork or arbitration agreements.  Humans, at last!  Now for the fun part.

The Closer

What parent can resist the opportunity for a master surprise!  During the cool-off period from the failed Dealer C scam, I found a couple of used cars Jessica liked: a 2004 BMW and a 2007 Mazda3, both in dark blue with low miles.  I even went so far as to get her prequalified at our credit union.  As far as she knew, the next morning we were headed to a town just north of Tampa to look at the used Mazda. It just so happened that Chevrolet Dealer A was located towards the end of my route.  The lack of excitement built all night.  I could tell this because when the next morning came around, I had to wake her.  No Christmas morning anticipation here.  Yawn.  On came the Headphones of Boredom and a complete tune-out on the highway.  Perfect.  She was clueless.
“Let’s stop by here a minute and see if they still have your car.”
“Are you serious?  Why?  They said no deal, remember?”
It hit her when she saw the salesman polishing the mirrors as we came to a stop just behind it.
You know those “Priceless” credit card commercials right?  Yeah, one of those.  She screamed, she laughed.  It was a proud moment, and I didn’t give a damn about Cats at the time.  It was the best surprise I ever pulled, and it couldn’t have happened to a nicer, more patient kid. 

 Congratulations Jessica, you've earned it!


No comments:

Post a Comment

T. Nelson Taylor | Official Site | DusT | Bolita