Cash For Clunkers in Seattle

After the recent announcement that the Cash for Clunkers program was active again, we at Seattle Auto have been fielding lots of emails from visitors wondering if their car was eligible. To be honest, even we were unsure of how the program worked, so we did a little research and here’s what we found out.
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Car Negotiation: The 10 Step Guide – Part 2

Step 6: How to Set a Price For Your Car

The trickiest part of the negotiating game is to set a price that is fair to both you and the dealership. As good or bad as a dealership might be, they still have to make a profit. In fact, you might be surprised to hear that dealerships average about a mere 1% profit per year on total sales. Read more

Are Seattle Car Dealers Getting Desperate?

“I got my Civic at $100 over invoice!” beams Leonard L., a Redmond resident who picked up a new 2009 Honda Civic earlier this year. Leonard is among the growing group of recent car buyers who have snagged up great deals as local Seattle car dealerships have begun feeling the economic recession.

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Cars that Are Selling…or Are They?

Seattle drivers, for the most part, are smart. They follow the beat of their own drum and rarely do we follow any type of national trend. But seeing between the lines of national statistics can tell you a lot.Take into consideration the Top 15 Cars Americans Are Still Buying by Forbes.com.

Numbers can be deceiving. They can be manipulated to serve a purpose by just about anyone. In terms of the Forbes story they used recent sales numbers provided by Autodata based on sales each month. They compared the number of sales from February 2008 and February 2009. But take it with a grain of salt. While individual models made gains, it wasn’t enough to save the overall losses by the company.

According to the Forbes.com story written by Hannah Elliot:

Despite the gains, individual models don’t reflect the industry at large; most of the cars with the strongest gains come from brands that lost ground last month. Audi’s A5 and S5 coupes, for instance, gained 28.6% in sales from February 2008, but the brand declined 24.4% in overall sales. Models like the Audi A3 (down 51.6% in February), Audi A6 (down 47.5% in February) and Audi A8 (down 67.5% in February) did more than their part to drag Audi down.

Similarly, the Nissan 350Z’s 33% gain couldn’t fully mitigate the brand’s 37.1% loss compared to February 2008. All told, only Kia (0.4%), Smart (28.5%) and >Subaru (1.4%) posted overall gains last month over February 2008.

Manipulation of individual numbers is a good way to avoid the doom and gloom of the overall auto industry. Take the BMW M3 convertible, according to last years sales there was only one sold in February 2008! All they had to do was sell two and it would’ve doubled their sales for 2009.

Therefore, the best thing to do is eliminate the sales that are less than 1,000 and take a look at the rest. When you do that, what’s left is a better overall picture of cars that sold better to the masses.

If you go by that method, Hyundai is making a lot of waves this year with the Genesis, Elantra, and Accent. This isn’t the first “top” list they’ve made this year. Check out these individual sales for Hyundai models in the United States from last year to this year.

Hyundai Accent
MSRP: $9,970

February 2009 sales: 4,334
February 2008 sales: 3,335
Increase: 30.0%

Hyundai Elantra
MSRP: $14,120

February 2009 sales: 8,978
February 2008 sales: 6,750
Increase: 33.0%

See the entire article and list at Forbes.com.

Obama’s Emissions Plan Fits Seattle Drivers

President Barack Obama made his message clear when he set new emission standards for new cars starting in 2011. Cars will be cleaner and more fuel efficient than ever before. The president will direct the Enviornmental Protection Agency to review whether California, Washington along with other states can impose stricter emission standards to battle green house gases. Read more

It’s Done, a $17.4Billion Bailout for US Automakers

The US Federal govenment is getting into the car business. With this latest attempt to save the American auto industry, the Fed will partially own a stake in the Big 3.

What will this do for the future of American cars? 

For the long term is this good or bad?

Will every American car soon look like FBI vehicles?

For the immediate future it is needed, but keeping an eye on the long term effects will be interesting.

Here’s what Debb Reichmann wrote in the Associated Press

WASHINGTON (AP) — Citing danger to the national economy, the Bush administration approved an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans in exchange for deep concessions from the desperately troubled car makers and their workers.

The Feds would then have the option of becoming a stockholder in the companies, very similar to that of the major banks. That would somewhat nationalize the US auto industry. 

A nationalized car industry, how will this effect local car dealers, if it does at all?

See the full AP article

 

What Will The American Auto Industry Do Now?

With Congress rejecting a $14 billion dollar bailout for US automakers, where does that leave Detroits Big Three? Unfortunately the decision came down to partisanship. Republicans voted against it, most Demorcrats wanted it. The auto industry will suffer deeply, and so will American jobs.

JULIE HIRSCHFELD DAVIS and KEN THOMAS of the Associated Press wrote,

WASHINGTON – A bailout-weary Congress killed a $14 billion package to aid struggling U.S. automakers Thursday night after a partisan dispute over union wage cuts derailed a last-ditch effort to revive the emergency aid before year’s end.

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit’s beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

If this union decision leads to the demise of the US auto industry, wouldn’t they be cutting their own throats? 

See the full AP article.

Why Toyota Wins From the Auto Crisis

From a blog posting I just read:

Do you know how many hourly jobs GM has laid off from 2006 to July 2008? Take a guess. How about 34,000? And now, they’re talking about another 5,500 layoffs.

…

OK, here’s a better question. How many hourly jobs has Toyota’s American production system laid off in the same time frame? Zero. That’s right. ZERO. How? Isn’t Toyota experiencing the same slow down in auto sales as GM is? Yes, it is. And yes, Toyota has halted production at its Texas and Indiana plants for the past 3 months. But the 4,500 people who work at those plants have not been laid off. 

 

The answer: Toyota has a special culture, deep-rooted values, and respect for their workforce. Toyota’s tradition is to NOT lay off employees during hard times. This tradition hasn’t really been put to the test until now. And Toyota has stuck to its guns and its values.

“This was the first chance we’ve really had to live out our values,” says Latondra Newton, general manager of Toyota’s Team Member Development Center in Erlanger, Ky. “We’re not just keeping people on the payroll because we’re nice. At the end of all this, our hope is that we’ll end up with a more skilled North American workforce.”

 

For the full article: What Toyota knows that GM doesn’t

My thoughts on this is two fold. First, I’m impressed with Toyota as a consumer. Second, I’m sentimental to the fact that this really is the end of the American car industry. 

Back in the 80s, when America stopped importing “cheap” Japanese cars and Lee Iacocca was making history at Chrysler, the American car industry seemed pretty much unstoppable. The “Big Three” were called that because they were actually the biggest – not because they are the only ones left standing – as is the case today. 

Through mergers and acquisitions, the industry, even with all it’s clashes with the union, the auto industry had the history of supporting it’s workers and ensuring a career out of tens of thousands of skilled laborers at a time that many corporations dumped their workers en masse. 

But that was then and this is now. 

In a surreal flip, it would now appear that those clunky Japanese car companies are the industry leaders today; and have been for more than a decade. While Detroit was drinking the oil-is-forever koolaid and pumping out beefier and bigger engines, the Japanese were hard at work perfecting their engines and builds to six-sigma and improving efficiency.

With gas hitting $4 a few months ago and the credit crisis, it wasn’t so much that the Japanese won the bet, but rather, Detroit found itself with an empty hand. Saddled with factories meant to churn out beefy SUVs, Hummers and trucks, the new paradigm in energy and economics poured cold water all over the roaring party up until this point. 

GM is losing a billion dollars a month and will likely buy out Chrysler. Layoffs in the 30,000 – 40,000 range are to be expected, along with 12 factories closing. Morale is no doubt at an all time low, with every worker wondering if he’s next on the cutting block. Even if GM is able to magically survive with an infusion of cash (bailout), the Volt is still years out and a grasp for straws.

Meanwhile, Toyota has taken a page straight out of the American automaker book by proving its loyalty to the company workforce. Though Toyota is halted on much of its production, they are taking the down time to train their workers to be even better skilled, educated and efficient workers. When the economy picks up again, Toyota will be the equivalent of a fully rested team going to the playoffs against a miserable and beat-up team that has just played 10 losing games in a row. It’s no contest who will win. 

If the Seattle Auto Show was any indication, the consumers have already voted, as we saw crowds around Toyota, Honda and Jetta. All the while, the sprawling 2-ton Ford F150 rotating 360 degrees might as well been invisible. Chevy and Escalade Hybrids were looked on more with a sense of derision or perplexed bewilderment rather than consumer curiosity (though this is Seattle). 

The new automotive landscape is already here – it’s just across the sea. 

 

The Demise of American Automakers – Part 1

It’s a sad day for American automakers when the makers of Hot Wheels is worth more than the largest automakers in America. In earnings releases, General Motors shares have gone from bad to worse, as investors flee from a company that is operating at an average loss of $1 billion dollars per month. Read more

Tough for Car Dealers = Good for Buyers!

The car industry has been a punching bag in 2008. In turn, it’s been a difficult year for those trying to sell cars, maybe the worst year ever. Everything from gas, to the economy and general consumer confidence has hurt those trying to sell cars. Read more