LET’S MAKE A DEAL

A primary principle of investing is, “Buy low, sell high.” It is basic, common sense. With today’s economy, other phrases come to mind: “It’s darkest before the dawn”; “Buying opportunity”; “Buy when it seems the bleakest”. Such advice is hard to follow when the stock market is tumbling, the housing crisis continues to mushroom, layoffs are in the news daily, and everyone talks doom and gloom. With all of this negative karma, it takes a strong individual to be a contrarian; buy for the future, by buying during the worst of times. But history shows that a wise, disciplined investor should do just that, despite the adversity. This also holds true with buying a vehicle.

Now is the best time in years to buy a new ride. Traditionally, this time of year is a good time to buy anyway. As summer fades, so does the current model year. Manufacturers and dealers want the old models off the lots to make room for the new. Also, as winter approaches, buyers are hesitant to subject a new car to ice and snow, often choosing to hold off on a purchase until spring. As a result, aggressive incentives are marketed to overcome reluctance, and move last year’s vehicles.

The escalation of gas prices has helped to make this a perfect time to buy. Overnight, buyers deserted the gas guzzling SUV’s and pickup trucks, replacing them with anything green. It is now difficult to buy a compact car, and nearly impossible to find a Prius or other hybrids, without a long wait and paying a premium. Meanwhile, dealers’ lots are overflowing with fleets of pick-ups, SUV’s, minivans, and some very attractive crossovers. All of these vehicles are now available at bargain basement prices. Check the papers, television ads, or maineautomall.com: a new Mustang for only $14,995; a Ford Edge with an MSRP of 26,035, selling for $19,745; trucks of all shapes and sizes for thousands off of the sticker prices. No matter what type of vehicle you might be interested in, dealers do not want you to leave the showroom empty handed. Auto dealers have never wanted, or needed, your business more than they do now. Now is the perfect time to buy.

The down turn in the economy scared the consumer. Suddenly they stopped spending. Vehicles continued to come off the assembly lines in droves. Manufacturers eventually slowed their production, but not before inventories were at record levels. Meanwhile, the housing crisis worsened. Banks and lending institutions lost millions. Their restructuring has now begun. For them to recover, they want to loan you money. In fact, to survive, they must loan you money. The Fed did their part, and responded to the impending economic doom by lowering interest rates several times. This year, in particular, is the best time to buy. Inventories are high, interest rates are low, and dealers want to deal.

Another reason to buy now is that never before has there been a better selection of well designed, quality choices available to the consumer. Both domestic and foreign manufacturers are now making great vehicles. The Ford Flex, an alternative to an SUV, is just now available, receiving glowing reviews. Ford knows that the buyer will be reluctant to buy a large vehicle, but Ford must succeed with its launch. They will do whatever it takes for it to sell. Deals will be made. Similarly, the “new” Chrysler must succeed with its recent crossover entry, the interesting Dodge Journey. Deals! General Motors’ economic challenges are in the news daily. For GM to recover, they must sell vehicles. The newly revamped Saturn line is ready for delivery at attractive prices. The Japanese auto makers are not immune. Overall, Toyota’s sales are down. Even sales of the seemingly invincible Honda CRV are off. Deals must, and will be made.

For any, or all of these reasons, if you are entertaining even the slightest notion of buying a new vehicle, any vehicle, now is your absolute best time in years to buy. Be a disciplined, wise contrarian, and lead the economic recovery. By the time that your neighbor feels better about his economic future, the deals will be gone and the dealers may not be quite as friendly. Buy now, and invest the savings for your future.

MINIVAN: Dead or Alive?

When it comes to naming the founding fathers of the automobile industry, one might think of Henry Ford, Karl Benz and Enzo Ferrari, but then the more contemporary names of Carroll Shelby, John DeLorean and Lee Iacocca come to mind. Iacocca is known for changing the industry forever with his creation of the Ford Mustang, as well as rescuing Chrysler from near extinction in the late 1970’s. He continued to revitalize Chrysler through the 1980’s by bringing to market the K-Cars, the Dodge Omni/Plymouth Horizon, acquiring AMC with its valuable Jeep brand, and most importantly, introducing the world to the minivan.

The minivan was a stroke of genius, a pioneering replacement to the frumpy family station wagon. Here was a vehicle that could comfortably seat 7 people, had the valuable traction of front wheel drive, and plenty of room for “stuff” that could be easily loaded in through its large sliding side door. Born during the energy crisis, it was even somewhat fuel efficient compared to other vehicles of the time. America’s car buyers responded with record sales, as did all of the other domestic and foreign manufacturers. Every brand designed their own version of the minivan…and the soccer mom was born.

Trends in the auto industry ebb and flow as the buyers’ tastes change. Suddenly, despite it functionality, the minivan was not cool anymore. Auto buyers found that it was necessary to address traffic in an assault vehicle with four wheel drive, essential to survival in the urban jungles. The SUV was quickly in vogue. As tastes change, so does the economy. The SUV is now nearly dead due to gas prices. Even its replacement, the crossover (CUV), is less attractive in favor of other, more fuel efficient choices.

But is the minivan dead? On the surface it might seem so. GM and Ford have given up their minivans completely. Even Chrysler, the vehicle’s creator, is scaling back its minivan production. Sales this year of the Chrysler Town & Country is down 13%, while its Dodge Grand Caravan is down a whopping 35%. Whether it is due to high gas prices, stiff competition, or the change in buyers’ tastes (all of the above?), the lack of sales is forcing Chrysler to shut down one of its key minivan assembly plants.

Regardless, all of the reasons for Lee Iacocca’s original design and subsequent success are still valid today. Families still need to shuttle kids, groceries and soccer balls. It still snows in Maine, so the traction and simplicity of front wheel drive still makes sense. Weekend warriors still need to remove seats to make room for a visit to Home Depot. Drivers still like the added visibility of elevated seating. These are the reasons why the minivan was, and still is, a great design.

My family recently made the trek from Maine to Brooklyn, New York to embark on a 9 day Caribbean cruise. Staying with relatives on Long Island, my brother-in-law graciously agreed to drive us in our Ford Windstar minivan to the cruise ship terminal. Packed to the gills with 4 people, 13 pieces of luggage and our guest driver, the van navigated effortlessly the chaos of New York City traffic, pot holes and all. Then, the value of the minivan truly shined as we faced the challenge of frantically unloading at the ship. Amongst the maze of limousines, taxis and shouting porters, the tailgate opened, the sliding doors slid, and in a flash, all of the gear and passengers were out in a matter of moments. Let’s see an SUV/CUV do that without bumped foreheads and a few expletives from aggravated New York cab drivers.

Frumpy image or not, the original design concept of the minivan still makes sense. Its versatility continues to prove itself repeatedly to this driver. That day in Brooklyn reminded me of just how much it really can deliver. The minivan: not quite dead in my book.