Andrew L. Taylor

Here comes the Volt… or not.

andrew — Fri, 18 Mar 2011 13:05:07 +0000

This was sent to me yesterday, and sums up much of what I was hearing in Detroit hanging around GM’s Volt display. Truthfully, it’s enough to make you angry.

The auto industry is much like any industry. Your product, or service, has to be of a very high standard. It also has to be something people WANT to buy. This car? Well, it’s neither.

Interesting the analogy to Ayn Rand’s Atlas Shrugged. A book that seems to have come into it’s own over the past few years.

Anyway… others say it better than I, please read on.

Chevy Volt: The Car From Atlas Shrugged Motors

Patrick Michaels, 03.16.11, 06:00 PM EDT

Who is going to buy all these cars?

The Chevrolet Volt is beginning to look like it was manufactured by Atlas Shrugged Motors, where the government mandates everything politically correct, rewards its cronies and produces junk steel.

This is the car that subsidies built. General Motors lobbied for a $7,500 tax refund for all buyers, under the shaky (if not false) promise that it was producing the first all-electric mass-production vehicle.

At least that’s what we were once told. Sitting in a Volt that would not start at the 2010 Detroit Auto Show, a GM engineer swore to me that the internal combustion engine in the machine only served as a generator, kicking in when the overnight-charged lithium-ion batteries began to run down. GM has continually revised downward its estimates of how far the machine would go before the gas engine fired, and now says 25 to 50 miles.

It turns out that the premium-fuel fired engine does drive the wheels–when the battery is very low or when the vehicle is at most freeway speeds. So the Volt really isn’t a pure electric car after all. I’m sure that the people who designed the car knew how it ran, and so did their managers.

Why then the need to keep this so quiet? It’s doubtful that GM would have gotten such a subsidy if it had been revealed that the car would do much of its freeway cruising with a gas engine powering the wheels. While the Volt is more complicated than the Prius, and has a longer battery-only range, a hybrid is a hybrid, and the Prius no longer qualifies for a tax credit.

In other words, GM was desperate for customers for what they perceived would be an unpopular vehicle before one even hit the road. It had hoped to lure more if buyers subtracted the $7,500 from the $41,000 sticker price. Instead, as Consumer Reports found out, the car was very pricey. The version they tested cost $43,700 plus a $5,000 dealer markup (“Don’t worry,” I can hear the salesperson saying, “you’ll get more than that back in your tax credit!”), or a whopping $48,700 minus the credit.

This is one reason that Volt sales are anemic: 326 in December, 321 in January, and 281 in February. GM announced a production run of 100,000 in the first two years. Who is going to buy all these cars?

Another reason they aren’t exactly flying off the lots is because, well, they have some problems. In a telling attempt to preserve battery power, the heater is exceedingly weak. Consumer Reports averaged a paltry 25 miles of electric-only running, in part because it was testing in cold Connecticut. (My engineer at the Auto Show said cold weather would have little effect.)

It will be interesting to see what the range is on a hot, traffic-jammed summer day, when the air conditioner will really tax the batteries. When the gas engine came on, Consumer Reports got about 30 miles to the gallon of premium fuel; which, in terms of additional cost of high-test gas, drives the effective mileage closer to 27 mpg. A conventional Honda Accord, which seats 5 (instead of the Volt’s 4), gets 34 mpg on the highway, and costs less than half of what CR paid, even with the tax break.

Recently, President Obama selected General Electric ( GE – news - people ) CEO Jeffrey Immelt to chair his Economic Advisory Board. GE is awash in windmills waiting to be subsidized so they can provide unreliable, expensive power.

Consequently, and soon after his appointment, Immelt announced that GE will buy 50,000 Volts in the next two years, or half the total produced. Assuming the corporation qualifies for the same tax credit, we (you and me) just shelled out $375,000,000 to a company to buy cars that no one else wants so that GM will not tank and produce even more cars that no one wants. And this guy is the chair of Obama’s Economic Advisory Board?

It really is enough to get you to say Atlas Shrugged. For those who do not know, or who are only vaguely familiar with, the Ayn Rand classic, it is a story of a society in decay, where politically favored technologies and jobs are foisted on the nation, where innovations that might threaten existing corporatist cartels are financially or physically sabotaged as unemployment mounts and the nation spirals into a malaise that makes the Carter years look like Mr. Rogers’ Neighborhood.

Atlas Shrugged is about to come out as a surprisingly good and entertaining movie (which will be destroyed by Hollywood and New York Critics) on–you guessed it–April 15. Maybe the government could put in an ad before the show with Immelt exhorting Americans to care about “the environment and green jobs.” All must buy Volts.

New, Used, Lease or Cash

andrew — Wed, 15 Sep 2010 12:34:33 +0000

When discussing a car purchase I am often asked, “Should I buy new or used? Should I lease, or pay cash?” There is no straightforward answer to this question, so I’ll try and break it down.

How long are you going to keep the car?

If you are the type of person who keeps cars for a long time, say five to 10 years, there are benefits to both new and used. If you go new, you may be able to take advantage of very attractive interest rates, as well as the longer and better warranties offered by manufacturers. These two factors alone may well offset the extra cost of purchasing a new car, perhaps making it cheaper over all in the long run. Also, if you tend to keep cars for five or more years, chances are you will be buying a car that has a good reputation for reliability, which brings us back to the “value” aspect we spoke of in the last article. If the car has a reputation of being reliable, it will suffer less depreciation—holding its value longer, offering less cost savings if bought in the used market.
If you keep your car for three to four years, then almost always your best bet is a lease. Lease the car as new through a manufacturer with a low interest rate and a subvented residual. Essentially manufacturers raise residuals and lower interest rates to make the payments lower than they should be. Manufacturers often lose money on leases … what they lose, you gain. The only downside with a manufacturers lease is that due to artificially high residuals, your chances of breaking the lease early without a large penalty are remote.

The alternative is to lease a pre-owned vehicle. Now the payment on a pre-owned vehicle may be similar to the new vehicle due to a higher interest rate, but your residual will be much lower and more in line with true market values. The advantage of this is the flexibility of being able to get out of your lease early without the big penalties. I’ll discuss this in greater detail when we discuss leasing versus finance in the future.

Also, if you only keep your vehicle for short periods of time, you may be willing to swap quality or “value” for extra features, and the much greater depreciation this vehicle has suffered.

If you pay cash, then there are still some financial benefits to buying pre-owned, as long as you know the car to be a good specimen. You lose an amount of warranty, but someone else has taken the first, and usually the most severe, portion of depreciation. The better the reputation of the vehicle, the less savings you will get, but the longer the vehicle will last. A car with a bad reputation for quality (lower value) will depreciate far more quickly, often as much as 50 per cent in the first year. On the surface this may seem like good value, but how long will the car last if you are planning on 10 years of ownership and what will the maintenance costs be?

Are you mechanically minded?

All cars require maintenance, and as they get older, repairs. Eventually, all cars get to a point where the repairs required to keep the car on the road reliably exceed the value of the vehicle. As a rule, the better the quality of the vehicle, the less maintenance and repairs it will require and the usable lifespan of the vehicle will be longer. Look at the really old cars on the road. You’ll notice that there are not many any more, and those that you tend to see will be from a limited number of manufacturers. These are the more reliable vehicles, and cars to look for in your hunt for long-term ownership.

If you are comfortable with potential repairs and maintenance, then you may wish to take advantage of an older car’s initial purchase price.

However, if you are not mechanically minded, it may make more sense to go with a new or at least newer car and take advantage of the full warranty and maintenance packages that are often available on today’s cars. You may pay a little more for the vehicle, but you have peace of mind.

That was Good Value, Right?

andrew — Tue, 31 Aug 2010 18:50:36 +0000

That was good value, right?

Why value is more important than sticker price

Last week I spoke about price and how I establish a good price. This week I’d like to talk about value, which I think is more important than price.

Often, value is a personal thing. We all value things differently. Some people will place value in, say, a watch, and be willing to pay thousands for a Rolex. The next person of similar means won’t see the value in that watch and be quite happy with a good quality Timex.

Let’s relate that to cars. Would you rather have a new $25,000 Honda Civic, a new $25,000 Dodge Caravan, a four-year-old $25,000 BMW 325xi, or maybe a two-year-old $25,000 GMC pickup truck? All of these vehicles have the same price, all are great vehicles, but of different value to different people.

What makes one vehicle more valuable than the other? Well, a number of things. The first and most important factor is quality. As consumers we all happily pay for quality. We don’t buy the cheapest pair of shoes, the cheapest meal, or the cheapest TV. Vehicles with a reputation of being good quality hold their value better than those that are thought to be of lower quality. People will pay more money new, more money used, and even pay a higher interest rate if they believe the vehicle is of higher quality.

And quality pays off. Yes, you will pay more money up front, but a better quality vehicle may save you money in the long run. You will spend less on maintenance. The vehicle will perform like “new” for longer. But maybe most importantly, it will hold its value much longer. If you are the type of person who keeps a car until “the wheels fall off,” a better quality car will last you longer, reducing maintenance costs down the road, offsetting that initial vehicle price difference in the long run. If you lease or trade in your car every four or five years, then the car with better value will be worth more when you bring it back, again reducing your cost of ownership.

How much we value a vehicle is usually represented by how much we are willing to spend: the point where the value of the vehicle exceeds what we are paying, whether as a cash purchase, or as a payment.

So in addition to quality, there are some other factors that help us determine value. How do we feel when we drive the vehicle? Does it make us feel good? Does it do the job we require of it? Fuel economy, performance, safety, warranty … all of these things help us decide the value of our vehicle. Some people will weigh heavily on safety, others on fuel economy.

Another way of looking at which vehicles represent good value is which vehicles are popular. Consumers are not stupid and many people take the advice of friends and family before making a decision. Vehicles of good value have happy owners who like to talk about their cars. Vehicles of low value have unhappy owners, who will tell everybody of their dissatisfaction.

Fashion and fads can affect the price of cars, but not the value. For instance, white paint is extremely popular right now and in the pre-owned world you have to pay a premium for a white car. But that doesn’t mean its better value than a black vehicle. Conversely, minivans are very unpopular compared to 10 years ago as the trend moves towards crossovers but that doesn’t mean that minivans don’t represent excellent value. So you have to understand true value. A good salesperson will guide you based on his experience, not push you into what is on his or her lot.

On the whole, the market has established the value of different vehicles and this general opinion is important when making a purchase decision. On the face of it, there is the selling price of the vehicle, but that is only a small part of what makes up “Good Value.” It’s never a good idea to only focus on the selling price of the vehicle.

What’s Your Best Price?

andrew — Tue, 31 Aug 2010 18:48:15 +0000

How to make sense of what determines used car prices

The thing that almost all customers ask me for is “my best price.” What is a good price? That’s a good question.

The auto industry is based upon negotiation. The seller asks for a price, the buyer offers a price, and usually both parties meet in the middle. If both parties are satisfied with that number, then I guess that is a good price.

I like to do things a little differently. There are two prices on every vehicle in Canada: a wholesale price and a retail price. If you buy your car from dealer “A” at a retail price, drive it around the corner and trade it in at dealer “B,” dealer “B” will give you wholesale price for the car. The difference between those two numbers is your retail markup. So I like to discuss price with my customers from a wholesale perspective.

Let’s look at this a little closer.

You come to me looking for a car, and for discussions sake, this car is a 2007 BMW 328i sedan with 50,000 kilometers on the odometer. At the auction a car like this would sell, with auction fees, for about $20,000. I can look at previous month’s sales results and see that this is the price to pay for a car like this. This is true wholesale value. When I bring this car back to my dealership to inspect, certify and detail, the car will stand me about $21,500. This is my book cost—how much I need for this car in order not to lose money, though still not make a profit.

Yes, profit. Like almost all businesses, we need to make a profit. If you were to choose to lease this 2007 BMW from me, I would lease you this car at $21,500, my book value, as my leases are based on wholesale value (Sounds good, huh? We’ll discuss leasing versus cash in a later article). If you choose to buy this car from me, you and I would discuss how much I can mark the vehicle up, or rather, how much money I can make. This number can vary from $1,500 to $5,000 depending on the cost, level of difficulty in finding it, or level of difficulty in getting the car here.

A quick look on AutoCatch would indicate to me that a retail price on this BMW would be somewhere from $27,000 to $32,000 depending on equipment, colour (yes, colour) and the store selling the car.

Now, if you know that the wholesale price on a car like this is around the low $20,000s, and you see a car on a dealer’s yard for $18,000, warning bells should go off. Why would a dealer, who needs to sell cars for a profit, sell a car at less than wholesale cost … at less than the market rate? Chances are this car had a significant accident in the past or something equally sordid, and therefore is worth less money. The price may look great, and it’s always tempting, but it won’t represent good value.

If we know what a car’s wholesale price is, it’s much easier to decide if the retail asking price is a “good price” or not. I’d rather be transparent and discuss a vehicle price starting at wholesale and working up, rather than from retail asking price, and negotiate down.

Who decides the wholesale price?

Well, you, the customer does! Once a car is on the used market, it is worth what someone will pay for it, much like a house. If we go back to our BMW, a white car will have a higher price than a green or red car, because most customers won’t want a green or red 328i … unless the price is low enough for you to take a color you don’t like. Dealers know this and will pay more at auctions for more desirable cars.

So what’s my “best price?” My best price is wholesale plus a profit margin that you think is fair for the work I do on your behalf.

How I stopped selling cars and became more successful

andrew — Tue, 03 Aug 2010 16:27:04 +0000

I’ve started an on-going series of articles in a local automotive newspaper, and though I’d share with you all here. As always, feedback is appreciated. Check back often!

Why “selling” a car should become an obsolete practice

Andrew Taylor is an Account Manager with Pfaff Leasing in Vaughan, ON. He has broad experience in the auto industry and covers issues relating to the car buying process.

One of the things I enjoy most about what I do is that I offer truly unbiased automotive advice. Well, okay… I do have some personal biases. Perhaps “preferences” is a better term. However, on the whole, I’m in a unique position to offer all makes and models, new, or used.

This has allowed me to turn my position from that of a Sales Person into that of a Facilitator. When my customers come to me, they may know exactly what they are looking for or they may have no idea at all and would like assistance in selecting a vehicle.

My goal is to help people get into the right car at the right price.

In 2003, I walked away from a lucrative career in and sales. I have developed an extensive customer base through repeat and referral business and believe this success has come from his honesty, transparency and putting his customer’s needs first.

Over the coming weeks and months I will be using this space to discuss an alternative way of purchasing a vehicle: a process that doesn’t involve “closing the deal” today; a process that allows the customer to weigh up all makes and models; a process that looks at the merits of new versus used; a process that will lay out the advantages of cash versus finance versus leasing.

Purchasing a vehicle is an exciting time and should be an enjoyable experience. If you’ve found your past vehicle shopping experience less than enjoyable then please, read on.

Selection

You make the decision to start contemplating a new vehicle. You decide to visit a showroom and start looking at what is out there and make some comparisons. Before you know it, you’ve driven a couple of cars, or maybe only one car, and a sales person is presenting numbers. This is all happening way too fast: your plan was to drive several makes and models and now you find yourself in negotiations on one of the first cars you’ve looked at.

Purchasing a new vehicle is based on emotion more often than not. I’m constantly amazed at how many people come to me driving the wrong vehicle. Perhaps they bought a small sports car instead of the family vehicle they were originally looking for because they got caught up in the excitement of the moment.

There are many great cars to choose from in Canada right now. So, I like to draw up a list of vehicles that meet my customer’s needs before I get someone anywhere near test driving a car and getting too carried away.

What things are important to them? What things do they “have to have” in their next vehicle? Within each class of vehicle in Canada there are upwards of eight manufacturers offering great selection. I help my customers narrow that down to a manageable number.

Import versus domestic, engine size, seating arrangement, front wheel drive, all wheel drive, hybrid versus conventional… there are many aspects to take into consideration.advertising to follow my dreams and work in the auto industry. Starting from the ground up, I have worked in almost every aspect of automotive leasing

Keeping my customer focused on their needs in the selection process is a big part of my job and it’s the first step to getting into the right car. “Selling” them a car is the last thing I’m interested in.

If you find yourself in this purchasing process and would like some friendly advice, please feel free to call or send an e-mail to me and I would be happy to speak with you.

Obama Beating on Toyota

andrew — Wed, 24 Feb 2010 13:20:36 +0000

For those of you who know me, I’m not a Toyota kind of guy. They build excellent toasters. And I mean EXCELLENT toasters.

Their build quality is second-to-none. User friendliness, reliability… just quality, quality stuff.

But mind-numbingly boring to drive, which is the only reason I don’t drive their product. But I’ve sold or leased lots of Toyota’s to lots of very happy customers. Over and over.

So I can’t help but think the flack they are taking from the US government is “ever so slightly” biased. I listened to a woman on the radio yesterday under oath saying that her Lexus started to accelerate out of control… for six kms. She claims to have put her foot on the brake, taken her foot off the gas, put the car into neutral, put the car into reverse even… and still the car kept accelerating.

Bollocks. Sheer, utter bollocks.

In order for this to happen as she claims her brakes would need to be disconnected, her transmission, also, disconnected. And her gas pedal stuck under her floor mat.

Now I’m not recommending you try this, but if you are driving your car and try and brake and accelerate at the same time, your car will slow down, stall and stop. Your brakes will stop the car.

I’ve been listening to this unravel with mild amusement… but as it seems to spiral out of control, I’m getting a little angry. I believe this to be a witch hunt, a tearing down of a company that has set the standard for automotive quality world wide, a company that built its growth and success not on cheap prices, gimmicks or incentives; but on quality and safety.

If Government Motors can’t build a better car, I guess tearing down the competition is the easy way out?

So long, and thanks for all the fish…

andrew — Mon, 11 Jan 2010 13:49:35 +0000

It’s official, as of the 15th of January I’ll no longer be working from Woodbine National Leasing.

From the 18th of January I’ll be at Pfaff Leasing. It’s a big move for me, I’m quite emotionally attached with the folk at Woodbine, but as a career move, it’s definately a step in the right direction. I’ll still be doing what I do now, but I’ll be able to offer a much more complete experience.

To customers of mine who choose to stay with Woodbine, I know they will be well looked after by Tom, Gary and my eventual replacement. To those that choose to move with me, I look forward to servicing you as I’ve always done, but with a larger and more service oriented dealer group backup.

If not before, I’ll see you all on the other side; next week.

Design Boom or Bust

andrew — Fri, 04 Dec 2009 03:28:32 +0000

Every morning I get a little email from www.designboom.com. Odds and ends of interesting design things from around the world. There’s some great stuff comes into my in-box. In fairness there’s also a lot of pretentious crap.

So this evening I was working through my backlogs of designboom email/letters/thingies and there is something automotive, something Canadian… Ontarian even, highlighted.

Bugger.

Green License plates for our cars.

http://www.designboom.com/weblog/cat/18/view/8336/green-license-plates.html.

Now I’m all for being a good steward of our planet. But there is nothing, NOTHING, green about a car. Perhaps some cars are less toxic than others, but they are all filthy. Having said that they are cleaner than they’ve ever been before, and as the people demand it, they’ll get cleaner and cleaner. But greener?

Apparently strap one of these green babies on your hybrid, and you’ll be entitled to use the HOV lanes… with just one person in the car.

That’s right folks. Fork out $70,000 for a full sized hybrid SUV and you have access to special driving privileges, parking spaces and moral high-ground.

Be a good steward of your planet, drive a cheap fuel efficient econo-box and you can idle in traffic with the rest of us.

Oh, and just for fun? Apparently various States down south are considering green plates for sex offenders.

A new 5 Series… finally.

andrew — Mon, 23 Nov 2009 12:45:44 +0000

De-Bangled 5 Series

The current BMW 5 Series is one of the best mid-sized sedans on the road, in the world. Especially with one of BMW’s super smooth in-line six cylinder engines driving the rear wheels. This car always impresses. Well built, well balanced, and extremely satisfying to drive.

But it’s ugly.

I always thought the shape would grow on me… and five years later, it still hasn’t. I think Chris Bangle drank a little too much one evening, his doodles got all whimsical, and someone took his drawings seriously. The fact this car’s design made it to production still surprises me. Especially when you consider just how attractive the previous generation 5 Series was.

I can’t look at the front of this car with out seeing Dame Edna Everage’s bejewelled horn rimmed glassses.

But, lucky for me there is a new 5 Series being released next year and with the absense of Mr Bangle… and if it’s anything like the new 7 Series, it’s going to be beautiful, again. More information will follow, but think about this: there will be a 5 door hatch back model.

A Tisket, a Tasket, a little Daihatsu Basket

andrew — Sat, 21 Nov 2009 14:56:50 +0000

Basket front quarter

This, remarkable piece of work, was debuted at the Tokyo motor show last month. It has a three cylinder, 600 cc engine making it very “efficient”. It also has all wheel drive making it useful for “off-roading”.

I can see me now, bombing down the 401 in the dead of winter on my way to work in this. I mean, it’s got AWD, right? What could possibly go wrong?