Next victim of mortgage mess: Auto sales

Rising concern about home values and mortgage payments is causing more buyers to slam the brakes on new car purchases.

Already-battered U.S. auto sales could be the next victim of the problems with mortgages, declining home and stock prices as potential car buyers delay purchases due to uncertainty.

Industrywide U.S. auto sales in August could be off 10 percent from a year ago, according to an early read from sales tracker Edmunds.com. That follows July sales that were 19 percent below year-earlier levels

Jesse Toprak, executive director of industry analysis for Edmunds.com, said that the downturn in home values and credit issues that were seen in the July numbers could be an even bigger factor this month.

"I think the issue is becoming more pronounced," he said.

Sales weren't just weak at domestic automakers, such as General Motors, Ford Motor and Chrysler Group. Year-over-year sales fell in July at Toyota Motor and Honda Motor as well. Many forecasters are cutting full-year auto sales targets in the face of these weak summer sales. And some experts say the turmoil in housing could throw even more dirt in the gears.

CNW Research, which specializes in surveys of car buyers, found in its latest reading that 13.6 percent of the potential market's customers were canceling or postponing plans to make a new-vehicle acquisition any time soon, up from 10.1 percent last year.

And of those postponing or canceling plans, home-related issues jumped to the No. 1 reason, cited by 17.6 percent of those staying away from dealers' showrooms, with nearly 11 percent of that group citing a decline in their home equity and another 6 percent citing an increase in their monthly home payment.

Of those postponing purchases, 10.7 percent cited problems with credit scores, as some sources of car loans are tightening lending standards. Gas prices are a distant third, cited by less than 5 percent of those delaying purchases.

"We're probably going to see some pretty bad [auto sales] numbers for the rest of the year," said Art Spinella, president of CNW. "To put it simply, housing is now the major hurdle to new car purchases. The next three to four months are not going to be much better if it's better at all. People are not interested in buying a new vehicle."

Only two years ago, the CNW survey found just 2.3 percent citing home-related issues as a reason to postpone a car purchase, while 5 percent cited credit score problems and about 3 percent cited gas prices.

Automakers, led by GM, are upping cash-back offers and other inducements to try to breathe life into sales in the face of headlines about home foreclosures and market meltdowns.

GM spokesman John McDonald said that GM isn't seeing any sharp drop-off in sales it can trace to the current mortgage and housing slowdown.

"It is one of a number of headwinds," he said. "There's fuel prices, there's interest rates and there's housing prices. But we're not seeing anything new that we've not been talking about for more than a year."

But one auto industry executive, who spoke on condition that his name not be used, said that the higher incentive spending by automakers, particularly on GM pickups, may mask some of the bite that housing is putting on sales.

"The home was not only a source of financing for some car purchases, it contributes to a positive feeling psychologically," said the executive. "That led to a confident outlook, a view that 'I can go ahead and spend from paycheck to paycheck and buy new cars when I want to because the value of my home and portfolio have gone up.'

"It's silliness to say the credit crunch doesn't matter," said the executive. "If the final sales numbers for August have any strength, it will be because of incentives."

Current Auto Rates
36 month new: 6.82%
48 month new: 6.94%
60 month new: 6.94%
72 month new: 7.01%
36 month used: 7.40%

Experts in the field say that car purchases are one of the first items that consumers can and will put off if they are nervous about their own financial outlook, long before they'll cut back on eating out or other discretionary purchases.

Bob Schnorbus, chief economist for auto research firm J.D. Power & Associates, said that the August sales probably won't tell the full story about the drag that the housing turmoil is causing for auto sales.

"I wouldn't expect it to have that quick impact; I would expect it to be more of a drag throughout the rest of this year than a plummet in August," he said.

And Schnorbus said that while consumers may keep making other types of purchases, even as they pull back from buying new cars and trucks, the slowdown could spread to other types of spending in the future if the market does not improve.

"A new car is one of the more postponable purchases that people make," said Schnorbus. "That new vehicle purchase could be a good leading indicator if consumers are going to cut back. Over the next few months, we could be getting some very interesting signals."
(C)CNN

Your Money: Hit the Road, but Get Cover

Millions of drivers will take to the roads for the great Bank Holiday getaway next weekend.

But with one in five having no breakdown cover, there are sure to be plenty of motorists stranded by the roadside.

Those who don't have cover could end up paying a hefty call-out fee of up to pounds 100 at peak times in the UK, plus anything between pounds 2 and pounds 25 a mile for recovery of a broken-down car. These costs can be even more expensive if you are driving abroad.

And even people who do have cover often fail to shop around for the best deals. Our table on the right shows some of the best-buy comprehensive breakdown cover policies for the UK and Europe.

Richard Mason, of comparison website moneysupermarket.com, said: "Motorists can avoid wasting precious holiday time on the hard shoulder by ensuring they have adequate breakdown insurance. It is important to choose not only the most competitive policy, but one which is comprehensive enough for your needs.

"UK breakdown policies do not automatically provide cover for driving abroad, so those planning to cross the Channel should check they have the appropriate cover. After all, the last thing you want is to stump up an exorbitant call-out fee or organise your own recovery service while stranded abroad."

As well as taking out comprehensive cover, if you are planning on taking your car overseas you should also check you are covered in case you have an accident. Look at the small print of your policy to see if it includes foreign use.

This will either be included as standard, or it can be purchased as an optional extension.

A spokesman for consumer finance website Find.co.uk said: "If it is included as standard, your insurer may stipulate that you are covered for a maximum of 90 days driving abroad in total per year, but that each trip must not exceed 30 days.

"So if you were on an extended driving holiday, you would have to return to the UK at the end of 30 days to maintain cover. If this were not feasible, you would need to arrange extended cover at the outset."

You may find your insurance policy includes breakdown cover, but this often doesn't extend to Europe. Only 10 per cent of policies include European breakdown cover and 24 per cent offer this as an option at extra cost. Some providers, such as M&S Car Insurance, include this cover as standard for both UK and Europe, but usually you have to pay extra.

James Harrison, of Insurancewide.com, said: "Before you scour the market for a separate breakdown policy, check whether your existing car insurance covers you and to what extent.

"If you are not covered and need to add breakdown on to your existing policy, it won't necessarily be cheaper with your existing insurer.

Be very clear what you want to be covered - don't blindly make do with the cheapest policy."

CHECK THE COST

Based on comprehensive annual cover for man, 25, driving 2001 car 12,000 miles a year Provider Premium below.

UK BREAKDOWN COVER
RescueMyCar.com pounds 31.00
First Call pounds 32.00
Europ-Assistance pounds 41.30
GEM Motoring Assist pounds 60.75

EUROPEAN BREAKDOWN COVER
RescueMyCar.com pounds 68.50
Drive 24/7 pounds 76.50
First Call pounds 76.95
Car Breakdown Discounts pounds 89.00

(C)Sunday Morror, London

Auto Leasing: Pros and Cons

If you are considering leasing, you need to do your homework. Here is some advice on how to get the best deal.

Aside from having a new car every few years, a major attraction to leasing is that "you get more car for the same monthly payments," says Robert Haber, a New York City art dealer who is leasing his Lexus RX 330 SUV.


These pluses will seem convincing to many new car shoppers, but to lease successfully, you need to understand the transaction. The concept is simple, but the execution is often highly complicated. When you lease, you pay, in effect, for the loss in value of a vehicle for the three or four years you are leasing it, plus interest on that amount.

Dealers will want to talk only about monthly payments, but to lower those payments you need to understand all the moving parts.

How Leases Work
Leasing comes with its own jargon. The most important factor in determining payments is the difference between the starting cost, known as the capitalized cost, and the estimated value at the end of the lease, called residual value. Auto brands that have high resale value, such as Mercedes-Benz, are good candidates for leasing.

Usually the best available lease deal will be the one offered by the manufacturer's captive finance subsidiary (see definition below). They often offer subvented, or manufacturer subsidized, leases, a promotional effort designed to help move certain vehicles. These deals are most common for luxury brands, and typically the residual value will be fixed, as will the interest rate. Thus your only weapon to lower payments is to negotiate down the capitalized cost — just as you would try to lower the purchase price if you were buying the car instead.

Leasing has its pitfalls, as well.

Do’s and Don’ts

Don't sign a lease longer than the warranty on the car. You don't want to be paying for repairs on a car you don't even own. On Ford, General Motors and DaimlerChrysler cars, three-year warranties would call for no longer than three-year leases.

Don't sign a lease with mileage limitations that are unrealistically low for your driving habits. Excess mileage costs at the end of the lease can be very expensive. You will likely save money by negotiating up front for a limit higher than the typical 12,000 miles a year, if you think you will need it.

Do protect yourself against theft or serious collision loss early in the lease. If the vehicle is stolen or totaled, your insurance will pay only the depreciated market value of the car at that time, which may be less than the total you owe on your lease. So-called "gap insurance" will pay you the difference between your insurance settlement and the total amount you still owe on the lease. Most leasing companies offer this coverage, and it is one of the few add-ons that makes sense to accept. Gap insurance as part of the lease usually won't cost you any more than getting it from your insurance agent, and is more convenient.

Do brush up on leasing jargon, so you can be a savvy negotiator.

Leasing Terms to Know

Capitalized Cost: The lease transaction's equivalent of the selling price. Payments are determined largely by the difference between the capitalized cost and the residual value (see below).

Capitalized Cost Reduction: Jargon for down payment in a lease transaction. You can use it as a way to reduce payments if, say, you have the proceeds from selling your old car, or if you are trading in your old car.

Excess Mileage Charge: A penalty for driving more than the mileage allowance in the lease — typically around 12,000 miles a year. To avoid this penalty, make sure your lease has a mileage allowance matching your driving habits.

Captive Finance Companies: These subsidiaries of major auto companies, such as Ford Motor Credit and General Motors Acceptance Corp., make auto loans on the companies' brands. Often they have better rates than those offered by the dealership itself.

Subvented Leases: Subsidized by the manufacturer, these leases are generally designed as promotional efforts to help move vehicles. Often, these can be one of the best deals for the consumer considering leasing as an option.

Residual Value: What the vehicle will be worth at the end of the lease. It may or may not match true estimates of the used car value at that point. When a manufacturer wants to promote leasing of a certain model, it will lower payments by artificially boosting the residual value.

When Does it Make Sense to Lease Instead of Buy?

A choice to lease or buy with a loan is largely one of personal preference and driving habits. If you typically trade for a new car every four years or less, drive less than 12,000 miles a year and keep your vehicle in good condition, you may be a good leasing candidate.

Especially among luxury brands, the best deals are often ones from the company's own finance arm. Because they prefer promotional leases to giving rebates, companies such as BMW, Lexus and Mercedes-Benz often offer leases that have low interest rates, above-market residual values or both. The result is lower monthly payments.
(C)Forbes

Most Expensive Cars to Insure

High-priced cars aren't just expensive to buy — they can cost a lot to protect, as well.

The more expensive the car, the more it costs to insure. But just how expensive may come as a shock. For modest coverage ($500 deductibles on collision and comprehensive coverage, $100,000 each for personal and property coverage, and $25,000 each for medical and uninsured coverage) on this year's $135,400 Mercedes SL, owners will pay about $22,536 a year.

For pricey cars like this, yearly insurance costing 20 percent of the base price is typical. But for those with low monthly payments on high-end cars, that could mean spending more on insurance than on the car itself.

"The cost of the vehicle is primary when setting the price of a policy," says David Wurster, president of Vincentric, a Detroit-based automotive data firm that studies car insurance costs. Vincentric gets its data from state agencies and averages these figures in compiling its list of most expensive yearly rates. "But there's also the type of vehicle it is. Sports car owners tend to drive them a little more aggressively."

This, in turn, leads to higher-priced policies. With this in mind, it's no surprise that racy offerings from Mercedes-Benz, BMW and Porsche make for some of the most expensive cars to insure.

How It Works
"We start with the manufacturer's suggested retail price," says Kip Diggs, a spokesman for State Farm, the largest insurer of autos in the U.S. Diggs says State Farm then considers how expensive it is to repair each model. The more costly the parts, the higher the policy. For foreign brands with parts from afar, expect to pay more. "From there," Diggs says, "we look at safety features to see if a vehicle qualifies for a safety discount."

Allstate, the second-largest U.S. car insurer, also considers the price, but places more weight on a policyholder's driving record.

"Pricing has more to do with the driver than the car," says spokesman Raleigh Floyd. "If there are two drivers with the same car, the driver with accident histories will have a higher rate. He's shown himself to be a higher risk." Those with a penchant for wrecking Ferrari Enzos on California's Highway 1, for example, can expect to pay more.

Age is also a factor. "A 17-year-old driver is going to be more expensive to insure than a 40-year-old with a family," says Floyd. "Experience counts. It counts a lot."

There are some anomalies in the ranking.
"You would think a Corvette Convertible would be hideously expensive to insure," says State Farm's Diggs. "But that car is involved in very few accidents, so it's fairly low." This is because research shows Corvettes typically aren't driven every day.

More utilitarian models like the Toyota Camry can be more expensive to insure because, with more road time, they are more likely to be involved in an accident. Vincentric doesn't collect data on exotics like Ferraris and Lamborghinis because, says Wurster, there are too few owners to make the data useful.

Policy pricing also has to do with where a car is garaged, with urban areas considered higher-risk. "In a more concentrated area, your chances of bumping into something are higher," says Floyd. "Jersey's going to be on one end of the spectrum, and a less populous state is going to be on the exact opposite."

But if you have a hundred grand to spend on a car, you're probably not worrying about insurance.

"For people of that caliber," says a salesman at Mercedes-Benz Manhattan, "the cost of insurance really isn't an issue."

1. Mercedes SL Class and S Class
SL Class (pictured)
MSRP: $135,400
Insurance: $22,536

S Class
MSRP: $123,888
Insurance: $21,161

The convertible SL is Mercedes' most expensive production offering. A two-door roadster built for speed, the SL features a 5.5 liter V8 engine. The retractable hardtop roof is classier than its canvas counterparts, and the trunk is surprisingly spacious. The S Class sedans, while no less luxurious (and only slightly less expensive), aren't quite as sporty. But with the Benz logo front and center, they're not cheap to insure.

2. Mercedes CL Class
MSRP: $122,050
Insurance: $20,942

Who said coupes were small? Mercedes' CL is based on the stately S Class sedans, but sports only two doors for a sleeker profile. Zero to 60 in 5.4 seconds will get you to the office in time, but it comes at a price. With a monster V8 engine, the federal gas-guzzler tax applies. And then there's the insurance.

3. BMW Alpina B7
MSRP: $115,000
Insurance: $20,100

Good luck getting your hands on an Alpina B7. BMW is only selling 200 in the U.S. A souped-up version of the 7-series full-size sedan, the Alpina features bigger wheels, better suspension and an advanced stabilization system. All of this makes going fast a bit safer. But speed comes at a price.



4.BMW M5 and M6
M6 (pictured)
MSRP: $102,000
Insurance: $18,548

M5
MSRP: $82,500
Insurance: $16,220

The M Series cars are meant to go fast, and for insurers, speed is dangerous. The flagship M6 hardtop coupe is arguably the fiercest-looking BMW to roll off the production line, and inarguably one of the priciest. Both the M6 and the more practical M5 sedan have roaring V10 engines.

5. Mercedes G Class
MSRP: $95,600
Insurance: $17,784

The G Class is a boxy, military style SUV from Mercedes. Indeed, it was originally designed for the battlefield. But don't let the lack of finesse fool you--today the G Class is all luxe. The door handles are wrapped in leather, and a DVD-based navigation system keeps drivers on target.



6. Audi S8 and A8
S8 (pictured)
MSRP: $92,200
Insurance: $17,353

A8
MSRP: $92,000
Insurance: $17,353

The A8 and its fancier cousin, the S8, are the best Audi has to offer, and they're not half bad. The V10 in the S8 make this sedan faster than the Porsche 911 Carrera in a zero-to-60 sprint. And with enormous cast-aluminum tires concealing oversize brake discs, even speed demons can stop on a dime.

7. Cadillac XLR
MSRP: $87,898
Insurance: $16,973

The only American entry on the list, Cadillac's XLR is a serious roadster meant to rival its European competitors. The V8 is plenty strong to pull the light aluminum chassis, and the interior is posh--trimmed with eucalyptus. A retractable hardtop makes the XLR a speedy option in any weather, and there's also an exclusivity factor: GM is planning to sell only 1,000 a year.

8. Porsche 911
MSRP: $91,208
Insurance: $16,955

The fundamentals of Porsche's 911 have hardly changed over the years, and with good reason: Its teardrop shape keeps it aerodynamic and recognizable, and its hardware keeps it among the fastest cars in the game. Today's iteration comes equipped with Porsche's Active Suspension Management system, which adapts the suspension to match road conditions and driving styles.

9. Jaguar XK
MSRP: $83,335
Insurance: $16,154

The XK, in coupe or convertible, is a brand-new offering from the storied Jaguar brand. Designed to recall the XKE of the 1960s, today's XK appears perhaps a bit too similar to its countryman, the Aston Martin. That doesn't stop it from performing. The V8 propels a relatively light frame with ease, and this two-seater is the most teched-out Jag ever built, with a computer adjusting it to Comfort or Sport modes.

10. Land Rover Range Rover
MSRP: $84,285
Insurance: $16,042

One of only two SUVs on the list, the Range Rover is capable of climbing mountains, but more at home in the city. Four-wheel drive and a supercharged V8 make this among the most powerful production vehicles on the market, while options like Sirius satellite radio and a rear-seat DVD system ensure creature comforts are never far off.
(C)Forbes

Do Car Dealers Favor Drop-Ins?

Customers without appointments are more pleased with their dealership service experience than those who plan ahead. The good news is, car quality is increasing industry-wide.

Customers who simply drop into a dealer for servicing a vehicle are generally more satisfied with their experience than those who make an appointment ahead of time, according to J.D. Power and Associates’ 2007 Customer Service Index (CSI). The annual study also found that owners are reporting fewer repairs, which means car quality on the whole is improving.

J.D. Power’s CSI gauges the satisfaction of customers who have brought their car into service departments during the first three years of ownership. Overall satisfaction is based on six factors: service initiation, service adviser, in-dealership experience, service delivery, service quality and user-friendly service.

Of the more than 84,000 respondents to the survey, over three-quarters report making an appointment with their dealership for repair or maintenance on their vehicle. But they’re not the ones who seem to be the happiest. Owners who drop in for vehicle service had satisfaction scores averaging 882 out of a possible 1,000 points, while those with scheduled appointments averaged 874 points.

“It may be a case where somebody who just dropped in — and for some of those people it may be an emergency situation where suddenly their car broke down — the dealer was able to take care of them and they are overjoyed,” said Tom Gauer, senior director of automotive retail research at J.D. Power.

But there’s a flip side to this. If the owners who come in off the street are getting the same treatment as those who made appointments in advance, the customers with appointments are going to report a less satisfying experience, hence skewing the numbers even further.

“When you go into the service drive of many dealers in the morning, which is when they’re busiest, often there’s no difference in the way people are handled in terms of whether they made an appointment or not,” Gauer said. “And so those that made an appointment that are stuck waiting in a line for 10 or 15 minutes to drop their car off wonder, ‘What was the point of making an appointment?’ It’s a frustration for those who do make an appointment that causes a little bit lower satisfaction on their part,” he said.

Some dealers do show higher levels of service to customers with appointments. Gauer cites a personal anecdote of a dealer he used to go to that would put an orange cone on the roof of cars whose owners made appointments and a white cone on top of cars whose owners didn’t make appointments. The cars with orange cones had three or four service advisers working on them, while those with white cones got only one adviser. “It’s something that varies at individual dealers,” Gauer said.

Maintenance Versus Repairs
More customers visit dealerships for maintenance than repairs, which J.D. Power interprets as a sign of the automotive industry’s continuing improvements in product quality. The percentage of maintenance visits increased by four points to 62 percent from last year; 38 percent of visits were for repairs, according to J.D. Power data.

“Overall in the industry, the quality of vehicles continues to get better and better,” said Gauer. “The incidence of product problems continues to drop, and the incidence of people bringing vehicles in for just maintenance is on the increase.”

J.D. Power’s CSI also ranks specific brands by customer service satisfaction, and Jaguar came in at No. 1, with 925 points out of a possible 1,000. In 2006, Jaguar was 4th on the list, with a score of 908. It also topped J.D. Power’s 2006 Sales Satisfaction Index rankings, which looks at the ability of a brand’s dealerships to manage the sales process, from product presentation to negotiation, financing and delivery.

“Jaguar has typically been a fairly strong performer,” Gauer said. “I think in 2003 they were ranked 11th in CSI in the industry. They moved up to 8th in 2004, up to 6th in 2005. So it’s not a matter of a sudden remarkable performance. They have the tendency of doing a very good job of being focused on the customer and taking care of the customer’s individual needs.”

It’s a good thing, because Jaguars need more repairs than the average luxury vehicle. J.D. Power reports Jaguar’s incidence of repair to be at 48 percent, versus the luxury-vehicle average of 41 percent. Basically what this means is that of the survey respondents, 48 percent of Jaguar owners reported needing a repair in their most recent visit, versus 41 percent in the overall luxury segment. But with regard to service, “they end up scoring a full 37 points higher than the premium average on the overall repair index,” Gauer said.

The J.D. Power and Associates CSI Study is based on responses gathered between January and April 2007 from 84,495 owners and lessees of 2004 to 2006 model year vehicles.
(C)Forbes

Shopping Advice: Buy a Car, Pick It Up in Europe

European delivery programs aren't just a glorified vacation: many offer discounts on new vehicles and attractive travel packages.

Many European car manufacturers offer special programs that allow buyers to purchase a vehicle at a dealer in the U.S., pick it up at the factory in Europe, drive it around and then drop it off at a designated port for shipment back to the U.S.

Often called "European delivery programs," some, like Saab's, provide as much as a 9 percent discount off of a vehicle's manufacturer suggested retail price (MSRP), as well as airfare to and accommodations near the factory where it's picked up. More elaborate travel packages are usually available for purchase and can be a good value. The car companies handle all of the complicated details, such as insuring the vehicle for driving in Europe and arranging its shipment back to the U.S. So drivers are free to enjoy their new vehicle while exploring Europe.

These money-saving trips are often an insider’s secret, one of those things that you need to know about to ask about. That’s because this ultimate option often lurks below dealers’ radars despite the wildly enthusiastic responses from owners who participate.

“They love the program, they love going to the factory,” says Anne Doris Korallus who is the European delivery order administrator for Mercedes-Benz. “Even if they’re not a car enthusiast, they go on the factory tour, and it’s like an elves workshop; it’s so fascinating to watch how a car is built. They come out bubbling over.”

The European delivery programs are a chance for Americans to drive their cars as they were designed to be driven, flat-out on the Autobahn; or above the Arctic Circle. That’s where Saab takes some customers for snow and ice training, as well as quality time behind a team of sled dogs. Or it’s a way to celebrate an anniversary or do some mother-daughter bonding while getting what James Hope of Volvo Cars N.A. calls “friendly” rates at hotels the company recommends.

The hitch is that you forgo the instant gratification of driving home with your dream car the same day you go down to the dealership.

No matter which brand you prefer, Audi, BMW, Mercedes-Benz, Porsche, Saab or Volvo (more on the English absence in a bit), the procedure is pretty much the same.

Go to your local dealer, select the model you want — it must be one regularly available in the United States — configure it to your specifications and order it. Prices are preset and usually slightly discounted from the MSRP. Payment and financing options are the same as for regular delivery. The dealer will tell you when your car will be ready at the factory.

Book flights. Plan your itinerary, coordinating with the manufacturer to ensure you take the best routes for some great drives. Pick up an international drivers license at the nearest AAA office.

Fly to Europe. Enjoy some hospitality from the manufacturer, usually a minimum of transportation from the airport, one night in a hotel near the factory, a meal and a factory visit.

Take delivery of your car. It will have temporary insurance that is often renewable so you can extend your stay, export registration and plates.

Explore Europe in your own car being careful not to exceed the maximum time limit that you can use the car there without being taxed, usually three to six months. You must also pay attention to where you can go; the offered insurance coverage may have geographical restrictions.

Drop off your car at one of many predetermined locations for shipping to the United States. Be sure to read the fine print on this because there may be extra charges at certain locations.

Pick up your car at your dealership several weeks after you return from Europe.

The biggest challenge may be finding a salesperson at your local dealership who knows about the program.

“If a retailer is supportive, you might see a poster” about the program, says Volvo’s Hope. “That’s why we get a lot of repeat customers, they’ve done it before. Or when they were buying a car in the past they saw the poster and then do it when they buy a new car.”

The programs, started between 30 and 40 years ago, were conceived as a sales enticement. At the time, European cars seemed exotic, if not downright odd, to most Americans. “The first Saab we bought was from a friend whose husband had died,” says Seth Bengelsdorf of Port Chester, N.Y. “My father felt bad for her because she had the snow tires on the wrong wheels, in front.”

That was in the late '60s when front-wheel-drive was unknown and theirs was the only Saab in town. By the summer of 1971, the family was in England, taking delivery of a new Saab for a driving vacation that included a ferry trip to Europe. Since then, it’s been all Saabs for all Bengelsdorfs almost all the time.

Such loyalty is not just a Saab quirk. At Mercedes-Benz, Korallus has tracked customers who’ve used the program 30 times since its inception. Audi revived its program in 2006, so great was customer demand, much of it from previous participants. And they want more, so Audi is expanding its post-pick-up touring offerings with the help of Abercrombie & Kent, a company known for arranging luxurious, individualized travel. Even Porsche, which doesn’t discount prices for European delivery, finds repeat customers are a significant percentage of program participants.

Mike Strada, of Kailua on the Hawaiian island of O’ahu, has taken European delivery of a silver Porsche 911 Carrera Coupe every year since 2001. He takes delivery in May, having signed up for the Porsche Grand Tour program that puts him on the racetrack in a Porsche 911 Turbo, or a Boxster S with a professional driver who will “redline from zero to 160 mph, and slow down to 120 mph on the turns,” Strada says.

He started this routine after a divorce, figuring a month of Porsche-ing about Europe with his son would be a good 24/7 experience for them. Strada keeps the car at his home in Bellagio, Italy, on Lake Como through the summer, then returns to drive it for another month in Europe each fall before shipping it home. He manages to squeak out under the deadline for paying what amounts to a failure-to-export penalty.

Porsche handles all the details of getting the 911 Carrera Coupe to Hawaii, and each year, Strada sells last year’s model to make room for the new baby next to his daily driver, a Toyota Tacoma.

Perhaps only a Mini driver could be so loyal, which brings us to the lack of an English delivery option for Mini Cooper owners. Judging by online howls, they want this option the way a pre-schooler wants a puppy — passionately and right now. Given Mini’s innovative marketing and owner programs, what gives?

Common sense.

For American drivers, “it’s a challenge to drive on the right-hand side even with a right-hand side drive car,” says Andrew Cutler of Mini USA. With a car designed for American roads, which would be left-hand drive “it’s kooky-crazy. The last thing we would want is for somebody to come pick up their brand new baby” … here, Cutler pauses, letting images of dented, crumpled Minis slouch through the imagination. The possibility of owner injury is too great a horror to contemplate.

Gamely, the company has tried a Mini-holiday program where owners would tour the factory, then rent a Mini for scooting about the landscape. It never achieved what Cutler calls “critical mass.” There have been discussions of installing mini-cams in the factory, so customers could watch their car being built from afar. So far, no go.

But Mini is not alone in not offering an English delivery option. Jaguar doesn’t. Neither does Land Rover. However, Land Rover compensates somewhat by welcoming American owners who want to "get their mud on" into its intensive driver training courses throughout the United Kingdom. Use of the vehicles is included in the enrollment fee. You can take much the same classes at home throughout North America.

Keep reading for a guide to the most popular European delivery programs or scroll to the top and click on a brand that interests you.

If you want to buy a super luxury car or an exotic, check with your dealer. As a Ferrari spokesman said, “The simple answer is 'no,' but things can be arranged on an exceptional basis.”
(C)Forbes

If you drink, you can't drive these Nissans

Beer-breaths, beware.

A new concept car with breathalyzer-like detection systems may provide even greater traction for Japanese efforts to keep impaired drivers off the road.

Nissan's alcohol-detection sensors check odor, sweat and driver awareness, issuing a voice alert from the navigation system and locking up the ignition if necessary.

Odor sensors on the driver and passenger seats read alcohol levels, while a detector in the gear-shift knob measures the perspiration of the driver's palm when starting the car.

Other carmakers with detection systems include Sweden's Volvo , which has developed technology in which drivers blow into a measuring unit in the seat belt before an engine can start.

But Nissan's car includes a mounted camera that monitors alertness by eye scan, ringing bells and issuing a voice message in Japanese or English if a driver should pull over and rest.

The car technology is still in development, but general manager Kazuhiro Doi says the combination of detection systems will ultimately keep an eye on who's behind the wheel.

"We've placed odor detectors and a sweat sensor on the gear shift, but for example if the gear-shift sensor was bypassed by a passenger using it instead of the driver, the facial recognition system would be used," said Doi.

Also keeping a short leash on drivers, car seat belts tighten if drowsiness is detected, while an on-road monitor checks if a car is keeping its lane properly.

Japan's No. 3 carmaker, which competes with Toyota and Honda, has no specific timetable for marketing, but aims to yoke all technology to cut the number of fatalities involving its vehicles to half 1995 levels by 2015.

Nissan's Doi says they still have to distill exactly what impairment means: "If you drink one beer, it's going to register, so we need to study what's the appropriate level for the system to activate."
(C)Reuters

10 Ways to Outwit a Car Dealer

Auto dealers have their own colorful slang that says something about how the car business operates; some pitfalls to watch out for; and, in some cases, how some of the more cynical dealerships see the customer.

Many car dealer terms can be applied to customers. Quite a few, like "Minnie the Moocher" are not compliments. (In the Cab Calloway song, Minnie the Moocher dreams she has $1 million in nickels and dimes, which she counts a million times.) A "mooch" is a customer who wants everything, without paying for anything. Not something the dealer likes to see.

Another such term: Be-back. This is a customer who makes multiple visits, as in, "I'll be back." Salespeople get paid on commission, so naturally their first priority is to close the deal.

Don't allow yourself to be rushed. If the salesperson is helpful and knowledgeable on your first visit (on your first visit, you're called an "up"), get their business card and ask for them next time. Consumers should negotiate hard, but they shouldn't get so caught up in the nickels and dimes that they lose sight of the big picture.

Nor should they take to the "ether" and let the details flow in one ear and out the other.

It's important to take your time. Read the fine print. Don't fall in love with a particular car — at least, not so much in love that you get in a rush and won't settle for anything else.

"Good advice," says Rosemary Shahan, president of the Consumers for Auto Reliability and Safety advocacy group, in Sacramento, Calif.

Money Grubbing

She says another term to watch out for is "dealer reserve." Often poorly understood, it refers to the markup the dealer applies to the interest rate on your car loan.

Dealers make money for arranging loans. Based on how risky the customer is, the lender approves a loan at the so-called "buy" rate. The dealer hikes the buy rate to the rate you pay, up to a ceiling specified by the lender, usually a couple of additional percentage points. The difference, called "dealer reserve," is a big source of dealer profit.

There's nothing illegal about it. Dealers and auto lenders have argued successfully in several lawsuits that arranging loans at the point of sale is a valuable, convenient service. And the National Automobile Dealers Association is quick to point out that in independent consumer surveys, most people say they are satisfied with their dealerships.

People should know that the dealership, not the bank or the finance company, sets the final interest rate you pay. "Most people have no idea that the dealer is getting what in essence is a kickback on the loan," Shahan says. "It is an undisclosed conflict of interest." Potentially, the interest rate is even negotiable.

However, Ron Burdge, a Dayton, Ohio attorney who specializes in "Lemon Law" complaints, said that even if you know this, few dealerships will budge.

"What's negotiable about it," he says, "is it just means you can go somewhere else if you don't like it."

Be-back: Customer who makes multiple visits, as in, "I'll be back." Salespeople get paid on commission, so naturally their first priority is to close the deal. Don't allow yourself to be rushed. If the salesperson is helpful and knowledgeable on your first visit (on your first visit, you;re called an "up"), get their business card and ask for them next time.





Dealer reserve: Dealers make money for arranging loans. Based on how risky the customer is, the lender approves a loan at the so-called "buy" rate. The dealer hikes the "buy" rate to the rate you pay, up to a ceiling specified by the lender, usually a couple of additional percentage points. The difference, called "dealer reserve," is a big source of dealer profit.




Ether: A dazed and confused customer is "in the ether," according to Ron Burdge, a Dayton, Ohio, attorney who handles Lemon Law cases against dealerships and is well versed in car dealer lingo. Losing focus is dangerous. An ethical, knowledgeable, well-trained salesperson or finance manager should be willing and able to slow down and answer any questions.




High penny: Rounding up a payment, say from $301.09 to $301.99. Like "ether," this term appears in Burdge's online Car Dealership Dictionary. By itself, the "high penny" might not be worth fighting about. But multiplied by hundreds of deals per month, it adds up.






Minnie the Moocher: A customer who beyond reason wants everything for nothing, after the Cab Calloway "Hi De Ho" song. There is some truth on both sides. Some customers really do make unreasonable demands. However, some dealers simply don’t like a taste of their own medicine. Customers should negotiate hard, but not obsess over nickels and dimes and forget bigger issues.




Packing: Adding extras to a finance contract. Rust-proofing is the classic example. Today’s cars don’t need it. Also beware of "credit life" insurance, which pays off your loan if you die. Homeowners insurance may already cover you. Also be aware that lenders are not allowed to require credit life.






Spiff: A dealer-only rebate. It can also be a bonus paid to the salesperson. When an ad says, "Dealer participation may vary" it means, "The factory is paying the dealer a spiff. This advertised price assumes the dealer will pass on the entire amount to you, in savings. They might not." Read all the fine print. Some ads disclose the amount.





Spot delivery: Buying a car on the spot, out of dealer inventory. Rather than lose a sale, dealers in hyper-competitive markets such as Southern California often let a customer take delivery before the financing is even approved. This can cut both ways. A dealer may be motivated to sell something that’s been sitting there. However, the customer should avoid rushing into a deal.




Third-base coach: Like in baseball. A third-base coach is a friend or relative, or maybe a trusted mechanic, who may try to stop the customer at third base, instead of letting them run for home plate, closing the deal. This is unwelcome to the finance manager trying to close the deal. However, like ballplayers, some consumers ignore their third-base coaches.





Yo-yo financing: The customer must bring the car back and pay more. Rosemary Shahan, president of the Consumers for Auto Reliability and Safety in Sacramento, Calif., said this is simply a tactic to get more money. It’s likely that after a too-hasty spot delivery, lenders refused to approve the deal without a bigger down payment or higher interest.

For the consumer, it pays to know the behind-the-scene details; it also pays to shop around and study up so you know even a few words of the local language.
(C)Forbes

Top 10 Most Expensive (TCO) Vehicles to Own

The 10 vehicles with the highest overall cost of ownership are top-drawer luxury models, but that doesn't mean that lower-priced vehicles are necessarily a better value.

True, the more affordable the car, the less cash it gobbles up overall. But digging into cost-of-ownership data from Vincentric, a firm that tracks vehicle lifecycle expenses for car dealers, manufacturers and others, shows that the five-year lifecycle costs of the 10 most expensive vehicles to own are lower multiples of their base prices than models that cost less.

Take two examples: the 2007 BMW M6 Convertible, with a manufacturer suggested retail price (MSRP) of $104,900; and the 2007 Audi A3, with a $25,340 MSRP. The pricier BMW M6 Convertible is fourth on our list and is more expensive to own than the Audi A3, which is among the 10 least expensive luxury vehicles to own. But the M6 Convertible’s cost of ownership after five years is $150,565, less than 1.5 times the car’s base price; whereas the A3’s five year total cost of ownership of $51,513 is more than two times the vehicle’s base price.

The lesson: If you sink more than $100,000 into a car, each of those dollars stretches farther over time. That's largely because high-end cars tend to hold their value better than regular vehicles. But remember, you’re still shelling out more money for the pricier car.

Breaking Down Ownership Costs

After five years, the total cost of owning a vehicle can tally more than twice the original price paid at purchase time, even with a trade-in to soften some of the upfront expense. Depreciation is the largest single cost incurred; others include interest on loans, insurance premiums, taxes and other fees. Cars also consume investment income that could otherwise be accruing interest in bank or brokerage accounts. Then there are maintenance and repair costs and, lastly, cash for fuel.

We determined the Top 10 Most Expensive Vehicles to Own using Vincentric data. The company calculates total cost of ownership (TCO) over five years using six variables: depreciation, interest and opportunity costs, fuel, maintenance and repairs, insurance, and taxes and fees. The ranking includes 2007 models only.

Vincentric breaks down ownership costs for every variation within a model line. Consider the Mercedes-Benz CL-Class coupe, the most expensive car to own and No. 1 on the list. Vincentric computes separate lifespan costs for the CL550 and CL600, the two versions sold by Mercedes. The ownership costs shown in the slideshow are model-line averages of Vincentric's breakdowns.

For luxury cars with very high sticker prices, depreciation claims more money than it does for mass-market models that cost a lot less to begin with. That's true even for luxury models that retain their value very well.

Over five years, the Porsche 911 GT3 — the tenth most expensive car to own — depreciates just 41 percent from its starting MSRP. By contrast, the Lincoln MKZ, the 10th least expensive-to-own luxury model, sheds about 67 percent of its base price. But the MKZ sells for around $30,000, compared to $106,000 for the 911 GT3. Sixty-seven percent of $30,000 is a lot less than 41 percent of $106,000 — that works out to $20,100 versus $43,460, respectively.

Higher-priced cars also run up higher costs in other categories, says David Wurster, Vincentric president. For example, you pay more in taxes when your car costs more. Insurance premiums typically run higher, too, he says.

The Intangibles

Cost of ownership calculations measure monetary value only. Luxury models that demand more dollars for care and fuel pay more in image and prestige.

“We don't buy cars just for transportation,” says Michael Calkins, who follows ownership costs as manager of approved auto repair at the national headquarters of AAA. “We buy them to make a statement about who we are and where we are in the socio-economic spectrum.” Status and style are intangible, ego-driven elements of car ownership. “Everyone has to put his or her own value on that,” Calkins says.

Car buyers torn between luxury and frugality can balance the two by avoiding special editions and super-speedy versions of high-line models, Calkins says. “You end up taking a huge hit on those. I would love to have an AMG model [by Mercedes], but the standard model is a much better financial purchase,” he says.

Mercedes’ high-performance AMG versions suffer more depreciation because of their stratospheric prices. Insurance also costs more for these models. Even tire expenses will likely consume more funds, Calkins says. Not only are the larger, wider tires found on AMG and other high-performance models inherently more expensive than standard ones, but if they’re high-speed rated, then they wear faster and drive ownership costs up even more.

Vincentric updates cost-of-ownership estimates monthly. The figures here are from late May 2007. Interest expenses assume a five-year loan at 6.86 percent with a 15 percent down payment. Opportunity costs consider what owners would have made if car expenses went into certificates of deposit instead. Insurance costs are for a typical driver under age 65, with a clean record. Vincentric used the EPA's 2007 Fuel Economy Guide to calculate fuel costs.

Our ranking does not include exotic sports cars and ultra-luxury sedans produced in limited numbers. Vincentric doesn't track them, in part because buyers of these rare cars aren't as interested in total ownership costs, Wurster says. “The vehicles we're talking about are day-to-day driving vehicles. Even if it's a $150,000 Mercedes, people are still driving it,” he says.

Ten Most Expensive Vehicles to Own

10: Porsche 911 GT3
Starting MSRP: $106,000
Depreciation: $53,467
Interest and opportunity cost: $31,268
Fuel: $13,211
Maintenance and repairs: $5,523
Insurance: $19,025
Taxes and fees: $6,964
Five-year cost of ownership: $129,458

Although not as potent as the 911 Turbo also on this list, the 911 GT3 is designed for serious racetrack use. And with a proportionally lower price than the 911 Turbo, the 911 GT3 requires fewer dollars to maintain and drive. It also retains its value rather well, depreciating just 50 percent over five years. So even with a lofty base price of $106,000 — the third highest on this list — it costs the least to own among these pricey luxury models.

9: Audi S8
Starting MSRP: $92,000
Depreciation: $62,840
Interest and opportunity cost: $28,147
Fuel: $15,020
Maintenance and repairs: $5,215
Insurance: $17,353
Taxes and fees: $7,793
Five-year cost of ownership: $136,368

Audi is the only brand with vehicles in both the top and bottom 10 for cost of ownership. The large, fast, technology-laden S8 makes the most expensive list mostly because of high depreciation — 68 percent over five years — that substantially erodes a lofty base price. At the other end of the spectrum, the Audi A3 hatchback likewise depreciates rapidly, but a substantially lower purchase price holds down the A3's total ownership costs, making it one of the 10 least costly luxury cars to own.

8: Mercedes-Benz G-Class
Starting MSRP: $83,700
Depreciation: $59,848
Interest and opportunity cost: $28,913
Fuel: $19,183
Maintenance and repairs: $5,375
Insurance: $17,783
Taxes and fees: $6,212
Five-year cost of ownership: $137,314

The military-inspired G-Class is the only SUV to make this list. Mercedes sells two versions of this luxurious off-roader that’s usually seen planted firmly on-road. The high-performance G55 AMG version raises the model's average cost of ownership considerably, and depreciation hits the G-Class hard, consuming an average of 71 percent of the model line's starting price over five years. This un-aerodynamic, heavy SUV also costs more to refuel than any car on the list.

7: BMW M6 Coupe
Starting MSRP: $99,100
Depreciation: $62,586
Interest and opportunity cost: $30,357
Fuel: $18,313
Maintenance and repairs: $5,349
Insurance: $18,201
Taxes and fees: $9,459
Five-year cost of ownership: $144,265

The BMW M6 Coupe is so intimately related to the M6 Convertible that their five-year costs for fuel, maintenance and repairs are identical. But the hardtop version lands three spots lower on this list because it costs $5,800 less. It depreciates at nearly the same rate as the convertible, but that depreciation claims a smaller sum. Its lower purchase price also demands lower finance fees, thus stealing less cash from other potential investments.

6: Porsche 911 Turbo
Starting MSRP: $122,900
Depreciation: $66,771
Interest and opportunity cost: $35,557
Fuel: $12,551
Maintenance and repairs: $5,622
Insurance: $21,045
Taxes and fees: $8,028
Five-year cost of ownership: $149,574

The 911 Turbo is the most expensive 911 variant sold by Porsche, as of publication time, and has the highest starting price on our list. It's also the fastest, with a 0-60 mph time of 3.9 seconds. Surprisingly, the 911 Turbo has the lowest five-year fuel cost of the list, $12,551.

5: BMW Alpina B7
Starting MSRP: $115,000
Depreciation: $67,409
Interest and opportunity cost: $33,868
Fuel: $14,538
Maintenance and repairs: $5,047
Insurance: $20,100
Taxes and fees: $8,847
Five-year cost of ownership: $149,809

The rare Alpina B7 is the highest-priced BMW among the three on this list, and the second-highest priced overall, second only to the Porsche 911 Turbo. It costs $10,000 more than the M6 Convertible, but that car depreciates more swiftly, losing 62 percent of its base price in five years, as opposed to the B7’s 59 percent loss. By holding its value better and consuming less fuel through its lifetime, the Alpina just edges out the M6 Convertible in five-year total cost of ownership.

4: BMW M6 Convertible
Starting MSRP: $104,900
Depreciation: $65,416
Interest and opportunity cost: $32,054
Fuel: $18,313
Maintenance and repairs: $5,349
Insurance: $18,895
Taxes and fees: $10,538
Five-year cost of ownership: $150,565

The M6 Convertible is the last of three pricey, high-performance, low-volume BMWs to make the list. Fuel cost is its most conspicuous downfall. At $18,313 over five years, the M6 Convertible ties with its M6 Coupe twin for the second-worst fuel efficiency on the list, eclipsed only by the Mercedes-Benz G-Class. All that fuel returns low 0-60 mph times: 5.0 seconds for the convertible and 4.6 seconds for the coupe.

3: Mercedes-Benz SL-Class Convertible
Starting MSRP: $94,800
Depreciation: $75,060
Interest and opportunity cost: $37,639
Fuel: $16,461
Maintenance and repairs: $5,874
Insurance: $22,535
Taxes and fees: $10,634
Five-year cost of ownership: $168,203

The top-shelf AMG versions of Mercedes’ SL-Class boost average cost of ownership for all SL version, particularly the priciest and fastest SL65 AMG. With that variant out of the equation, the ownership costs for the remaining three SL models — the SL550, SL55 AMG and SL600 — average out to $150,895. But even with five-year costs totaling a lofty $220,128, the SL65 AMG receives a “good” value rating from Vincentric when compared to other brutally expensive cars in its category.

2: Mercedes-Benz S-Class Sedan
Starting MSRP: $85,750
Depreciation: $82,368
Interest and opportunity cost: $36,661
Fuel: $15,807
Maintenance and repairs: $5,130
Insurance: $21,161
Taxes and fees: $10,003
Five-year cost of ownership: $171,130

Like the two Mercedes models that fall before it on this list, the S-Class expenses run high because its ultra-high performing AMG version elevates the average cost of ownership for the entire car line. Considered alone, the S65 AMG Sedan duns its owners for an astonishing $243,491 over five years. If you took it out of the mix, the other three S-Class versions sold by Mercedes — the S550, S550 with 4Matic all-wheel drive and S600 — would cost owners an average of $147,010 after five years.

1: Mercedes-Benz CL-Class Coupe
Starting MSRP: $99,900
Depreciation: $83,703
Interest and opportunity cost: $36,076
Fuel: $16,370
Maintenance and repairs: $5,359
Insurance: $20,940
Taxes and fees: $11,816
Five-year cost of ownership: $174,264

Four models in this list have starting prices higher than the Mercedes-Benz CL-Class. But after five years of ownership, the CL-Class swallows more dollars than any mass-produced vehicle you can buy. That's because pricier models — the BMW Alpina B7, M6 Convertible and the Porsche 911 GT3 and Turbo — all hold resale value far better, thereby depreciating less than the CL-Class.
(C)Forbes

About Paying for Cars With Cash

There are two questions that greet every car buyer who walks into a showroom: “Are you ready to buy today?” and “How do you plan to pay?”

If the answer to the first is yes, there are smiles all around. If the answer to the second is cash, that warm greeting may grow chilly.

To be sure, no dealer will turn away a cash-paying customer, not in the atmosphere that surrounds the automobile industry these days, but all things considered, they are less welcome than buyers who want to lease or finance their cars. “We actually love all paying customers,” said George Borst, the chief executive of Toyota Financial, “but we really want people to finance.”

On the other hand, many car dealers are trying to clear out big inventories at the end of the 2007 model year to prepare for fresh models that begin arriving soon.

But buyers who pay cash, whether they write a check or borrow the money elsewhere and bring it to the showroom, provide car dealers with fewer opportunities to make money on a car deal.

That ranges from the cut they get from arranging a lease or loan, to options like extended warranties or antirust coating that buyers are more likely to choose if they can fold it into the amount they borrow. In some cases, those extras account for up to 75 percent of a showroom’s profits.

But, to some dealers’ chagrin, cash deals are up in 2007. Some 11.7 percent of buyers paid cash for cars in the first half of this year, versus about 8 percent over the last few years, according to a survey by CNW Marketing Research, which studies car buying habits.

In all, about 26 percent of buyers are bringing cash to the table, whether it is out of their bank accounts or in pre-arranged loans through their credit unions, banks or home lenders, according to the Power Information Network, the research arm of J. D. Power & Associates.

That overall figure is up slightly from last year, but still below the one-third of buyers who paid cash in the 1950s, when customers, many with lingering memories of the Great Depression, came to showrooms with their check books or stacks of bills.

It is in line, however, with the rate during the 1970s and 1980s, before car companies made widespread use of cut-rate loans and discount lease plans.

One big reason for the recent rise in cash-paying buyers is the introduction of small and less-expensive cars into the American market, like the Honda Fit, Toyota Yaris and Nissan Versa, said Art Spinella, the president of CNW Marketing.

Because many consumers purchase small vehicles as second and third cars, and have a car loan for their primary vehicle, a number are choosing instead to pay cash rather than take on another loan, Mr. Spinella said. That is particularly true for women buyers, who account for about 42 percent of cash-paying customers.

Cash-paying buyers, who tend to be wealthier than typical consumers, are often reaping investment profits. This year, 34.8 percent paid for their cars by selling stock, the most common source of cash, compared with 31.8 percent who took money out of their savings, Mr. Spinella’s data showed.

Indeed, at brands like Mercedes-Benz, Volvo, Audi and BMW, as many as one-third of transactions are cash sales.

For these customers, sticker price can be no object. One shopper at Lexus of Ann Arbor, Mich., recently paid $116,000 in cash for the Lexus LS 460 Lh, the hybrid version of Lexus’s ultra luxury sedan, which went on sale in July.

Mark A. Louria, the general sales manager there, said about 25 percent of his customers paid cash for their new cars, keeping them for an average of six to seven years. Mr. Louria said he tried to encourage many customers to lease their cars instead, arguing that it was a better way to take advantage of ever-changing technology.

In the end, “it’s whatever works best for them,” Mr. Louria said.

Shopping sites like Edmunds.com, Cars.com, Kelly Blue Book (kbb.com) and Autobytel.com are places where consumers can research data like the invoice price, and the amount that manufacturers are giving to dealers in rebates and extra incentives.

Those who plunk down dollar bills often cite a single reason. “I just don’t like debt,” said Todd Larson of Shorewood, Minn. Mr. Larson and his wife, Linda, paid $33,000 cash for their 2005 Ford Freestyle, as well as a 2001 Jeep Cherokee.

For Matthew Galloghy, 30, who lives in Batavia, Ohio, outside Cincinnati, it is simply saving money. He recently paid about $20,000 for a Honda Accord, and plans to drive it for about 10 years.

Mr. Galloghy takes his thrift to another level. He said he would make a monthly deposit equal to a car payment, or about $300, in a money market account. “And now I certainly have a cushion for emergencies or anything else that may come up,” Mr. Galloghy said.

Cash purchases had all but died out in 1998, when buyers were snapping up cheap lease deals that allowed them to take home more expensive models, especially sport utility vehicles, for little down and minimal monthly payments.

After a rebound, they plummeted again in the months after the September 2001 attacks, when auto companies led by General Motors rolled out zero percent financing plans in an effort to spur auto sales.

Lately, these plans have been far more limited than they were earlier this decade, said Jesse Toprak, an analyst with Edmunds.com, a Web site that offers car-buying advice. Many automakers, who made zero percent financing available to virtually any customer six years ago, now offer it only to those with the best credit, he said.

Auto company finance arms and banks have been burned by oversetting these cars’ residual value, or the amount that they estimate the vehicle to be worth when the lease is finished. The higher the residual, the lower the monthly payment, but a too-high residual means the finance company takes a loss on the car after it is turned in.

These lenders also have been hurt by their practice of encouraging five and six-year car loans, which can lead to lower payments, but can result in a vehicle being worth less than the remaining amount to be paid off, a situation the industry calls “upside down.”

Zero-percent-financing plans, in which buyers need only pay for taxes, licenses and other documentation, can prove more beneficial to consumers with the best credit.

Likewise, a discounted lease of 36 months or less can allow trend-conscious customers to swap their cars for the next hot model without gambling on the car’s value, even though they will pay interest on the lease, transaction fees, and may need a down payment. No matter what, buyers need to haggle over the price first before discussing the details.

But some buyers simply want to own outright. In that case, these consumers need to do their homework before they begin negotiating, checking out the prices that are being paid in their area for the automobile they want on sites like Edmunds, which provides a tool it calls the “true market value.”

Buyers enter their ZIP codes, and then choose the options they want, and are provided with the price most frequently paid by purchasers in their area.

Without that knowledge, cash-paying customers risk not just a frosty dealer response, but a concerted effort to get them to change their minds, said Mr. Toprak, who sold cars early in his career.

“When I was at a closing and the customer said, ‘this is a cash deal,’ I knew I would not make any money for the next hour,” he said.

Mr. Toprak advised cash buyers to get prices from several dealers through their Web sites. If a sales person balks at honoring that figure because a customer wants to pay cash, the buyer can threaten to go elsewhere, he said.

Still, some buyers prefer to stick to their guns.

John Kealing, a St. Louis salesman, paid $34,000 cash for his 2006 Infiniti G35x, the second car this decade for which he has paid cash. Mr. Kealing said he deliberately waited until the last minute to tell the dealer that he was paying cash. “He found out when he put the loan document in front of me,” Mr. Kealing said.

The dealer “tried to talk me out of it, actually,” he said. “He told me he had some great rates, but I didn’t waver.”

Rob Butler, owner of the Butler Automotive Group in Indianapolis, said he doesn’t discourage customers who want to pay cash from doing so.

“If a guy likes to write a check, fine,” Mr. Butler said. “Cash is still cash.”
(C)NYT

Big Brother can save you money

Car insurers explore ways to track drivers so they know whom they can charge less.

A new discount plan from GMAC Insurance gives a discount on premiums to drivers of General Motors vehicles with the OnStar service if they let the insurer track the number of miles they drive.

Other companies have been experimenting with similar programs, which is causing concern about how much privacy drivers may unwittingly give up in exchange for savings.

OnStar is a program built into most newer GM vehicles that allows occupants to communicate with a help-desk operator.

Among the services are travel directions and restaurant reservations. An OnStar call can also be initiated automatically in the event of a crash to get help quickly. OnStar subscribers can also get a monthly diagnostic email detailing any needed maintenance or potential problems for their car.

The only information OnStar would share with GMAC insurance, both companies said, would be the number of miles driven each month. GMAC would use that information to help it calculate risk. Drivers must enroll in the OnStar Vehicle Diagnostics service to get the discount.

"I wouldn't really consider that to be particularly invasive," said Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse. According to him, it's data that is commonly given out that doesn't dig very deeply into a driver's habits.

The biggest discount of 54 percent would go to those who drive fewer than 2,500 miles per year. The smallest discount of 13 percent would go to those who drive between 12,501 and 15,000 miles per year. No discount would go to those who drive more than 15,000 miles per year.

The plan will be available in 34 states, but will roll out in more states next year, the company said. OnStar currently claims over 5 million total subscribers

GMAC Insurance has been offering the discount on a test basis since January, 2004. So far, according to the company, 10,000 people have signed on.

GMAC Insurance, which is 49 percent owned by General Motors, insures all types of cars, not just GM cars, the company said, but this program would only be available to GM drivers.

Others testing the waters
Progressive Insurance offers a similar program in a few states. It's called TripSense, and it requires participants to plug a computer chip into a port in the the car's dashboard.

The chip collects data, including the number of miles driven and time of day when the vehicles is driven. Participants remove the chip on a regular basis and connect it to a computer to upload the data to Progressive's computers. In exchange, they receive discounts of as much as 25 percent on their insurance premiums, according to the company.

Adding time of day invites the potential for unforeseen uses of the data, according to Stephens. For example, the information might could be subpoenaed in a divorce case to prove that someone was taking a few extra trips that weren't being divulged to his or her spouse.

"I saved $100 on my auto insurance, but I've got a pretty damning piece of evidence here that can be used against me and cost me tens of thousands of dollars," Stephens said.

Progressive also collects data about vehicle speed, acceleration and braking, but that information is used only for research purposes, the company said, and it would not be used to set rates, or as a basis for canceling a policy.

These discount programs are voluntary. As long as consumers understand fully what data is being collected and how it's being used, it's up to them to decide how much information they're comfortable with sharing to save money, said Stephens.

The GMAC/OnStar announcement may spur larger insurers to begin experimenting with programs like these soon, said Brian Sullivan, publisher of insurance industry newsletter Risk Information.

Spokesmen for State Farm and Allstate said their companies are looking into it.

Keep on Truckin
Data-tracking discount programs that collect and analyze even more detailed data than those used by GMAC and Progressive, are already used by the commercial trucking business, according to Sullivan.

Customer acceptance is less of an issue there because the customers aren't the drivers but the trucking company owners who share the insurance company's interest in regulating and tracking driver behavior, said Sullivan.

"The nice thing about truckers," he said, "is if you can make them pee in a cup you can make them do anything."

Programs like that will provide more in