Friday, December 26, 2008

Top 10 Best Selling Vehicles of 2008

With all the hype over Hybrids and $4 gallon gas in 2008, what would you guess would be the #1 selling vehicle in America? Wrong, not the Prius! Think opposite, exact opposite. Like the Ford F-150, yes that's right, Ford Motor Co. sold more F-150's than any other vehicle in America. Over a half-million to be exact!

Ok, ok, but the Prius or Corolla has to be #2 right? Well, think again, can you say, "Chevy Silverado"? That is not a typo and your eyes are not fooling you. The Top 2 best selling vehicles in America are trucks that don't even come close to getting 20 MPG on the freeway. When I read this list for the first time, it made me laugh out loud. Everyday, I hear from the media, celebrities, Al Gore, and politicians about how we must drive cars that get better gas mileage or take mass transit or walk. Moreover, there rhetoric makes you feel as though everybody is being "Green" and your're the only one not on this wagon.

However, facts like these prove once again, Americans know what they want and will ignore the so called "Experts" and make decisions that make sense in there individual lives. The big three are building vehicles Americans actually want to drive. 4 out of the top 10 best selling vehicles are American made.

I am dreading the "Green" designs and new regulations that Harry Reid and Nancy Pelosi are going to come up with in an effort to make the Big Three pay for there bailout money. Washington seems bent on regulating Detroit into making inferior products that Americans will not want to drive, I cannot wait for the day that I get to buy a Dodge Ram with a frame made from recycled materials and runs on vegetable oil!

This Top 10 List makes you wonder what these Automakers could do without the UAW or Washington breathing down there neck with regulations and outrageous wages. Level the playing field Washington, Cut the Red Tape!


Monday, July 28, 2008

Econo-Cars Appreciate?

Lately, I have been reading alot of articles about how economy cars are actually appreciating in value. In all my 30 years of working in the auto industry I have never seen the value of a car actually appreciate with the exception of collector cars. Generally, when I purchase a car the key to making any profit along with any other Dealer is to sell it as fast as possible. Why? You might ask.

Well a vehicle is a depreciating asset and once you drive a new car off the lot you instantly lose 10-20% of it's initial value (This percentage varies depending on the Year, Make, Model and the kind of deal you got on the car). Used cars tend to lose there value slower, but they still depreciate. The more miles and wear and tear you put on your vehicle in the years after you purchase all play a huge role in the future resale value. This is why I was totally shocked to actually hear some cars have actually appreciated up to 20% of there value in the past 3 months. The cars that have made the biggest jump in value are economy cars that get great gas mileage.

I believe the reason for this unusual climb in appreciation is because the exhorbitantly high gas prices we have all been experiencing around the country. People are scrambling to buy up cheap vehicles that offer great gas mileage and trying to sell or trade in there gas guzzling trucks and SUV's. With oil prices finally dropping it will be interesting to see how long this appreciation for small cars last, but for now don't count on walking into your local Dealer and expecting him to give you a "GREAT DEAL" on a econo-bomb! Unless, of course you buy from FOX AUTO SALES, where our prices are always below our competitors, Private or Retail! OTIS

Thursday, March 6, 2008

How Dealer's Profit!

Just recently a friend of mine applied for a job at a local dealership for a finance manager position. The salary for the position was 100% commission on the back-end of the vehicle sales.

There are two ways that dealers make money on the vehicles they sale the front-end and the back-end. When referring to the front-end, let me give you an example of how this works. A dealer buys a car for $10,000 from a wholesale auction and then turns around and sells it for $12,500. The profit from the front-end of this transaction is $2,500.

However, in most scenarios dealers will offer additions to you on the back-end of the deal. Here are a few examples of back-end profit. If you get a loan from a local credit union referred to you by the dealer, they get a $200 spiff for the referral. If you decide to buy an extended warranty for $1500, they are probably making $500, paid to them by the 3rd party warranty company. In addition, if the dealer offers you GAP insurance (Supplemental Insurance), which they sell to you for $250, they will probably make that same amount. And last but not least some dealers will offer you exterior undercoating, that supposedly protects the paint from water-spots and other roadway junk for $150. The total profit on the back-end of this deal is $1100, giving the dealer an overall profit of $3600. If my friend would have accepted the job his goal would have been to sell $1200 on the back-end of each sale and he would have made approximately 15%-18% on each transaction.

Facts to remember when buying a car from a dealer:

-LOANS: If your getting a loan for the vehicle make sure you shop around the rate, the company the dealer is pushing on you is probably the one that cuts them a spiff for the referral, but not neccessarily the best company and rate for you.

-WARRANTIES: Most maufacturers provide warranties already, so make sure you do your research before you buy. Moreover, warranties usually don't pay back what you originally paid for them and sometimes cover things that are most likely not to fail. You'd be better putting the money in the bank and letting it collect interest until you need it.

-EXTRA'S: Such as exterior/interior protection coating. These things are fine if you desire them, but the cost to the dealer to put these things on your car is very minimal. So you can most likely work them into the deal for free or at a very low cost.

-MISC: There are always going to be special things the dealer tries to push on you, but they are probably things you don't need. So do your research and make sure you aren't adding negative equity into your car before you drive it off the lot.

Remember, even though the dealer is telling you that he is making minimal or no profit on the car he is selling you, they are either lying or planning on making money on the back-end of the sale. OTIS

Thursday, January 17, 2008

Salvage Title?

What is a Salvage Title (or in some States they're called Rebuilt or Restored Titles)?

Well, when cars are involved in accidents the insurance company calculates the total cost of the repair job minus the salvage value and determines whether or not it would be economically feasible to do the repair. If so, the car is repaired and put back on the road with a "Clean Title". But if it not the vehicle is tagged with a brand of either Salvage/Rebuilt/ or Restored Title, then the vehicle is sold through a salvage auction.

Basically, a Salvage Title represents a vehicle that was deemed not economically repairable. Moreover, the liability of the insurance companies are dramatically decreased by branding titles.

Most people would then automatically think that buying a car with a branded title would be crazy, because your buying a vehicle that was once considered beyond repair right? Not so! With the rising cost of auto body repair, cars with minor damage are not being repaired.

For instance, I purchased a 2003 Hyundai Sonata in 2004 for $2800. This vehicle had minor front-end damage and was worth at the time about $10,000 with a Clean Title. That means the collision estimate on this vehicle must have been at least $5000; however, the accident didn't even render the car undrivable. What this proves is that the damage on Salvage Title vehicles is sometimes so minor, that you can get a deal on a car that is almost 20% off the retail price. The more expensive the car, the better deal you can get. The reason for this is that most lenders will only loan up to 60% of the retail value, which means you must have alot of cash to put down to purchase it.

By purchasing Salvage Title cars I can then sell them for the best price in town! And buyers can be confident in purchasing them from me, because I buy cars with light damage and repair them back to there original condition and sell them for less than 20% off the retail value.

Another thing to think about is this. The older the vehicle and the less it's worth, the less it matters what kind of title the vehicle has. Mostly because when your buying an older, cheaper car your buying it to drive it until it stops. For this reason it really doesn't matter where and how you get a car that goes from A to B.

Here's The Deal: Salvage Title cars are cheaper and just as safe as they were in there original state. But to help calm your concerns you can take it to a mechanic or Auto Body shop that you trust and they can give you an unbiased inspection. OTIS

Thursday, January 3, 2008

Toyota is #2

Wow! This is real news! Toyota takes the #2 spot from Ford as the 2nd biggest U.S. automaker, after Ford held it for over 75 years. 

First off, Toyota is considered a U.S. automaker??? Wait a second, I thought the only U.S. automakers were the "Big 3" GM, Ford and Chrysler. Well, they were until 1972 when Toyota built it's first manufacturing plant in Long Beach, CA and now has 7 manufacturing plants with another one scheduled to be finished in the Spring of 2009.

What does this mean and how did it happen? There are probably several reasons why GM and Ford have both taken a beating to foreign auto makers. But the one that sticks out in my mind is that after the "Muscle Car" era, which ended in the early to mid 70's, American auto makers started making junk! Both Toyota and Honda started catching appeal because of there great gas mileage (Google: ARAB OIL EMBARGO), but more notable than that was the fact that they would go 250,000 miles plus. They were an industructable and cheap. On the other hand American cars seemed to have a 100,000 mile limit to their success.

For Instance, when I opened my first Dismantler location in Rio Linda, CA in the early 80's. We dealt in all Toyotas! One the biggest issues we had in selling Toyota Drive-Trains was that nobody needed them, we had stockpiles of engines and transmissions that we could not get rid of; mainly because of their amazing longevity. In addition, I will attend auto auctions to this day and see old Toyota trucks and cars on a regular basis with over 250k miles and the cars are still running strong and they still demand top dollar. However, if I see a GM/FORD/CHRYSLER with those same miles it's usually located in a Pick n' Pull type operation (If I am lucky enough to even see one).

Now let me say this, American cars reliability wise have come a long way in the past couple of years, but they've had too. With companies like Toyota, Honda, and Hyundai making reliable and inexpensive cars with great warranties, it's surprising to see that they are still competitive. 

Here's the deal: You can't go wrong with buying a Toyota or Honda because they will last forever and are very reliable. But, you will also pay top dollar for these cars; especially, when your buying them used.

Hyundai and Kia's are a great alternative to buying a Toyota or Honda if you want to still go foreign. Hyundai actually owns Kia and some of there vehicles are built on the same platform. In addition, they are a fraction of the cost of Toyota's and Honda's and in my opinion similar in reliability.

And if you are debating on whether to buy a Ford, GM, Chrysler you can still get a great deal because of the low resale values these cars provide. But also remember if your buying a Toyota you are buying "AMERICAN" still.   OTIS

Full Article Link on Toyota being #2: