Transportation

See the USA in Your Chevrolet…I’m not so sure says Lemon-aid Author

Toronto, April 29, 2009—”See the USA in Your Chevrolet” Dinah Shore’s 1952 jingle has been replaced by Leonard Cohen’s “It’s Closing Time”.

 

Lemon-aid Used Cars and Minivans 2009-2010 author Phil Edmonston says that the Detroit carmakers are “Dead men, walking” And anyone planning to tour the country in a  Chevrolet better hurry. GM has just ditched Pontiac, after sounding the death kneel for Opel, Hummer, Saab, and Saturn. Even GMC, the automaker’s upscale Chevrolet truck division is on GM’s endangered species list.”

Lemon-Aid predicted the bankruptcy of Chrysler and GM several years ago.

 

Says Edmonston: “GM’s market valuation is now about a third of Bed, Bath, and Beyond; Its two billion dollar capitalization is about two percent of Toyota’s one hundred billion dollars+; and GM stock is barely a buck-fifty a share. Ford stock sells for almost $5.”

 

Quoting the National Review, an American conservative magazine, Edmonston agrees that “General Motors, like the other two geezers of the Old Three, is a vast retirement home, with a small loss-making auto subsidiary. The UAW is the AARP in an Edsel: It has three times as many retirees and widows as “workers”. GM has 96,000 employees but provides health benefits to a million people.”

 

These legacy costs compounded by Chrysler and GM inefficiencies and maladministration mean that a huge increase in sales will only make the Detroit-based automakers lose money faster. For example, Honda and Nissan make a pre-tax operating profit per vehicle of around $1,600; Ford, Chrysler and GM sustain a loss of between $500 and $1,500—losing money on every vehicle sold.

 

Edmonston, the first NDP MP from Quebec ever elected to Parliament, doesn’t mince his words: “In a few days we will know if Chrysler will avoid bankruptcy by linking up with Fiat (imagine two drunks propping up each other). And if it does get Fiat’s small car technology, it’s unlikely buyers will risk their money on a Chrysler Fiat and it’s even less likely that Chrysler’s large-platform factories in Canada will build the cars. Smart money says Chrysler is no longer a viable entity no matter to whom it is partnered (remember, not even Mercedes could afford to support Chrysler’s cash-burn).”

 

Again, Edmonston quotes Cohen: “Leonard Cohen sums up succinctly the Detroit automakers’ plight when he sings: “Everybody Knows”.

 

Good Buys in a Bad Economy

Edmonston says now is the time to buy, if you are careful and follow Lemon-Aid’s advice.

 

“Bad news for Detroit is good news for car buyers. New and used car prices have plummeted. Recently-built large trucks and SUVs now cost less than half their original list price because of soaring fuel costs. Now that fuel prices have dropped by almost 75 percent vehicle prices have remained in the basement. This is the time to buy.

 

For example, a 2006 all-equipped Yukon Denali (a Better than Average Buy) that sold for $63,645 can now be bought for only $23,000. At the other end of the choices available, a 2006 fuel-frugal Ford Focus ZX5 SES four-door hatchback (an Average Buy) that listed new for $21,800, can now be picked up for $9,000. Incidentally, I have used the 2006 model year as an example of a good year to buy most cars, vans, SUVs, and trucks, because it was a watershed year for across-the-board safety and quality improvements.”

 

“Interestingly, cars and trucks that are currently coming off three- and five-year leases have added to the savings possible when buying used. Dealers gave these vehicles inordinately high ‘buy-back’ residual values, resulting in owners dumping the cars at the end of their lease and buying something else more affordable. This has created a glut of reliable, overpriced vehicles dealers can’t sell without massive discounting. And, these discounts will increase as we go into the 2010 model year. 

 

Five Tips for Big Savings

Edmonston says there are five ways car buyers can save money by purchasing a recession-proof vehicle as they ride out this economic downturn that will likely be highlighted by mass bankruptcies in the auto sector:

 

• Buy a vehicle that is relatively uncomplicated, easy to service and sold in large numbers over a decade or so. This will ensure that independent garages can provide service and parts because many parts suppliers and dealers will have also shut their doors.

 

• Stay away from European cars, vans, and SUVs. The dealership networks are already very thin, parts are incredibly expensive and hard to find, and few garages will invest in the expensive diagnostic equipment needed to service relatively complicated emissions and fuel delivery systems. The old axiom that there is a right way, a wrong way, and a European way to trouble-shoot a car, still holds true.

 

• Don’t buy a hybrid or a diesel. They are failure-prone, complicated to service, dealer-dependent, and don’t provide the fuel economy or savings they hype. Furthermore with gas as cheap as it is, there really is no imperative to complicate your life with a complex piece of machinery. Diesel complexity comes from emissions regulations passed several years ago requiring the use of cleaner-burning engines and hard-to-service fuel systems.

 

• Don’t buy most Chrysler or Dodge models with the exception of a well-inspected Jeep Wrangler or Liberty, or a minivan, which are the best of the bad. Chrysler is the weakest of the Detroit Three, most of its products are infected with serious safety- and performance-related defects, and its automatic transmission, brakes, and ACs are practically biodegradable.

 

• Don’t buy any vehicle that requires an extended warranty, even if the federal government promises to stand by the warranty. Ever argue with a Revenue Canada bureaucrat? It is likely warranties will be worthless when companies merge or shut down.  And, as cash gets scarce, automakers and dealers will find more reasons to deny warranty coverage, as they try to cover their payrolls, instead.      

 

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To schedule an interview with Phil on the above topic or any other automotive concern, email or call him directly at: lemonaid@earthlink.net; Tel.: 416-628-2821.

 

To receive a review copy of Lemon-Aid 2009-10 Used Car and Truck Guide and for further information contact:  Ali Pennels at:  apennels@dundurn.com;

Tel:  416-214-5544, ext. 222.

© 2009 Defining Canada.