Sunday, July 18, 2004

Doing my part to stimulate the American economy by buying a new car

Hey Kari:

Well, I did it. I went out and bought a new car.

I did my part to stimulate the American economy and, gasp, I even bought an American car!

As a fine mid-western gal, I have the feeling you have probably always had American cars?

You have to understand (and you probably do), us left-coasties have a fondness for foreign cars. Take a look at my workplace parking lot and you will see mostly foreign cars. And because I work near Beverly Hills, a lot of the cars are foreign luxury cars.

How about your parking lot at work?

My parents have had a few German ones. In my youth, I remember riding in my dad's VW Bug! I'm talking the original where the engine was in the back!! We also had a lemon of a VW Rabbit.

I have driven mostly Japanese cars. During graduate school, I had a Nissan Stanza. When it hit 60,000 miles it seemed like everything started to fall apart! I then had two wonderful Honda Civics. They are great little cars and I love them. One of them took me from LA to DC in 1993 and back in 1997. Alas, that car went to the salvage yard after an intersection collision a few years ago.

Anyway, my Nissan Maxima had turned 180,000 and I thought it was time to retire it. I was thinking used car but somehow I felt like going for a new one. Thus, the decision was not a financial one. As you say, the strictly financial choice would have been to stick it out with my Maxima.

Picking out a car

Talking to different people, I found myself steered towards the Toyota Corolla, Hyundai Elantra and Ford Focus.

Toyotas are very popular and thus can command a high price and it was on the edge of my budget. I visited one dealership and made inquiries via the internet. Their stock of 2004s was pretty depleted and the 2005s were just arriving. There were certain features I wanted and most of the Corollas the dealers were pointing me to didn't have those features and they didn't seem too eager to push me into getting a 2005 ordered with the package of features I wanted. I wonder why they didn't push me in that direction? Odd, you think?

The Hyundai Elantra looks like a nice little car. But I have to confess the dealership experience left me a bit underwhelmed. At the Toyota and Ford they were pretty excited about describing the cars. I suppose they saw me as a walking piggy bank! The Hyundai dealership seemed... well, to be honest, dead. There were 2 people looking at a another car and that was about it. We are talking a nice Sunday afternoon when many of the dealerships had BBQs out making hot dogs for the customers!

I visited two Ford dealerships and they seemed pretty eager. I had heard on the radio that sales were below expectations and so I think they were getting antsy with all that inventory. The 2004 Ford Focus was being offered with $3000 rebates.

The $3000 rebate was tempting. But I needed a little more than that to go for a Ford, an American car.

My parent's experience with American cars has been mixed. We had a full-sized Chevy Monte Carlo a number of years ago. At the time, Japanese cars were only noted for economy cars. If you wanted something bigger and luxurious you had to buy American. The Monte Carlo was big but had its share of mechanical problems. There was the years we had a Chevy Monza and that too had some troubles. Currently, my dad is driving around in a Jeep Grand Cherokee. Initially, it had some electrical bugs which after several rounds of repairs eventually was resolved and the car is doing fine now.

Thus, my personal experience with American cars was not confidence inspiring. However, I have a friend who was an engineer at Ford and when I mentioned I was looking at a Focus he said they have come a long way in reliability. But I guess what clinched it for me was the Consumer Reports list of recommended cars. Absent was the Hyundai Elantra. Not surprisingly, the Toyota Corolla was there. What I didn't expect was the positive comments about the Focus.

I utilized the dealerships just to see and test drive the car. After that, I went to the Internet.

Settling on a price

I remembered that Postrel wrote in the NYT about her car buying experience. Excerpt:
Consumers who use Internet referral services pay about 2 percent less for their cars than people who shop the old-fashioned way, according to research by Professor Zettelmeyer, Fiona M. Scott Morton of the Yale School of Management and Jorge Silva-Risso of the Anderson Graduate School of Management at the University of California at Los Angeles.
Using data from J. D. Power & Associates and Autobytel, the economists tracked about 700,000 car sales in 1999 and early 2000. (Their paper is available at Comparing equivalent buyers who shopped online and offline, they found the exact opposite of what they had suspected.

"The people who use this medium," Professor Zettelmeyer said, "are those who in the offline world would have done worse than average." Internet referral services are, in effect, transferring money from car dealers to the consumers who used to pay the most.
Postrel further commented: On the Internet, it turns out, everybody gets the "white male price," even those of us who hate to bargain.

I went to to select three local dealerships to interact with. I picked one dealership via and I got one more at Autobytel.

I sought financing via a credit union and Capital One online.

Interestingly, after getting loan approval from Capital One, they connected me with a Ford dealership they have a relationship with. So I had contact with six dealerships.

From the internet salesman's perspective he (it seemed everyone I interacted with was male and I'm told most car sales people are male) has to figure out which are serious inquiries versus just price comparisons. How quickly can he figure out he has a live serious customer who is ready to buy? When he puts a price out there, he knows he is competing against other dealers via the internet. He has to put out a number low enough to get the attention of the buyer but still big enough so he gets a hefty commission. Too high a number and the contact goes cold. Too low and he is taking money from his pockets.

I also had a list of things I wanted: 4-doors, 5-speed, side air bags, ABS, moonroof and air conditioning.

The dealer has to decide, do I push a vehicle I have on the lot that has only 3 of the things this guy wants or do I broach a car from another lot that has more of what the customer wants. I learned that dealers trade cars with each other but sometimes they have to buy them off each other!

Anyway, in the end, one dealer seemed to pick up that I was serious and found a car that had 5 of the 6 features I wanted and fired back a quote that beat one of the other dealers who also found the SAME car! Other dealers were slower on the response and seemed to push cars with only 3 of the things I wanted and when I re-iterated my list some didn't respond while others moved slowly to broach cars closer to my "wish list."

Actually getting the car

Me and my buddy drove down to the dealership where the car was being washed and gas tank filled up. With the down tine, we chatted up the dealer and found out the manual cars are very rare these days. He said he knew of only four 2004 Ford Focus with stick shifts and he had to have his dealership buy it off the other dealership.

We took the car for a final test drive and was satisfied with the car. We then went to the finance office where time... shall we say ... stood still seemingly?

First thing they did was knock off a few fraction of percentages off the loan rate. I have to wonder if CapitalOne gets a piece of the action because they pre-approved the loan for me AND referred me to this dealer. Once on the dealership grounds, Ford promptly beat CapitalOne's rate. Admittedly, 4.49% down to 4.19% isn't much difference but it would seem to me that CapitalOne will always lose if Ford Financing feels the borrower is a reasonable risk.

Then the sales guy (not the same who I got the car price from) pushed various warrenty items. It was a hard pitch or at least it seemed hard to me being a new car buying newbie.

I hate to think how much negotiating there would be if I had to meet the used car trade-in guy, do in-house new car price negotiating (instead of low key internet pricing) and finally rassle with the finance/warrenty guy!

Well, eventually, I drove out with my new car.

I've been writing words and words so here is a photo.

News item: sales of Ford Focus do NOT go up with new blogger spokesmodel appearing with said vehicle.

Take care and be well,

P.S. Hey, maybe you could give pointers to readers who are in the house buying mode? Being in LA and on my salary, house buying is not on the horizon. 8-(


Blogger Kari said...

Congrats! You certainly took the scientific approach, which should not surprise anyone. But the Focus has aesthetics goin' on too. (And may I say, Ford should sign you up today to appear in a series of ads, Mr. Male Spokesmodel.)

The Other Half and I have been talking about trading in one of our two big vehicles for a commuter-friendly car, particularly if we relocate as planned to a few acres outside the city (more on that in a post later this week, modeled on your car-search post). The Focus and Civic are on the candidate list, as well as the slightly bigger Matrix/Vibe and Hyundai Sonata. Keep us posted on your level of satisfaction with the Focus!

7:22 AM  

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