Strange Days, Indeed

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As if the automotive market couldn't get any stranger, it has recently encountered a few new curves in the road that would rattle even a Ferrari.

Chrysler announced the end of factory-sponsored leasing, Ford and GM followed with new, tighter rules on prospective leasing, and then Chrysler announced what it is calling the "Shop 'til you Drive" sales event, designed to allow potential lease customers to own a vehicle at leasing-type rates with extended finance terms and special loyalty bonus cash. As of this writing, I can only expect GM and Ford to follow suit in some way, as their latest sales numbers are so bad that they are difficult to comprehend. Even Honda and Toyota are posting results well below expectations.

What is the cause of all this? Simply put, the manufacturers as well as buyers have not recently been "Choosing their cars wisely." By this I mean that the market has slammed the door shut on future profitable truck and SUV sales, and people who bought one of these back in the boom years (which were not much more than 24 months ago!) are now saddled with vehicles that are worth much less than they owe. So how can they even consider buying something new and more fuel-efficient without also putting their credit rating and bank account at risk?

2008 Dodge Ram

This is the same reason Chrysler dropped leasing--its lots were being filled with off-lease vehicles in that same "upside-down" situation. But in Chrysler's case, the number of vehicles that it was taking back from drivers was way more than its accountants could allow.

So what is a buyer to do? If you are stuck with an upside-down vehicle, do all you can to hold tight and try to pay down the gap/difference. If fuel consumption has got you beat, try alternatives like local transit services and carpooling. Or, if you must drive alone, for goodness sake make sure the trunk/back of the vehicle is not full of heavy "stuff" and that your tires are properly inflated. And slow down--a reduction of just 10 MPH over the duration of a trip can add many MPG. Or walk!

Posted on 2008-08-01 | Permalink | |

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