Washington Post columnist
Friday, April 3, 2009 11:00 AM
Washington Post cars columnist Warren Brown was online to answer your questions about every aspect of the automotive industry.
Silver Spring, Md.: Hi Warren, this is my first time sending you a question... Why can't you pay points on an auto loan and get a lower rate like you can with a real estate loan?
Warren Brown: Good morning, Silver Spring:
If you think of "points" in terms of a down payment, you can pay the equivalent of points on an auto loan and get a lower rate. It's a matter of reducing risks. The more you put down, the more you reduce the risk of the loan to the lender, and the more room you have for bargaining a lower annual percentage rate.
Columbia, Md.: You reviewed the Kia Soul this week, and commented on the suspension issues over bad roads. I was wondering if you had a chance to drive the + trim level over the same roads, as I test-drove both and found that the + was much better over the same bumps and potholes, due to the higher sidewalls on the 16" tires compared to the 18" tires on the !. In other words, it may be an issue of the amount of rubber, rather than the suspension, although the suspension would certainly help, as it did in the Sport model I also tested.
Warren Brown: You are absolutely right, Columbia. The Kia+ with the high-aspect ratio tires, the higher sidewalls you refer to, offers a much, much better ride over bad roads. Low-aspect ratio tires, lower sidewalls, with a rather tight suspension, are simply murderous over those roads.
Germantown, Md..: Hi Warren, I've heard different things from different dealers on this. In the stimulus package, sales tax can be deducted from a new car purchase, does this include a lease? Thanks.
Warren Brown: Yes, that includes a lease, according to dealers I spoke to and according to sources at the National Automobile Dealers Association.
Keedysville, Md.: Topic for a column: (I read you every Sunday) I keep reading and hearing that the car companies need to, among other things, shed some dealers as part of restructuring. How does that help? I'd think more dealers = more sales. Does each dealer somehow cost the motor companies or tie up their cash?
Warren Brown: Hello, Keedysville:
In the 1950s, when a post-WWII America viewed its economic growth as limitless, a car dealer on every other block was the ideal.
And in that era, when domestic car companies controlled nearly 100 percent of the U.S. market, the strategy was the more dealers the merrier.
But that America no longer exists. Like it or not, America is becoming more and more like Europe, where no car company has substantially more than 20 percent of the market.
That being the case, the domestic car companies must do what they have been doing slowly over the last 15 years, and which they must now accelerate under threat of bankruptcy, they must trim their dealership ranks to reflect their realistic market share. If share increases, it is better to have fewer dealers with more sales and higher profit margins than too may dealers with marginal sales and marginal profit margins.
Landover, Md.: Mr. Brown: I'll be replacing a 1995 Buick Century in the next month or so. I drive short distances and not every day. I'm retired. I have narrowed down my choices to the Chevy Malibu, Honda Accord and Hyundai Sonata. Please give me your thoughts on which car would be best for me. Thank you.
Warren Brown: You have three excellent choices there, Landover. All are equally competitive in terms of reliability, quality, safety.
But Hyundai has the best value in terms of what you get for what you pay.
My personal favorite is the Malibu. I just love the feel of that car. But it tends to cost more than the Sonata.
South Riding, Va.: Can the U.S. automakers stage a comeback? I have owned three Chevy SUVs and hope to be able to continue to buy from Chevy in the future. Although, my current Chevy Trailblazer isn't getting much use as I drive the smart fortwo more often.
I know that it is not as simple as saying that GM can sell x number of cars per year and they could shift their organization to fit that level of demand. They have a backlog of cars and a huge debt to repay. With the current economy they are only able to sell a fraction of x number of cars per year which makes it even harder to get back into business. I fear the U.S. government, if they continue to play a role in the future of the auto industry, will strip away too much of the GM organization that it won't be any stronger in the future. How can they climb out of the hole and remain a viable business?
Warren Brown: Hello, South Riding.
And a very definite "yes" at that.
Before the bank-AIG-hedge-fund-lax-regulation-credit-default-swap-greed-inspired global economic collapse, GM and Ford were moving well along the road to recovery.
GM had cleaned up its European operations, integrated its global vehicle design and development operations, improved its product quality to be world-competitive. Ditto Ford. Not so much Chrysler.
All of those changes and improvements cost money--financed with stupendous losses ($82 billion since 2000)--at GM; and financed with sell-offs of family jewels (Aston Martin, Jaguar, Land Rover) and stupendous borrowing at Ford.
Ford's proved to be the smarter, or, perhaps, luckier strategy (having occurred before the economic collapse). But I believe that Frederick A. "Fritz" Henderson, the man responsible for cleaning up GM's European operations, and who is now in charge of GM, can work a similar miracle for the struggling giant.
GM's problem isn't product, or leadership. It's the absence of buyers, whose absence has floored the entire car industry.
New care: Warren, if you had $15,000 to spend on a brand new car (4-door, automatic), which car would you pick and why? Thanks.
Warren Brown: Hyundai Elantra--the most car (replete with quality, reliability, safety and best warranty) for the money.
re: Keedysville: You said "If share increases, it is better to have fewer dealers with more sales and higher profit margins than too may dealers with marginal sales and marginal profit margins."
I understand how that helps the dealers, but not how it impacts the manufacturers.
Warren Brown: Manufacturers need a total quality network to attract and retain customers. That means, of course, their products must meet or--much better--exceed customer expectations. It also means their retail network--point-of-sale quality, vehicle-care quality--must do the same thing. The latter is easier for dealers who aren't living hand-to-mouth. The early Saturn experience proved that much. Certainly, the Toyota and Honda experience--fewer dealers with more sales and higher profit per store--proved that.
Rockville, Md.: We checked out the Elantra as we are in the market for two new cars; however, the blue instrument panel was very hard to see in sunlight. What gives with that?
Warren Brown: A number of manufacturers and Toyota with its latest Camry in some cases--have resorted to the blue and soft blue/green backgrounds. Lots of consumers find that lighting pleasant. Some regard it as high-tone styling. But, I agree, it's hard to see in sunlight, especially if you are wearing sunglasses.
Atlanta, Ga.: Hi, Warren, I heard you on NPR a couple of weeks ago and I agree with you 100 percent that American car companies have done a pitiful job of promoting themselves. I owned a 1987 Ford Taurus that I drove into the ground with very few repairs and no major repairs. I currently own a 1996 Mercury Grand Marquis with almost 200,000 miles and still going strong. Again, no major repairs (my mechanic is amazed that I have all these OEM parts) but I'm a stickler for regular maintenance. I can't speak to GM & Chrysler, but I think the public still perceives Ford as Found On Road Dead, when my experience has been high quality, long lasting vehicles.
Warren Brown: Thank you, Atlanta.
Here's hoping that GM follows Ford's lead on that. I absolutely love Ford's new, aggressive, product-quality oriented marketing. Way to go, Alan!
Alexandria, Va.: Warren, GM sales of G8 the rear wheel drive were a high point in a dismal month of March. GM is said to have advanced orders for over 14000 Camaros another rear wheel drive car. Mercedes and BMW make fine rear wheel drive cars and have for years while GM has said that front wheel drive was the way to go for fuel reasons. GM has the great technology such as direct injection and also has developed the baby duramx 4.5. a stunning advance in engine design. For some reason GM chose to put this engine on hold, it seems to me that they have the answers for better sales but they are so slow to bring out their best technology. When will you be testing the new Camaro?
Warren Brown: I'll be in the Camaro in June. But, let me tell you, I certainly understand the enthusiasm for the G8. I'm driving one, now. It's simply amazing! Great torque. Smooth acceleration. Terrific handling--and one of the highest-quality interiors anywhere.
Capitol Hill: We figured with the auto glut this might be a good time to replace our eleven-year-old Toyota. However, my husband really wants a convertible. It can be new or used. He likes the BMWs and the Mini Cooper, but these brands don't seem to be discounted. Do you have any advice on getting a good deal on a convertible in the next few months? What brands/models would you consider? Thanks for your advice.
Warren Brown: Almost all car companies are hurting, Capitol Hill. But all car companies are not all car brands, such as Mini Cooper, a division of BMW. Mini continues to sell well, not a good place to go for discounts at this time.
But check convertible offerings almost anywhere else, including BMW, whose sales are down nearly 23 percent. This recession isn't sparing many companies. Go to www.edmunds.com or www.cars.com and look up "convertibles". Then Google "car sales" by manufacturer and plan your shopping accordingly. It's cruel, perhaps crass. But the more a car company is hurting in the sales department, the easier it is for you to bargain.
Re: Manufacturers vs. Dealerships: Manufacturers must hate that local dealerships, over which they have little direct control, are the public face of their companies. I just bought a Ford Fusion Hybrid. I love the car, but working with the local dealership was a nightmare.
Warren Brown: Automobile dealers are independent business people--to the extent that there are any "independent" business people in the era of federal bailout loans. There always has been some tension between dealers and manufacturers. But there always has been a great deal of cooperation between them, too.
Only dreaming: Warren, I don't think we'll ever be able to afford one, but what do you think about the Ford Flex? It just looks so cool. And from someone who has only ever driven Japanese cars, this is a big compliment and change of mindset.
Warren Brown: I really like the Flex crossover utility. But, you're right, I wish the price on that one would come down a bit.
Silver Spring, Md.: More dealers? Of course not. My dad needed a dealership so that he could look at the car and find out what features it had. Today, we have something called the Internet and buyers often walk into the dealer knowing more about the car (and its competition) than the salesman. I expect many more small dealers to close and the emergence of very large, lifestyle centers where you become immersed in the brand. What if Chevyland was even more like an Apple Store (expert advice, no high pressure sales, get upgrades for the software and entertainment systems in my car, etc.)? Someday, somebody will figure out how to not make me (and others) cringe when thinking about going to a dealership.
Warren Brown: You are mostly right, Silver Spring. We lost nearly 900 dealers last year. We're likely to lose a similar number in 2009. But let's not embrace regicidal revelry in that matter.
Thousands of jobs are disappearing with those dealerships. Not to mention community tax revenue and all of the assistance that car dealerships over the years have given to those communities.
Re: Landover: Will auto dealers ever get cut out of the loop were 4-5 Amazon.com type websites (of maybe the manufacturer's websites) sell the cars and they are delivered via gas/service stations? It seems like the gas stations could do the warranty repairs.
NADA has a strong lobby. But at some point wouldn't this prove to be more economically efficient (lowering prices by removing the dealer's cut). Maybe the service stations could be legally considered "dealers" to create a loophole in these dealers-only laws?)
Warren Brown: I don't think, so, Landover. And I certainly hope not. I believe dealers perform a necessary function--human interface with the manufacturer, repair and maintenance. But, do we need the 30,000 or so dealers we had 25 years ago? Perhaps, not. As for the Internet? That is becoming more an integral part of the daily lives of successful dealers every day.
Boston: Explain this to me as I'm in the market... Toyota's RAV4 and Venza solve the need for the family hauler. As far as I can tell here are the differences: Venza has a bit more room for the passengers RAV4 has a bit more room for cargo, Venza is bigger on the outside.
Otherwise, they are similarly priced, have similarly powerful engines, and similar fuel efficiency. My family and I are all short, so the extra cabin size of the Venza are lost on us. They are both cars really, Camry vs Corolla. But why would they give the smaller version (Rav4) more cargo space? I just don't get it.
Warren Brown: Hello, Boston:
The RAV4 continues to embrace the personality of an SUV while offering the feel of a car.
The Venza is a station wagon that would prefer to be viewed as something else more exotic.
Warren Brown: Thank you all for joining us today. The hour flies fast. Please join us next week. My everlasting gratitude to my wonderful producers.
And thank you, Ria. Eat lunch.
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