Hammer Time: Bye Bye 10k. Hello Lease!
Aaahhh… the good old days of 2008. A time when you could poach for a decently equipped gas sipper right around the 10k range. Of course we had (and still have) bogus fees aplenty. The processing fee. The documentation fee. The ‘we are gonna screw you any way we can’ fee. Out the door most of these vehicles hit the 12k to 13k mark. But with enough luck, a little demo miles, and a clunker in the driveway, you could always limbo close to that 10k mark. Can you still get this deal in October 2010 ?
The manufacturers are now controlling their inventory… in most cases. The average vehicle supply has now dipped to 60 days which is right where the American economy had been on October 2007. Dying brands are… mostly dead. Scion, Mitsubishi, Porsche, Suzuki are all pretty heavy on the days of inventory with the occasional Jaguar thrown into the mix. But the volume of vehicles has gone down considerably and with that comes newfound faith in resale values.
Forget about the parts bin Taurus and Regal of old. The new ‘lease’ vehicle is one that now has at least 80% of it’s competitors virtues. Why? Resale. If it can’t hit the number, that teaser monthly payment won’t take place. The Honda Insight is to me the quintessential 80% vehicle. You get 80% of the Prius’s fuel economy (41 vs 50), 80% of the back seat room (got small kids?) and 80% of the interior quality for a lease that may very well end up being about 2/3’s of the cost of one for the Prius. Why?
They don’t sell unless they are cheap, and the Insight is likely the biggest sales disappointment of 2010 .The nee-Prius is now being pushed out the door in some places for $169 a month for 36 months. Yes you do get the usual onslaught of tag, title and bogus fees to deal with and your credit history has to be better than the Chinese government. But most folks don’t read that small print. Just the big number.
If gas hits the $3 average you may very well recapture the sales tax and ad valorem expenses through your gas savings. Of course a beater will be much better. But for someone who can’t drink the Steven Lang Tightwad Kool-Aid it’s a better deal than most. But wait… another $1700 due at signing? Forget it! Just go dicker down a Chevy Cobalt XFE coupe, pay cash, or just keep what you have. Or maybe get cheap financing now that GM is using AmeriCredit to make all their bad financial decisions.
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I am an automotive masochist, and thus I have always preferred older European cars. Not just any Euros though...we're talking JD Power's Hall of Shame: Land Rovers (including a '68 IIa), old Saabs, old BMWs, that sort of thing. I love tinkering, DIYing, all of it. A Saturday morning spent replacing ball joints on my wife's 9-5 wagon was heaven. Leasing was always out of the question. What fun is that? Then...we had kids. Not only did the economics of a 13 year old 5 series no longer make sense, but time became a big issue. Replacing ball joints was no longer as much fun when I could be collecting leaves with my daughter. Leasing fits my needs at this point. I leased a new, no-worries car (manual Accord) for a pittance ($169/month, $830 down inclusive of all fees). It's a great commuter, I can fit the family in it when necessary, and I can just give it back in 3 years. And I'll never have to change the struts. When the kids get older and my wife goes back to work, I can revisit my sickness. There's a small shop on the way to work that has a TVR for sale...
Back in the mid-2000's, you could only get the 'musical three' vehicles bargained down to the 10k range. The Accent, Aveo and Rio.
Then things started to change in 2008. The Cobalt became heavily discounted. Nissan started to aggressively price the Versa's low-end trims. Even the Yaris, Focus and Lancer started to come plummeting down to the 12k range. Throw in the PT Cruiser and Caliber being utter sales flops and there were nearly a dozen vehicles that were slugging it out in the cheap side of the market.
Now everyone is vacating that side of the market... at least on paper. The Cruze and Fiesta are going upscale. The Yaris now starts at 13k and looks to be well established with those folks who can't ante up for the Corolla. Mitsubishi is limiting production and Suzuki is as well.
Long story short...
A close out Cobalt, Accent, Rio, Aveo or Versa may be the way to go these days for a new car 'keeper' ont he cheap side. The Cobalt deal I saw seemed to be the best one out there but I would put the Versa on the list as well. The other three just aren't that competitive. Hmmm... maybe a Yaris demo model if you can fine one.