Suckers come in all shapes and sizes.

They can be a young guy with college loans in his mid-20′s who is charged $800+ for a $100 repair. Or an elderly couple on a fixed income who is encouraged to sign on the dotted line with a malevolent seller.

Every single American has probably been a sucker at some point in their lives when it comes to cars. Young, old, smart, not so smart, confident, fearful… and in all cases, struggling with the unfamiliar. Our society is not one that de-fangs the predators or educates the victims. It is a debtful and litigious one that encourages money to be thrown into every which direction but personal accountability.

Or does it? Frugality is supposedly the in thing these days… and cars are now kept longer than ever. As a life long debt hater, I would like to think that there are far fewer suckers than before. Especially when it comes to cars.

But the numbers tell me otherwise.

This recession has yielded some unusual results in two industries that reflect the lack of change within the American automotive lifestyle. Take a look at this graph for instance.

Autozone is the largest auto parts retailer in the United States. Not to be outdone by a long list of other competitors. It has been a bellweather of success along with many of the other publicly traded auto parts retailers during this recession. Since 2008 this market segment has yielded a 125% return vs. the S&P 500 index.

So should we all just toss in our proverbial ponchos of stock portfolios and start chasing after companies that embrace Americas newfound penchant for frugality? Not quite yet. Any investment we do in life has to require far more than a few blips worth of data.

The idea of buying a parts retailer may be lucrative to the ‘keepers’ amongst us who believe in investing in our cars for the long haul. But the three most dominant and successful auto parts retailers have only seen annual revenue growth of 4% to 7% over the last five years (Click symbols: AAP, AZO, GPC.)

Without going too deep into the rabbit hole of data, success in the auto parts business has more to do with managing inventory and costs than the sudden enlightment of the general public.

As far as it pains me to say it, most Americans are not pursuing the path to wisdom at all. At least as it relates to cars. In fact everything on the wholesale side of the world points to a public that is increasingly dependent on barnacle levels of debt for their roadside freedom.

Go to page 18 of the 2012 Data Source Book for Used Car News and you will see the nasty reality of a ‘sucker’ infested marketplace. According to Experian Automotive, loans for used cars that are for 60 months or less are becoming far fewer in number.  In their place are 5+ year loans. The 61 to 72 month term is now the most common one in the United States with loans beyond 72 months up a startling 41.1% just in the last year (see page 18).

There are now more auto loans for used cars that are six years and longer, than those that are three years or less.

The average term has gone up (page 17). The average payment has only declined for the most creditworthy (see page 16). While those who are the most credit challenged are putting nearly 15% less of a down payment since 2008 ($959 down in 2011 vs $1130 down in 2008, see page 23).

From these numbers, it appears like a lot of folks are going to be bordering on the broke for a very long time. But it gets worse. Far, far worse for the unfortunate among us who happen to live from paycheck to pawn debt.

For more Americans than ever before, the cycle of ‘debt to equity’ has become a ‘debt to debt’ trap. That will be shown in detail come Wednesday. But for now let me ask you a question. How can we reduce the number of suckers in our society? Jokes are welcome as always. But serious answers would be even better.

Everybody believes they know what a beater is.

“My old 10 year old Chevy Cavalier is a real beater!”, they may remark in some self-affirming way. “Why it’s old and it has 120k miles, and the paint is faded… and…”, they will continue to go through the list on the mistaken belief that any car made in the late Clinton to Bush era is a beater. They’re not. At least not quite yet. Any car that can be scanned or diagnosed with a conventional OBDII scanner is not a beater.

Then there is the modern day Yuppie beater. “I have a late 90′s Mercedes E-Class that’s a true beater!” Never mind that the car would fit in at any country club if the owner bothered to give it a good detail.

In my humble opinion, these types of cars are not beaters at all. What qualifies? Well let’s go through the list shall we?

The ‘E’ Factor: As in embarassment. A true beater will always have a degree of social stigma attached to it. As in, “Did you see that crappy car that Flo the crackhead waitress drives? What a beater!” If your car blends in with the scenery of drivers, it’s not a beater. Only when a car sticks out in ‘that way’ does it qualify. Ten points.

Daily Driver: If you don’t use it as a daily driver no dice. Some may call it an antique. Others may call it junque. Either way it has to stay on the road to be a true beater. Five points.

Dents Don’t Matter: If hitting another object that is made out of steel does not require even a glance at the damage, five points.

Orphan Brand: Oldsmobile, Saturns, Pontiacs, Plymouth, Saabs and Hummers all get one point. Actually, they have to be at least 17 years old which eliminates all Hummers and most any Saab that is still in good running condition. Five points are given if your beater brand was last sold prior to 1995, and ten points if it was before 1985. Five if it’s French or Italian. Ten for British. Fifteen for Eastern Europe. Twenty for a Russian brand.

Old Enough To Drive Itself: Five points if it passes this test and is a daily driver. Prestige brands should be of legal drinking age except for Jaguars which automatically qualify once they hit their teenage years.

Beer Bellies And Soggy Bottom Boys: Is your car’s suspension so bad that it has its “pants on the ground”? Do the shocks or struts make moaning or groaning sounds akin to a mechanical orgy? Does your car truly bottom out when hitting large potholes or small furry woodland creatures? 10 points for you!

Primer: Forget about faded paint. Are portions of your paint job down to primer? That’s another five points.

Four Speed Stick / 3 Speed Auto: Five points for either one. Five additional points are also given if you can no longer use one of the gears.

The Technicolor Dream Coat Paint Job: Does your car come in at least three different shades of the same color? Or two very bad off colors? Five points for you!

Doors: Do they work? Five points for each door that doesn’t open.

Windows: Five points for each crank window that does not open. Five additional point if you use a garbage or plastic in place of a window. Ten points if it’s the rear glass.

Big Old Detroit Iron: No we’re not talking about the custom ghetto blaster with big wheels, and stripes, and looks like a big rolling Tylenol. Thugmobiles don’t count. Grandma’s little traffic helper does. Five points if your car was owned and driven by the wiser among us. Ten points if it was the last car driven by both beloved grandparents.

Ol’ Redneck Truck: You know it when you see it. Extra five points given if the seats are vinyl. An additional five points if it has no muffler. five points more if the horn no longer works due to overuse. On second thought this criteria also applies to cars. Ten points if the bed has holes, and ten points more if the floorboard has holes.

The ‘Memories’ Car: Has a random stranger come to you and waxed eloquently about all the joy your model gave them back in the day? Ten points if this has happened to you and your car hits at least three of the above categories.

The Followed Car: Is your car so nasty looking that the police start following you around the neighborhood? If this has happened at least five times, then five points for you.

The ‘What is That?’ Car: If folks out there have asked you that question at least three times, that’s five points. Five times or more? 10 points.

The Scrapper Saver: If your car was meant for the crusher at least once in it’s life, that’s 10 points.

The Duct Tape, Thumbtacked, Staple Gunned Car: 5 points for each one of these substances. 10 points if the duct tape is used to hold together or replace a vinyl roof.  Wire hanger holding the muffler up? An extra 5 points.

Thirteen Inch Wheels: If your replacement tires are the proverbial advertised specials you see in the circulars, 5 points. A smaller size is 10 points. Ones that have to be special ordered because of their age and rarity are 15 points.

Bathroom Floormats: Five points for each one used in the interior. Ten points if they are used for the trunk. Fifteen points if they are permanently attached to the vinyl roof.

Broken Antenna: Five points. No more. No less.

Old School Features: Five points for those that ceased to exist by the 1990′s. Ten points for the 1980′s. Fifteen points if your car did not come equipped with a working radio, passenger side window or air conditioning.

The Steenkin’ Lincoln Factor: Is your car so menacingly ugly that people automatically give you the right of way?  Ten points!

The Mismatched Syndrome: Five points for each part on your car that came from another vehicle…  that was not the same model. Buick wheels on a Pontiac. Jetta steering column in a Golf.

Tally up your score. 50 points or more is a true beater. 25 points or more is a beater-in-training. 15 or less is plain Jane commuter in drag.

Also, if you have any other criteria you would like to add feel free to make it known. All the best!

My mom, bless her heart, used to observe the speed limits with enough zeal to make Ralph Nader blush. “Do we drive 25 miles per hour? No! We drive 20. That way we are always obeying the law!” Needless to say, I have managed to steer free and clear of her driving habits for well over 20 years.  She thinks I’m a control freak… when the truth is she’s just too damn slow.

The slow issue got me thinking about speed limits back in the bad old days of the 1980′s. Between reading various auto magazines at the back of my high school classes, I used to daydream about a better society. Not about serving your fellow man or envisioning world peace. But one where drivers like my mom would just get the hell out of my way.  One where the observance of all motoring laws would be based on reason and logic, rather than the short-term needs of a ravenous revenue seeking police state.

A beautiful driving utopia where asphalt and heavier right feet would march in unison towards a quicker commute. Where speed limits would be anywhere between 10 mph to 20 mph higher than today’s superficially low limits. Where a speed limit would indeed become a speed limit.

I realize now in the year 2012 that one man’s 65 mph remains another man’s 85 mph. But why don’t we split the difference at say, 80 mph, and have that slow driver stay to the right where they belong? Why not have those sensory deprived speeds of 25s to 30s become truly safer 35s to 40s? But then have them be limits?

There are obviously a very long line of impediments that would get in the way of it. Insurance companies. Glorified public service organizations. The burdensome thousands of police traps that already dot our fair land. Not to mention my own mother. Maybe even your mother too.

But what if? What if we could have speed limits that encouraged a healthier respect for all the laws within our country? Would such a place be a libertarian paradise? Or would it just be a mild enhancement of today’s driving world where thousands of officers still spend a disproportionate amount of their time on the road?

Today’s question is two-fold, and not easy. Should speed limits be raised upwards and become true limits, and who should set them?

Ah, the good old days. When  a young Kadett could be crude and lewd. A Chevette Scooter could exemplify 14th floor parsimony with it’s cardboard cutouts,  and the Yugo was justifiably bombed out of existence.

A bad car was a known commodity back then. But what about now?

Everyone cribs each others specs and suppliers these days and the results are… well… middling.

For example, is the 2012 Kia Rio a bad car? Jack Baruth says, “Hell No!“. Motor Trend says something in the lines of “B-Class Economy Just Got Better!” and then puts it dead last in a recent comparo (along with putting the Hyundai Accent first.)

Who is right? Who is wrong?

I don’t know. From what I see at the auto auctions,  it’s been quite a while since North America was truly exposed to a bad car. But when? It could have been the early 2000′s. Or perhaps the early 90′s when a Peugeot 505 and a four door Saab 900 could celebrate their birthdays together in the very same dealership.

One of the funniest comments I ever heard at an auction came was when an old Hyundai Scoupe went through the auction block and the auctioneer said, “This was the shittiest car ever made until they came out with the Daewoo!” He may have been right that day. Fired… but right.

So what was the last bad car sold in the United States? Does the Aveo deserve to be treated as an inferior to a 15 year old Honda? Did the Daewoo Lanos (and the hands of fate) automatically merit Daewoo’s demise? Or do we have to go further back in time? What says you?

From the good old days of 2007…

“Is that yours?” Millions of car buyers spend billions of dollars hoping that this statement will be born of admiration rather than pity. When these words come out of a car dealer’s mouth at trade-in time, they can be especially hurtful– even if the salesman is as honest as their spiel is long. That’s the moment when most car buyers finally discover whether or not their automotive “investment” has walked off a cliff and fallen into the financial abyss known as depreciation.

Here’s how to avoid the freefall.

It simply can’t be stressed enough. Depreciation is the mother of all automotive operating costs. Even if gas soars to four bucks a gallon, depreciation STILL represents the biggest hit to the car owner’s wallet.

To wit: The average cost for a new car in these great United States currently hovers around $30k. After seven to eight years–  still a few years less than the ever-increasing average amount of time American new car buyers hold onto their whips– the car’s owner will be looking at a depreciation rate somewhere between 65 percent and 85 percent.

In other words, come trade-in time, they’re facing an average loss between $19,500 and $25,500. That’s before any considering of the “opportunity cost” (i.e. money lost by NOT investing the cash in a house/money market/alpaca farm). Or inflation.

Bottom line: if you want to avoid depreciation, forget about buying a new car… or even a near-new car.  Yes, a new car offers warranty-related peace of mind and late model vehicles can be purchased as certified pre-owned models. . But it’s an extremely expensive security blanket. A carefully-selected used car may need repairs. But in most cases, repairs of those expenses still cost a lot less than depreciation.

If you’re willing to forgo that new(ish) car smell, figuring-out your buying pattern is the next step. There are two basic buying types: Keepers (keep cars for the long haul) and Traders (trade them in after a few years).

Many Keepers are ready, willing and able to enjoy a vehicle for well over a decade. “Keepers” believe their car should be a cruising companion until the point where the perceived risk of owning it (usually the cash outlay for major repairs) outweighs the fact that ownership itself eventually costs them nothing/virtually nothing.

In the automotive world they are what we call “married.”

The key to being a successful Keeper: marry genuine quality, not reputation. Say what you will about “import bigots” and brand loyalty. The automotive market is a place where perceived reputation translates into dollars and cents.

Toyotas and Hondas routinely receive price premiums– even though many of their products fall far short in value and performance as compared to their peers. By the same token, overlooked or unloved models represent an excellent way to keep the hounds of depreciation at bay.

In most cases, car buyers get more bang for their buck (power, features, etc.), lower up-front costs, and lower depreciation costs simply by buying a used example of a less well known/accepted car. Mitsubishi, Suzuki, Buick– there are plenty of brands that sell excellent products that simply fail to capture the public imagination. The fact that these cars take a huge initial hit on depreciation works entirely in your favor, both buying and selling.

For example, if you’re looking at a midsized commuter, a 2004 Buick Century or 2004 Oldsmobile Bravada, both of which finished first in J.D. Power’s dependability study and received strong ownership ratings, will cost thousands less to purchase than a comparable Camry, Accord or Pilot. Remember: badge snobs must pay for the privilege.

The Trader is a different animal. They are looking at a shorter time horizon than the Keeper. They require a different strategy.

To avoid depreciation, Traders are best off buying a carefully vetted seven to nine-year-old car of their choice. At that point, depreciation has exacted the majority of its revenge.

With due diligence, Traders can get a superb return on their money. The average seven-year-old car kept for two years experiences minimal depreciation (20 percent or so). The average nine-year-old car experiences even less, and so on. It’s a simple but highly effective buying pattern.

And then there is the Sage. The Sage can buy nearly anything and make a buck at it. Yours truly has enjoyed hundreds of vehicles over the last few years– and it’s only taken huge chunks of my free time to do it. Mechanics, auto auctioneers, wholesalers, retailers and hobbyists will always have an edge when it comes to depreciation costs. We know what’s hot, and we know plenty of people who appreciate hotness.

Again, wisdom comes at a cost. Sages don’t pay for depreciation (much), but their insight requires years of hard work, money (mistakes are never free) and a feel for the auto biz’ cycles of fashion and fame.

Whether you’re a Keeper, Trader or Sage, remember: a car is an expense. It may excite you or be a daily nuisance, but it is still an expense. By minimizing depreciation you will avoid the single largest cost in the process. With that money you can save the world, buy groceries or save up for your next car.

I remember looking at the then brand new Ford Five Hundred and thinking to myself, “This would make one heck of a Volvo.”

Like the Volvos of yore this Ford offered a squarish conservative appearance. A high seating position which Volvo’s ‘safety oriented’ customers would have appreciated. Toss in a cavernous interior that had all the potential for a near-luxury family car, or even a wagon, and this car looked more ‘Volvo’ than ‘Ford’ to me with each passing day.

Something had to be done…

Hmmm… why not subtract ‘twenty’ from the Five Hundred name. Call it a 480, and put in a nice classic Volvo styled fascia on the front end. Throw in an interior inspired by the best of Swedish design and, Voila! Ford would have offered a Volvo that would have hit the square peg of the brand’s main customers… and maybe even a few others who were considering an upscale Camry or a Lexus ES.

Sadly Ford never made a Volvo version of the Five Hundred, or the Flex for that matter. Instead they mis-balanced the diverging priorities of competing simultaneously with BMW (S40′s, C30′s, S60′s) and conservative middle-aged Americans who valued luxury transport over driving dynamics (Xc90, XC60, C70).  The brand became a disaster.

I am starting to see the same ingredients mixed into other brands these days. Take for instance Scion.

Yes this brand will get a nice pop and halo in the form of the upcoming FR-S. Then again, halo sports cars that are shared with other brands tend to be short-lived. Just ask Pontiac and Saturn about the Solstice and the Sky.

So what would be the perfect car to put into Scion’s kinship?

Two years ago I would have strongly argued for making the CT200h a Scion. It didn’t have the luxury trappings of a Lexus. However it offered tons of sporting character and attracted the type of youthful and educated audience that Scion sorely needed at that point.

You know. The type of people that quickly walked away from Scion after they started marketing bloated SUV-like compacts that should have been marketed as… Toyotas… or Volvos. Who knows.

Wait a second. YOU know!

A lot of potentially great cars over the years have been marketed to the wrong brands for the wrong reasons.  So I ask the B&B, “What cars were given the wrong brand, and where should they have gone?”.

Like most marketing classes in modern day MBA-land there are no right answers. Just SWAG’s and opinions. Feel free to demote a Cadillac to a Chevy if you must. So long as you can defend it, let’s hear it.

I drive about 200 hundred cars every year. Some go 0 to 60 in about 6 seconds flat… others take as long as 10 or 12 seconds. Even the slowest of these cars are amazingly fun to drive when you are in the right place and time. As for the fastest? Well they offer sport and convenience, and more opportunities to feel a Baruthian thrust.

There was a time when acceleration truly sucked. The late-70’s to late-80’s was an era laden with double nickels, turbo lag, and enough environmental regulations to make Ralph Nader jump for joy.

Then things changed. A plebian Camry with a mere 91 horsepower back in the Reagan era, now offers 268. The 1995 Dodge Neon completely obliterated the horspower rankings back in its release with 150 horsepower (and a 0 to 60 time in the mid-7’s). That was about double versus  the average a decade ago.

In today’s market everything well short of a the defunct Aveo can go pretty fast. Even diesels. Now that we’re at a point where most everything can go ‘pretty fast’, does acceleration have any major importance? I’m sure that tomorrow’s engineers of  muscle cars and other performance vehicles will always have an eye on the spec sheet. But what about Hyundais, Camcords, and other mainstream vehicles that are mainly used for commuting?

Should new car reviewers emphasize the interiors and the multimedia features more than ‘acceleration’?  Do 0 to 60 times really matter? What says you?

But there are thousands of used car sales managers that see nothing but big losses on much of their inventory at this time of year. The green Hummer that seemed like such a great deal back in red-hot June may be molderizing at the back of the lot by November. Same goes for the trade-in’s that were valued perhaps a bit too strong… just so the deal on the new car could get done.

This is usually a great time to buy. But not always.

Here are some of my most recent purchases:

• 1993 Lexus LS400 (Auto, Leather, 180k $725)
• 1996 Chevy Camaro (5-speed, V6, Leather, Black, Large Spolier, $1815)
• 1998 Lincoln Navigator (Auto, Leather, 190k $1815)
• 1998 Lincoln Town Car (Auto Leather, 176k, $1525)
• 1998 Mercedes E320 Wagon (MB Tex, Records, 166k, $2725)
• 1998 Ford Explorer XLT (Auto, Leather, 140k, $575)
• 1999 Toyota Camry CE (Auto, Cloth, Inop, $500)
• 1999 Dodge Caravan (Gov’t Vehicle, 109k, 3.0L V6, $590)
• 1999 Cadillac Escalade (Auto Leather, 212k, $2450)
• 2002 Saturn SL2 (Auto, Silver, Power Pkg, 104k, $900)
• 2002 Chevy Tracker (Auto, 4WD, V6, ZR2 model $2315)
• 2003 Saturn Ion Coupe (Auto, Side Graphics, 120k, $2815)
• 2003 Cadillac Seville SLS (Leather, Dealer Records, 125k, $2015)
• 2005 Chevy Malibu Maxx (Auto, V6, 115k, $3670)
• 2005 Ford Freestyle SE (Leather, 149k, $3170)

This is quite a list… and it reflects a few buying realities for the author. From the beginning you’ll notice that I avoid most older European vehicles and buy a bit heavy on the domestics. I also tend to stay under $3500 due to lower down payments ($500 to $1000) and favor vehicles that have leather interiors.
This is all purely intentional. Let’s look at the European side of the ledger first, or the lack thereof.

The European Sleds

Saabs, Jaguars, and VWs tend to be problematic at these lower price ranges, while Audi’s, BMW’s, Land Rovers and Mercs are usually far, far worse. When I was a ‘cash’ dealer I simply looked at the ownership histories and bought the ones that had the best combination of dealer maintenance and low wear regardless of the brand.

However when you finance a vehicle, you have to pay special attention towards getting vehicles that can withstand abuse and neglect. Not to mention having reasonable cost of repairs. In my experiences, most European models from the late 90’s and early 2000’s will become buggy high maintenance bastards. So I avoid them like the plague.

When I (rarely) buy one of the brands above, it will usually be a wagon model that has a very strong dealer maintenance history. Larger wagons in particular tend to have less abusive and more affluent owners. In days of yore, Volvos in particular lived up to this standard.

Volvos: Then and Now

Volvos used to be my absolute favorite for this ‘conservative’ combination. In fact Volvos and Subarus tended to make up nearly a quarter of what I sold when I first started. But the ETM issues of 1999-2002 combined with the transmission and electrical issues of more recent Volvos makes them far more chancy than in times past.

Sometimes making the wrong maintenance recommendations (lifetime transmission fluid) or chronic electrical and software issues can kill a brand. That’s Volvo in a nutshell.

The Second-Tiers: Why old Kias will never be like Hyundais

I am far more liberal when it comes to the domestics, Korean (except Kia until the most recent models), and the Japanese (except Mitsubishi, Suzuki, Isuzu, and certain Mazda models). The brands that I put in the proverbial parentheses I do buy… but just not in as large quantities as everything else.

To be blunt, most of these models I buy in smaller quantities because they have trouble selling and making the note. Weak trannies, a propensity for oil leaks, abysmal quality levels and an orientation towards ‘cheap’ low end trim makes these brands proverbial paperweights at the low end side of the range. As the old saying goes at the auctions, “Everyone wants a great deal on an eight year old Kia… until they actually drive one.”

One brief little story related to Kias. The funniest thing I ever saw at an auction came from an auctioneer who had always managed to get himself deep-sixed for shooting his mouth off at just the wrong time. Upon seeing a Kia rolling up to the block he bellowed out, “This was the shittiest car in America until they made the Daewoo!” Needless to say the seller flew into a rage and his time on the block didn’t last very long.

Domestics: Most GM and Fords, A Few Chryslers

The domestics pretty much fare down this way…

1) Rear wheel drive is more durable than front wheel drive
2) The bigger the engine, the greater the opportunity for longevity (Northstars and ealrier Chrysler 4.7’s are notable exceptions)
3) Certain powertrain combinations for FWD models will be near bulletproof, while others for the same exact model will be borderline garbage. (i.e. Tauruses, Grand Prixs, Luminas, Intrepids)
4) Never finance a domestic with a CVT. Always, always make those cash deals
5) The prior owner is the ‘pitcher’. Your job as a buyer is to inspect the vehicle, find out the type of owner they were, and why the vehicle wound up at the auction.
6) Older owners tend to be less abusive than younger owners.
7) Trade-in’s and repos tend to be the most abused. But that doesn’t mean you can’t buy a good one.
8) A well-kept leather interior is a big plus. Most consumers do research… and then buy with their eyes.
9) Orphan brands only sit longer when they’re ugly (Saturn L-Series, Olds Bravada, etc.)
10) If you can’t bother with giving a trade-in a good wash & vac, don’t even keep it at your lot. See #8 and ‘broom it’ at an auction.

Japanese Models: Why do the good become bad?

Japanese models come in two tiers. Toyota, Honda, Nissan (some models) and Subaru are in the higher tier. Why? Because they almost always sell for more money, wholesale and retail.

It doesn’t matter if the vehicle had engine sludge, or transmission issues, or a blown head gasket in the past. It doesn’t matter if the car is as new as the day the two ‘parts cars’ met and decided to kiss on their first and only date. The fact that this ‘new’ used car has the right name on it’s grille makes it highly attractive to the buying public. Same goes for Hyundai.

As I mentioned earlier I used to buy a lot of Subarus. But that changed around 2007 and now I buy no more than a few a year.

The same is true for the other brands and their more luxurious namesakes. 9 times out of 10 they will go for stiff price premiums at the auctions, and due to the lack of used car inventory at the sales, you’re likely getting a mediocre product at a premium price. At least when it comes to the lower end of the market ($3500 or less wholesale).

The other Japanese brands are seond tiers that are just hard to sell. A few models may go for premiums (Evo, Mazda 3, Mazda 5, etc) but those are simply not the ones you find on the lower end. Aerio, Reno, Verona, 626, Millenia, Rodeo, and Galants are far more common at the sales. If they have a nice upscale interior and a good maintenance history I will put them on my list.

The Bubble Market: Wall Street’s Next Rendezvous

Ironically, these same brands tend to sell well for the higher end buy-here pay-here lots that are looking for the newest vehicles. Why? Because they offer steep levels of depreciation along with healthy NADA values if they happen to be late models (2007 and newer).

Most folks are clueless about cars. A thick slice of them just want a late model vehicle at a monthly payment they can afford. Even if it’s for the next five to seven years. Then more times than not, they repeat the cycle.

Dealers who specialize in financing a bad credit customer with a late model vehicle will usually sell the paper to finance companies after a given time period. It will then be resold to a financial firm that doesn’t know any better, or will be kept if the assets and customers are perceived as less risky.

The Game… and how not to play it…

Thanks to the declining fortunes of the middle-class, there is a lot of money in this game. Sales at buy-here pay-here dealerships are up by more than 50% from only five years ago and the dirty secret of the modern day is that even the best names in the business now make their money by attracting the hard to finance customer to their ‘superstores’.

So for those of you in the market for a car… please do yourselves a big favor. Don’t buy a name. Don’t buy a low price. Don’t buy anything based on words… especially from a dealer who exchanges ‘convenience’ for a high sales price.

Buy the prior owner. Drive what you enjoy. Look at the history. Have it independently inspected, and then keep it up so that you don’t have to suffer the slings and arrows of outrageous sub-prime misfortunes. My series on buying a used car should help. Good luck!
.

Every car at an auto auction is a failure. Well, maybe not the 4Runner that Bertel and Ed saw with me that had 459,000 miles (it sold for $1800 by the way). But there always comes a time or a point where an owner will say, “Enough!” and proceed to accept a wholesale price for a retail vehicle.

There are many reasons for failure… and here are some of the most common ones I find at the auctions…

Demographic Failure: Once upon a time the United States sold over a million minivans every single year. They were the quintessential American vehicle for nearly two decades. Space. Comfort.  Wonderful real world hauling capability. The baby boomers quickly found that minivans could take care of 90+% of their needs in modern day suburbia.

But then the kids moved off to college… and mom and dad found something else.  Anything BUT a minivan in most cases. In the meantime the auctions became absolutely loaded with these models.

So if you are looking for a cheap hauler these days  you can forget pickups or SUV’s.  Even tree hauling companies are now using minivans thanks to the aging baby boomers and the former big three dumping their unloved models to the rental fleets for  years on end.

Mechanical Failure: Sometimes automakers create utter crap… and then hide behind an army of lawyers once the warranty expires. Is it a fair thing? Well, one thing I can tell you is that these vehicles will spend years on end at the auctions seeking another idealist who is willing to machine 32 valves or rebuild a CVT.

The rebuilding process for the nastiest stuff rarely works. However I have seen a lot of vehicles get the automotive equivalent of a sex change. The Jaguar that gets a 350 V8 under the hood. A Saturn Vue whose automatic gets replaced with a manual. The Dodge Intrepid with the 2.7 Liter that gets recycled into Chinese beer cans. You get the idea.

Overproduction Failure: It could have been GM’s need to make surplus Metros and Cobalts to satisfy CAFE requirements. Honda may have found irrational exuberance when it came to producing the Insight and CR-Z, not to mention Chrysler’s maniacal stocking of Crossfires, Stratuses or Sebrings during the mid-2000′s.

Sometimes it’s not even a channel stuffing game… but a finance game.  Mitsubishi’s decision to offer 0 down and 0 payments until the next year for every crack whore that found one of their dealerships was a legendary example of this.

I won’t name any names (except for the Aveo, Sentra, and Caliber) but some automakers still find themselves pressing the production circuit a few too many times for reasons other than popularity. Those models wind up selling for lower prices at the auctions.

There are dozens of ‘failures’ out there at the auctions.  Substandard repairs. Electrical issues. A bad owner. A car that simply got lost in the shuffle due to a lack of market awareness.

But before I go to my fifth auction this week, I have to ask you, the Best & Brightest a quick question. At what point did you consider your once prized ride a ‘failure’?  The last failure I had was a daily driver that I simply didn’t have time to drive anymore. It was a Camry… a boring two door refrigerator… and now someone is still driving it with over 300k miles. Minus a 200,000 mile rollback. No doubt courtesy of the ‘exporter’ who bought that 4Runner.

Click here to view the embedded video.

How many of you have ever eaten horse chow? What? You don’t know what it is? Well it’s made out of four key ingredients. Oats, olive oil, honey and a bit of peanut butter added if you want extra richness. It’s the basic original granola and for the last fifteen years it has encompassed most of my breakfasts. Sounds healthy and a bit dull on paper. But it’s surprisingly good to eat.

Which brings me to a related question about our cars. What we can do to and for our own vehicles to keep them healthy and running strong?

1) Keep maintenance regular

We can go to great lengths and debate the ‘when’ until the cows come home. However this site does a great job of sorting all this out. And besides I’ve covered this before.

2) Start slow

You probably don’t like to do sprints as soon as you wake up in the morning. Depending on what you did the night before, you may have to. But it’s always better to start slow and get into your groove when you wake up.

The same is true for cars. They need to get their own oils flowing until they get warmed up. Once the coolant temp gets to its regular point you can feel free to rev away.

Then again, you may not want to practice any Baruthian thrusts if longevity is your goal . Driving slowly from stops and coasting coming to stops will save a lot of wear and tear on your car. It will also help you keep your money in mediocre investments instead of involuntarily donating it to a repair shop.

3) Buy quality

I always try to find dealer queens at the auctions. It doesn’t matter if the vehicle in question is a common Camry or a dodo like Suzuki X-90. Well maintained cars always make me money and a car with OEM dealer parts is always the easiest to finance.

But don’t go to the dealer for parts if you can help it. Simply stick with what the enthusiast forums say. The cost to buying it yourself versus going to the dealer is usually about half.

Tires should also be decided on by actual owners. A site like Tire Rack can give great insights to what’s good and what’s junk when it comes to tires.

Always pay for good tires. It saves on gas. Improves ride comfort and results in less wear on your suspension. If you want to be cheap… just buy them when they’re on sale.

 4) Keep it clean! 

There is a point when your automotive VIP will turn into a  POS. Usually it happens soon after you stop giving a flip about how it looks. A car wash once a month and a wax once a year is all most vehicles need.

If you’re a ‘keeper’ type, you may also want to consider cleaning up the little dings and dents that have come along the way. If the paint is faded and the dents are numerous it may be worthwhile to get a $500 paint job and some PDR (paintless dent repair) for another few hundred. Most folks won’t want to do this and to be honest, I can hardly blame them. A little beater in a well kept car never hurts too much. But if you’re planning on keeping it for another ten years you should consider it.

What always adds dividends is taking care of the interior. Look at it this way. You probably spend more time sitting and looking at your car from the inside than you do from the outside.

Using vacuums and wipes is pretty straight forward. But if your seat stitching is starting to tear, see if a nearby upholstery shop can mend it. Once a seat wears beyond repair it’s usually given seat covers. If that happens buy something nice. Go on Ebay, shop around, and find a cover that can last as long as the car.

  5) Enjoy the great indoors.

Do you have too much stuff in your garage? Then hold a yard sale. Use freecycle. Donate your unwanted legacies to a good cause. But keep the vehicle that cost you a healthy five figured sum inside of that garage.

Human skin doesn’t wear well in the sun. Neither do most paint polymers. You can get a car cover if you don’t have a garage but 98+% of folks who park their vehicles outside don’t ever bother with one.

If you must park outside and don’t want to deal with a cover, then just get it waxed twice a year; spring and fall. Make sure you pay extra attention to the roof, hood and top of the trunk since they get plenty of extra sun exposure.

Do all these things and your car will more than likely outlast the Euro. All the best!

It was Tamara’s first new car. A 2003 Saturn VUE AWD with a 4-cylinder and all the options. Out the door at $25,000.  Overjoyed to have finally afforded her very own new car, Tamara splurged and spoiled it. Saturn seat covers soon adorned the interior and a chrome grille guard was added to give her cute zonker yellow ride a bit more gravitas. The Vue would be her absolute pride and joy for the next seven years.

Until it died. Seven years, two transmissions and only 69k miles, Tamara got fed up with being one of many victims of an under-engineered CVT. Besides she couldn’t afford the $5000+ bill.

Yet she wasn’t alone. Far from it. Tamara is just one of thousands of folks who have been given the stiff arm by a manufacturer. All the major manufacturers do this to a degree and no, it’s not because they are evil and uncaring. You have to draw a line somewhere.

GM offered purchasers of their new VUE’s with the defective CVT’s a $5000 rebate towards a new vehicle… or 50% of the cost of a new tranny. It was good for 5 years or 75,000 miles, and there were many occasions where GM would go beyond that warranty.

Was that enough? Most owners would say no. Even in the dog days of the 1970’s a vehicle was expected to last longer than that. GM’s profit margins on these vehicles would likely tell a different story. On a purely personal note, it seems ridiculous that any well kept transmission shouldn’t last at least 10 years and 150k miles these days.

But there are a lot of exceptions to this rule.

Honda extended their CVT warranty to 8 years and 80,000 miles on the 1st generation Honda Civic hybrid which weighs about 2700 pounds. However the 1st generation Insight (2000 – 2004 models) with the exact same C VTtransmission and 900 fewer pounds gets a 10 year / 157,000 mile warranty.

Guess which one has the stronger enthusiast community?

Nissan extended their CVT warranty to 10 years and 120,000 miles on seven different models built between 2003 and 2010. Yet Chrysler who uses the same sourced transmission has not offered any warranty extension.

Volvo provided a 10 year / 200,000 mile warranty on thousands of defective Electronic Throttle Modules that were built between1999 through 2002. However Volvo also saw fit to not offer an extended warranty on their Aisin-Warner and GM 5-speed automatic transmissions that had high failure rates on their Volvo V70’s, XC70’s, and XC90’s. Those only get 5 years and 60,000 miles.

Toyota experienced engine sludge issues on ten models built between 1997 and 2002. After a long legal fight they settled on offering full compensation for new owners who had the issues occur within 8 years and unlimited miles.

Ford developed a V platform for their Ford Windstar, Ford Freestar and Mercury Monterey that used a highly unreliable 4F50N transmission. No warranty extension on them from the 3 year / 36,000 mile warranty. But Ford has recalled the Windstar for safety related rust issues as has Toyota.

In short every manufacturer has issues and deals with them in ways that reflect their core beliefs. When it comes to safety nearly everyone covers the well-being of the customer. Powertrain and electronics issues? It depends.

Whenever I see someone shift from reverse to drive on an automatic without breaking, I wince. I’m sure I’m not the only one who feels that way. As a dealer few things tick me off more than experiencing some loudmouth schmuck who ragged out a creme puff and then demands money for their abuse and neglect.

There are a lot more folks out there who fit that description than today’s media will ever admit to.

In the coming years you’re going to see an amazing array of new electronics systems and advanced powertrains. Cars should be more reliable than ever… but they also will likely become more  expensive to repair as well.  The line of expectations between what ‘should’ last and what ‘does’ last will continue to blur for customers and manufacturers.

So who should hold the mantle of responsibility? Is it sane for a manufacturer to offer only 36,000 miles of warranty coverage in an industry where cars are routinely expected to last 5 to 7 times longer? Should the free market rule? Or should the government intercede in cases when defect levels go beyond the pale?

It’s very hard to draw that line. Just ask Tamara.

Counties, cities, municipalities and parishes throughout the country get rid of their surplus government cheese through auctions. Police cars, fire trucks, commercial lawn mowers, dump trucks, confiscated merchandise, and most everything you can find inside a modern office are available for bidding.

The trick is to know when to bid enough.

Your success in large part depends on two things. The first is experience. Do you know what to look for when buying a Kubota Box Blade? Do you even know what one is? As someone who has been a part of thousands of auctions as both a buyer, seller, and member of the auction staff… I see tons of people buy ‘stuff’ that they simply know nothing about.

Why? Because they get caught up in the moment. They see a tractor they always wanted and decide that the seductive auction chant asking for a seductively low number is all the influence they need to make a bad decision. There is a ‘mob mentality’ that goes with nearly all large public sales that makes people consider buying things that they normally wouldn’t even consider under a regular retail setting.

Therefore, start with the knowledge that the auctioneer is paid by the county. Not you. His job is to make money for the county. So if you have excessive cash flow and want to find a quick way to donate it without recourse, a county auction is a great way to do it. Just remember that you will need to find a place to store the parade gaiters and the twenty-seven printers wrapped in cellophane.

The second ingredient to your success will be something called, “asymmetric information”. You need to figure out things that other attendees simply don’t know.

Let’s say you are simply going for a specific motor vehicle. You should start by visiting the sale early during the ‘preview’ time which is the day before the sale.

Bring four things with you. A ‘heavy duty’ battery jump box, an OBDII scanner, starter fluid, and someone who can assist you with the constant testing of the vehicles. You need someone that will help you inspect the vehicles and pass the time. Preferably someone who has a healthy level of experience working on and inspecting vehicles.

Some folks will inventory each vehicle’s major defect before the sale (bad engine, trans, parts removed, salvage, biohazard). But the overwhelming majority just let the tires go flat, the batteries go dead and the history to remain a mystery. Start unraveling the mystery by putting that jump box onto the battery. Try to start it up and see what happens.

If it turns over… great! Rev it a few times to see if there is any lower engine noise or obvious issues. You may find that the vehicle has old gas in it. In which case it may idle a bit funny or die off. Don’t be too alarmed if this happens. But be persistent with trying to get it in a normal idle mode.

If it idles fine and the check engine light remains off, then do the usual things you would do when testing out a vehicle. Put it into gear. Hold the break while accelerating (emergency break helps if you’re new too this). Test out the steering gear by shuffling the wheel to either side while testing for noise, Check for obvious leaks in the engine, chocolate milk on the radiator cap (blown head gasket), check out the a/c and heat, tire tread, interior leaks, oil, coolant, and tranny fluids …you need to spend a lot of time with these vehicles to see if they’re going to be worth your money.

If you are at a sale where a lot of vehicles are listed as ‘True Miles Unknown’, don’t be concerned. The county and auction company were too damn cheap and lazy to authenticate the mileage. This isn’t much of an issue with most Ford vehicles which are analog in the first place. But I see tons of ‘TMU’ vehicles these days along with ‘salvage’ vehilce, simply because most surplus units are used as parts cars after their time on the road. Not because anything dire happened to them.

A wreck is a wreck. But don’t be too concerned about bidding on a ‘salvage’ vehicle if it’s missing the headlights and a few other minor parts. Some of my best deals came from acquiring those vehicles.

If you’re not in the market for a police interceptor, your next stop will either be a vehicle owned by a county official… or a truck.

The trucks usually have hard lives. Especially if they’re older commercial trucks. If you don’t know much about older trucks don’t bid on them. Pre-1996 trucks don’t have OBDII diagnostics to make your life easy. You would be better off renting a truck when you need one at the Home Depot.

County official vehicles are a far different story. In almost all cases you will be looking at a generic midsized car from the days when Detroit amortized out their less competitive models. The bright side is that these vehicles are often maintained quite well and don’t have near the record of stress and abuse of the former police cars.

Find the few that pass your muster. Take down the VIN’s and give a call to the government’s maintenance department. Each one will keep a record of what’s been done to a vehicle and why.
Tell them that you’re looking to buy a vehicle for your family… or to save some money long-term… and ask if there has been anything recently done to the vehicle. Some folks will actually introduce themselves to the ‘fleet manager’ a few weeks before the sale. Unless you’re dealing with a large and borderline fascist government entity, it’s usually okay to just call in, be exceptionally nice, and find out what if anything has been done to the vehicle.

Keep it to no more than a few vehicles… and you will be surprised about what you find. I’ve had police vehicle vehicles that were given brand new front suspensions AND factory engines, only to have been mothballed within a year of their replacement. You may find that the car you’re interested in was the mayor’s car. Or the financial planner’s vehicle. You may also find that the vehicle has some chronic issue that makes it a no-no nadir. Do your research and be extra nice.

Congrats! You now know more about these vehicles than 99% of the public. Good luck!

There are two extremes when it comes to minivan buyers. There are those who want all the options and knick-knack’s checked and marked for their next Mommy-mobile. Automatic dual sliding doors. DVD systems that can offer a continuous loop of ‘Barney’. Fortress like levels of safety and space combined with enough airbags and sound insulation to make even the worst of traffic a passing thought.

Then there’s the buyer for this minivan.

Rent: This is a 2006 base minivan… which means it’s loaded in a 1990’s kind of way. Power package (windows, door locks, mirrors), Cruise, Alloy Wheels, CD Player, ABS. Take it all in a short wheel base and give it an attractive red exterior… and you have an easily rentable vehicle.

Since my dealership is in a rural county, I can get a healthy premium by keeping this as a rental. $175 a week. Throw in a bit of extra mileage and this model could easily garner $800 a month.  A lot of folks have families that fly into town, and since Enterprise charges everyone $40+ for a minivan, I get a lot of their traffic.

Lease: But I am also under the gun in a way. This minivan has 122k now. So even though it has the look of a spring chicken, the powertrain says otherwise. I have no problems at the moment. I even drove it from Atlanta to NYC about a month ago and it didn’t miss a lick. It had been a Carmax vehicle. So that halo of ‘quality’ would help to finance it.

How much? A down payment of $1000 to $1500 and monthly paymennts in the $300 to $350 range. You can either put it for a 24 month term, or shorten the payments to 20 months. Keep in mind this vehicle cost me $4030 altogether. So even with a hefty down payment, it’s still going to take about nine months to break even… and a lot can happen between now and then.

Sell: The sale price? When I sell a vehicle I usually don’t ask for too much. In a business where mark-up’s are anywhere between 15% to 35% I usually try to go for the lower side of the scale. I enjoy buying cars at auctions and the more time I spend buying cars, the more I can potentially make.

So I would sell this 06’ Town & Country for $5000. The mileage hurts the price a bit. But the overall condition, colors and options for this vehicle all work in it’s favor. I could make a quick nine hundred dollar profit (after paying to advertise it) and find another minivan to take it’s spot on the lot.

Keep: If I were to keep a minivan, this would be it. Except for one minor detail. This model has no side airbags for the second row. The IIHS and NHTSA gave it poor ratings for side impacts without those airbags. So my keeping this one will be a non-starter.

But if it did? I would probably do it. I would also probably start stowing away a few extra parts. A power steering pump. Master window switch. Install a transmission cooler and give it annual drain and fills with a Mityvac. Once you are aware of a vehicle’s weaknesses you can plan accordingly and enjoy a ‘keeper’.

This one is a keeper. Just not for me. But before I give it up should I keep on renting it? A potential $800 a month payday is quite lucrative. Should I lease it to someone responsible and potentially double my return in two years? Sell it for a quick and easy $900 profit? Or keep it and let my wife enjoy the virtues of a minivan that is completed loaded…. circa Clinton Era.

Want a cheap car? Buy a minivan. Even in today’s tough market, a minivan is a tough sell. A dealer friend of mine now has over 50 minivans spread out at four different locations. Not a single one sold so far this month. Only three sold the month before. In our business we don’t call that slow. We call that, “Yikes!”

It’s as if minivans are the automotive version of leprosy. Or perhaps the 2000’s version of a station wagon. Nobody wants em’. Nobody buys em’.

But should they?

If you took a unibody pickup… enclosed it… raised the seats a few inches… gave it front wheel drive… a ton of options… upgraded the suspension for comfort… and made it look like a beached whale… you would get a minivan.

You can seat seven (or eight). Tow 3,000+ pounds (in most cases). Enclose anything you want of real value in a safe manner. Heck, you can even stow 18 open cans of soda while letting your passengers enjoy an endless array of DVD’s and headphone fed tunes. Time flies in the cocoon that is a minivan.

For moms and dads, minivans have always been the road trip version of nirvana… and for good reason.

Except no one goes on road trips anymore. At least most families have low-tailed it since gas has remained at $3.00 and change. It costs an awful lot to keep a minivan running these days. Even the good ones.

A lot of other things have changed since minivans hit their peak sales of 1.37 million buyers in 2000. Americans are older. Poorer. Millions of jobs have been lost and nearly everything seems to increase in price in ways that the government can’t seem to track. While all this has gone on, hundreds of thousands have perished in the modern version of ‘oil wars’.

For the wars? Against the wars? Doesn’t matter. Only the most politically correct of big vehicles are selling these days. Even if those vehicles are far more wasteful and poorly designed. Automakers don’t push minivans anymore. They want crossovers, CUV’s, overweight metrosexual vehicles.

Let’s face it. You can’t even call a minivan, a minivan anymore. It’s a ‘lifestyle’ vehicle. A ‘family’ vehicle. A vehicle that is so icky in it’s pop culture connotations that you can’t even speak it’s name.

The deception of what is cool when it comes to a daily driver is just a small symptom of a much bigger problem. Americans are just slowly crawling back from a morass of media fed lies, poisons, and frauds. Deficits don’t matter. Wall Street is virtuous in its greed. Politicians can solve our problems. What does all this have to with minivans? I’ll give it to you in one word, representation.

The face of America is changing… and what we buy reflects it. While many of the usual purveyors of financial whoredom are still pretending that bad things are good, (high fructose corn syrup is merely ‘corn sugar’) many more of us simply know that all this shit just sucks.

Minivans aren’t representative of a bygone era of innocence. They reflect excess, bloat, and the one thing most businesses making record profits can’t seem to offer these days… commitment. Minivans reached their peak when the pursuit of family values and upward mobility seemed to be our country’s Manifest Destiny.

Not any more… families are now embracing a leaner lifestyle not because of want, but of need.

So who ‘needs’ a minivan?

Every night before I go the an auto auction, I do a mental exercise. It involves figuring out exactly what I’m going to bid on and why. My lot is small and as a consequence, I’m very minded of what is chosen. If the vehicle you buy is bought at a great price but sits, you just screwed yourself. It’s always better to get the popular cars… unless you find something really out of left field.

Then you can get a real killer deal.

This past Monday I got really bored. All the cars at the auction were ‘sitters’. Common cars that nobody wants. Old Malibus, Stratuses and Galants. Vehicles that can easily stay on the lot for time immemorial. But then I found something strange.

It was an old 1995 Cadillac Deville. Nothing special… except the miles were only at about 110k according to the online run list. Since I had been driving around in a 2001 Deville I decided to give it a thorough going over.

The history was surprisingly good. No accidents. A long period of ownership. Dealer records. It was doubly surprising since this vehicle was going to be sold by a title pawn. Most vehicles that go through title pawns have usually been owned for three years or less. In fact I would say based on my experiences running an auto auction that the average is just a little over a year. A very abused year and change in most cases.

This one had been kept for four years prior. Not bad for a pawn car. Only one owner before then. Plus the mileage figures seemed to be a constant 7k a year since day one.

That’s unusual. Most of the time you’ll get an owner who has run the wheels off the vehicle and put it away wet at some point. 10k a year creme puffs get ridden 30k a year, and within 2 years the car is all worn but out because the last owner didn’t take care of anything.

This Cadillac had the right history even if it had the wrong seller. So why not check it out? I had fewer than 20 vehicles on my list for that evening auction. Not much at all. Most of the stuff turned out to be junk. Burnt tranny fluids. Oil leaks aplenty. Neglect. Blown heads. Truth be told this was a public auction and at those sales 90% of what’s out there is trash.

The Deville had been parked out in the back lot with the words TMU on the windshield. TMU means true miles unknown. But it wasn’t TMU at all. The auction got lazy and didn’t even bother jump starting the vehicle to find out the actual mileage.

Auctions often times will do the absolute minimum of what’s needed if the seller chooses to have it that way.

You want 30 vehicles for the evening sale? Great!

Don’t want to get any of them inspected? Fine.

No keys for cars that are perfectly fine? OK!

Everyone thinks that it is the auctions job to get a vehicle prepped up for the sale so it can bring the most money. It’s not. That is the responsibility of the seller. Title pawns in particular tend to shoot down anything that involves spending money. Even if it makes sense. So what you end up with as a buyer is a massive number of question marks amongst a sea of garbage.

That car may have been a recent mint vehicle that runs perfectly fine. Or it has a blown engine that will cost $2000 to replace. You don’t know. But once you inspect the vehicle and look at it’s history, you can put most of the pieces together.

I saw a spill on the rear floor and some minor interior wear. Engine was in great shape. The 4.9 Liter instead of the Northstar. Thank God! Nothing is guaranteed though. Only time and my risk tolerance would tell.

When it came time for the Cadillac to cross the block, it was me and only one other guy. I think the fellow must have been the repo driver for the vehicle. I saw his beady eyes fixated on the car well before it got on the block. At that point I assumed this guy had been bent on the vehicle and would put the bid well past the car’s value.

My eyes met with the auctioneers. He’s known me for over 10 years. Been over his house. Calls me ‘cousin’, and I even managed to help his son get an auction job back in the day. I flash four fingers and a fast swish motion with a fist. Translation: Put me in at $450. I then start pretending to look at the other lane so that the other bidder doesn’t think the auctioneer has money. 15 seconds later and two futile $300 bids from Mr. Beady eyes, and the Deville was mine.

Plus $125 auction fee the total came to $575. Only a few years ago that auction fee would have been $45 or $50. Now the sales screw all they can and we dealers get charged up the wazoo. No matter. I’ve been on both sides of that fence. I sign the paperwork. Pay the office… and get the keys.

Turned out to be a good car. I would also buy a Cherokee that evening. But the real story for me was the Cadillac. It had been a long time since I was heavy on the Cadillacs.

I had tried giving my parents a 99’ Deville as a thank you gift a few years back when my father pulled me aside in his brusque German accents and said, “I don’t think your mother can handle that big of a vehicle anymore. Go find a Camry.” I sold the Cadillac to a PITA buyer from Florida who quickly decided to give it 22” wheels and a gold paint treatment. I’m sure it’s either been title pawned, totaled, or the Northstar finally bit its usual big one.

Since then I have been light on Caddies. My mentor who had a ‘buy-here pay-here’ lot was a heavy buyer of the models a few years ago, and I was still a ‘cash’ dealer back then. Volvos. Subarus. Any import without a Toyonda premium that had a great history and a leather interior I was more than happy to buy.

People paid a premium for peace of mind back then. Plus new car dealerships were more interested in financing thanks in great part to the liberal lending standards of the time. It was easy to buy good product and sell it quick.

Now you just have to find good product anywhere you can get it. The usual fishing holes will often have more dealers than they will cars. It’s become a ‘funny money’ business. Everyone is trying to chase after the poor schmoe who needs to buy a ‘tote the note’ car and the auction prices reflect the groupthink and greed.

I don’t think I’ll ever get rich buying old Cadillacs. But perhaps I need to start buying more of them. They ride a lot nicer than most folks give them credit for. Plus older folks love them, and I love dealing with older customers.

Maybe I am a Cadillac Man.

“We just got cited Steve.” My wife had called me and sounded as confused as could be.

“What?”

“Something about Code 2009… I can’t read this… hold on…”

“Honey? What the hell does that mean?”

It turns out that I had been cited for a truly heinous and despicable act. Parking my own car on my own driveway. Some misguided jackass (we’ll just call her Jacqueline) had decided to inform me that my car, the Barnacle Bitch, was now a flagrant violator of the county’s brand new law.

Here is what it stated:

Cobb county code. 2009-01643 Section (134-272 (5) b & c

Parking
Vehicles may not be parked in the grass or unimproved surface between the roadway and the home’s front setback. In the R-30, R-20, R-15, R-12, RD, RA-4, RA-5 zoned districts, parking allows only one vehicle, one boat, and one recreational vehicle (or any combination of such totaling three) in the rear or side yard on a hardened surface. In the R-40, R-80, RR zoned districts, any combination of boats and recreational vehicles exceeding three must be screened from public roadways via a buffer (approved by the Cobb County Landscape Architect) or fencing. No materials, equipment or business vehicles may be stored or parked on the premises, except for one business vehicle used exclusively by the resident. A business vehicle with a manufacturer’s gross vehicle weight greater than 12,500 pounds are not allowed to be parked on residential property.

What it boiled down to was this. I could now park my car on the street, in a garage, or even at the rear or side of my yard on a ‘hardened surface’. But a driveway? A paved surface specifically designed for parking cars? No! Nein! Nyet! Not in this county, buster!

But wait… wasn’t this a ‘violation’ for two business vehicles? There had been only one there.

I called code enforcement. No response. Just an eternal hold followed by a voice mail. After three days of unreturned messages and interminal holds, I decided to get a bit more serious.

I drove to their office. It was an interesting experience to say the least. Two brand new ‘Code Enforcement’ cruisers were parked in front. Thick glass partitioned the ‘county resident’ from the ‘county official’ and surprisingly, no one was there. Or so it seemed.

I knocked on the glass. Not a sound. Not a peep. After about five minutes of waiting I opened the exit door and closed it. Not leaving. Just waiting for the obvious. Within five seconds two heads popped up.

I laughed. VERY Loud! So loud that the two hopeless drones couldn’t help but look in my direction. After a brief discussion of seniority, one rolled her eyes and went towards the front counter.

“Can I help you?’

“Yes, what does THIS mean?” I gave her the citation.

“I don’t know. Ms. Jacqueline is the one who issued it. You may want to call and leave a message.”

“I did that. You ignored it.”

“I did not ignore it!”

“Exactly who picks up those messages then?”

“Della Carver. She is in charge of this department.”

“Well, I guess I need to speak to her then.”

(another rolling of the eyes) “Hold on!”

I wait 5 minutes… 10 minutes… 15 minutes..

“Helllo!!! Wakee Wakee! THUD! THUD! THUD! I need to pick up a dead parrot before 6:00 P.M. today so would you KINDLY inform the queen of my presence!”

No response…

“OK. Then if you chose not to respond I have no choice but to sing!”

“Oh say can you see! By-y-yai-yai the dawns early light! What so PROOOUUUUD-leee…”

“Sir! She will be right with you!”

“Tell that to my dead parrot!”

A few minutes later… a new person comes to greet me.

“Hi. How can I help you.?”

“Hi there. I have just been cited for parking my own car on my own driveway.” I give her the citation.

“Oh. Hmmm… yes it is against the law to park more than one business vehicle at your property.”

But I only had one vehicle? It’s a Mercedes. It can’t be that bad! Didn’t we win the war?”

“I’m sorry?”

“The code clearly states that one business vehicle can be parked on my property. I had only one vehicle there.”

“You will need to talk to the judge about that?”

“Come again?”

“You will get a letter in the mail stating the date of your hearing.”

“That’s insane! You’re actually criminalizing me for parking my own car on my own driveway?”

It didn’t get better from there. After dealing with a “Who’s on first?” styled debate for fifteen minutes about what the law meant, I was done.

Unfortunately ‘they’ weren’t. First on the agenda? Screwing around with the evidence of course!

Dave Ramsey has done an awful lot of good in this world. Millions have been helped. Billions in debt has been eradicated forever. Plus now a lot of folks finally understand that consumer debt is little more than a barnacle of financial enslavement. When it comes to frugality and avoiding consumer spending traps, Dave Ramsey offers a lot of solid advice.

So having said that, will this article be another soulless puff piece about the virtues of Dave Ramseys methods? Hell no!. As much as I love the fact that he helps so many, I think his math is horrific and his conclusions are dead wrong. .

At least when it comes to cars.

Take a look at this ‘Drive Free, Retire Rich’ presentation and see what you think .

OK… well let’s assume for now you don’t want to. Or will do so after this article. The entire presentation is hinged on two beliefs.

A) Dave assumes we can get a 12% annual return on mutual funds. No taxation. No fees. Never. Plus if you can save that $475 a month payment… you may someday end up with $5.5 million.

This Warren Buffett article and this one by Bill Bernstein put these garbage stats to rest. The 12% annual return myth has been based on a lot of ‘nip and tuck’ investment studies that more or less espouse a belief that stocks can defy logic and grow at three to four times the annual GDP growth rate. They can’t over the long run.

I don’t care too much about the use of old financial myths. At least in 2011, most of us have already heard it all and seen the consequences of irrational exuberance.

What did get my eyebrows raised way beyond my imaginary hairline was this factoid.

B) On average, The top third of new car buyers finance a vehicle at $26,000 over 6 years and wind up paying $33,000. That means on average, one third of the vehicles you see on the street have an average monthly payment of $475 (assuming 9.6% interest).”

Really??? So 33+% of the vehicles on today’s roads are ‘recent‘ new cars that require, on average, $475 monthly payments? There is no way that can be right. Not even in Texas.

What I found out was a bit more sobering…

New car sales have cratered from their peak year of 17.4 Million in 2000 to 11.5 million in 2010. No surprise there.

In fact new car sales only made up 23% of all car sales in 2010 (36.7M Used vs. 11.5M New). Most folks in the auto industry believe that the ‘new normal’ will remain at a 12 to 13 million clip  for a while.

But let’s be generous. Let’s assume an annual rate of new car sales of 14 million over these next six years. That would make 4.67 million cars annually that get the Dave Ramsey $475 barnacle.

14 million x ⅓ of buyers = 4.67 million

Multiply the 4.67 million by 6 years for the total population of new cars still under loan, and you get 28 million. A nice round number. Finished? Not quite.

Now we need to subtract out the annual repossession rate (2010 new car repo rate is 2.2% annually) and we end up with 24.5 million.

Are we finished now? Nope. This number doesn’t factor in those new vehicles that were either stolen or totaled. 2.5 million were totaled last year out of a registered vehicle population of 246 million.

If we assume a highly optimistic 1% annual attrition rate, we wind up with only 23.6 million of these cars on the road.

So it looks like only about 9.6% of the cars on the road have these loans. Except registered vehicles are not always daily drivers. Some are tractor trailers. Others are antiques. Many more are government vehicles or commercial vehicles.

Even if 50 million of the 246 million are not daily drivers, the percentage of new vehicles with payment vs. all personal cars on the road would only come out to only 12.2%.

33.3% vs. 12.2%? That’s a lot lower than Dave Ramsey’s factoid.

Is that 12.2% correct? Probably not. I’ve crossed a threshold where statisticians and economists are far better qualified to find the ultimate true answer… if the data is out there. But the belief that one out of every three cars out there is a recent debtful new car still seems way off the mark.

It could be 1 out of 7. Maybe only 1 out of 8. But 1 in 3? In today’s economy? Sheeezzz!!!!

I found a few other whoppers in the presentation. Including…

• Today’s new car loses 25% of it’s value the instant you drive it off the lot.
• After four years, your new car loses 70% of it’s value.
• That $26,000 creme puff bought 4 years ago is worth only about $6,000.
• After 6 years, the ‘normal’ new car buyer gets car fever and buys another one on the note
• A 6 year, 10 month old car is worth only $1500.
• But don’t worry! If you save just 20k and put it in a super-duper ‘stock market mutual fund’, earning 12%, you can buy a $14k to $18k new car every five years for the rest of your life!

You know what? Even If all these ‘leaps of numerical indulgence’ were correct, I still would buy used. Just imagine how much joy you can get out of a 2004 Mazda MX-5 that is only $1500! I’ll gladly take three of those Miatas, another Honda Insight, and maybe a Camry for when my mom is in town.

Cars have lost a lot since the 1990’s. How many of you remember ashtrays, crank windows, base AM/FM radios and motorized seatbelts? It used to be that little headlight wipers were a sure sign of an upscale ride along with glossy wood trim and a CD changer in the trunk. It was a Yuppie heaven back then.

You wanted good music? Gotta get at least a cassette player and why not throw in some flimsy cupholders that are just big enough for a twelve ounce Coke?

A lot has gone away since the days of Cadillac Allantes and Chrysler Imperials. But much more remains with us. Today’s cars have a ton of 1990’s luxuries as standard equipment: Cruise, ABS, Traction Control, CD Players, Keyless Entry and Anti-theft Alarm Systems. Even the once lauded ‘Power Package’ of power windows, door locks, and mirrors is now standard in all but the cheapest of models (and the Lotus Elise).

So today’s questions for the TTAC faithful are, “What Should Stay?” and “What Should Go?” in these next ten years. Should nav systems be integrated into our cell phones? Will CD’s offer as poor of a return for the audiophile as they already do at the bank? That one’s an easy answer. But what about CVT’s vs. conventional automatics? Eight cylinders vs. sixes? Push buttons vs. key fobs vs.???

The future isn’t now. So give your best guess.

Our oldest daughter is in fifth grade. It scares me that in only four short years she will be able to drive one of our cars. Ten years from now she will be as old as I was when I met my wife for the first time. Is she finally growing up? Am I beginning to grow old? Who thought middle aged life would be so damn intense?

Like any Dad, I want to plan a few things for her. On one side I don’t want her to become in terminal need of ‘Economic Outpatient Care’. She has to establish her own merits and foundations.

But I also want her to have the freedom to focus on what’s important. School, learning about life far beyond the classroom, and the ultimate freedom to pursue what interests her without having to deal with the modern day debt trap.As much as I love cars, I realize that interests rarely pass down through the generations. Cars are nothing more than debtful transportation appliances for most folks. So here’s what my wife and I plan on doing for our daughter … car wise.

The first year of driving is usually the hardest time for teenagers. I remember my Mom barking out her ‘pearls of wisdom’ even before I turned the key. Drove me nuts. To help alleviate this ‘parent reflex’ I’ll probably have the two of us spend some time at a parking lot so that we both can get used to each other.

I’m not sure if I will teach other how to drive a stick off the bat. Some folks need confidence behind the wheel before they can begin mastering that art. I think two pedals and one steering wheel may be more than enough. If sticks are still widely available for cheap cars, I may teach her how to use one later on. But nothing’s guaranteed.

Then again, will she even get a license? The real crossroads will come when she graduates from high school. Will she then need a car for college? If she attends a ‘commuter school’ I may just give her something of her own at that point. I expect her to contribute some money to her car.

The balance is almost always the parents responsibility; especially since cheap cars aren’t common anymore. If she gives a little bit though, at least my daughter will have a sense of achievement and responsibility in owning the car. I would want her to enjoy the freedom to travel without feeling like the bank of M&D has been nothing more than a ‘parental credit card’ that gives her things.

By that time I will hopefully have taught her the basics of maintenance and car care. It won’t be rocket science. Just by teaching the basics, you can give a young person an amazing level of confidence and self-reliance. How to check and change oil. How to check and change coolant. Replacing air filters. Changing tires. Everything but the tires we can do at gas stations and parts stores.
That is if she doesn’t end up dumping all this on me, her brother and/or her boyfriend. Which is probably what will happen.

Her automotive future may be nothing more than a non-event. Most colleges may ban student cars from campus altogether. Gas may go to $8 a gallon. Who knows? She may decide that a life without cars may be a better one. All this future prognosticating by a person with the best of intentions may simply go to waste.

But barring all those little chickens coming to roost, I will try to teach my kid how to make her car a long-term keeper. Either that or something else. Maybe a bike. Maybe investing. The high school class of 2019 is far into the future. Isn’t it?

What would be your ideal car? Would you like to have the best of the best? A car that offers all the power and luxury an enthusiast could ever desire?

Or are your tastes a bit simpler? An amply powered but safe utility vehicle that will let you do all your work without a hint of regret about scratches or four figured maintenance bills.

This ‘ideal car’ question yields a thousand shades of gray in practice. Take this Mazda MX-5 for instance.

Rent: I know that renting a 2nd gen Miata could be like blindly pressing buttons on Jack Kevorkian’s death machine. Abuse is rampant with rentals.

But maybe not. This generation MX-5 is as tough as nails and if you find the right customers who would pay… say $59 a day…  you may have a profitable undertaking.

Of course you would have to find ‘responsible’ customers. That’s the hard part. If you lived in a tourist community for the well-to-do it could work. Maine, Cape Cod, rural Montana. There are plenty of folks who would be happy to rent a nice convertible for a long weekend and pay well for the privilege. But those people aren’t typically found in Paulding County, Georgia. So renting won’t do.

Lease: On the lower end of automotive retail ($5000 or less) you try to get at least 25% of the purchase price as the down payment. That would make this Miata a $1000 down vehicle. Payments would be anywhere from $65 to $75 a week for 24 to 30 months.

That sounds like a lot. Until you realize that you’re giving someone who already cost a business thousands of dollars your car. At a $1000 down payment I am underwater by three grand. If the customer doesn’t pay, rags the vehicle out, gets into an accident without full coverage insurance, or just absconds with it… I’m screwed.

There is a lot of risk in this business. About a third of buy-here-pay-here don’t work out. Although I have an 85% success rate (which is outstanding), I can and have just as easily lost my keyster on a vehicle I finance.

The only guarantee you have as a dealer who ‘totes the note’ is risk. So you need to make sure your financial return can make up for it.

Sell: There are other risks associated with a convertible in particular. Can you sell it? A Miata is one of the more popular vehicles in the used car market. But given that we’re headed towards winter time, retailing this car may not be an easy thing.

I would likely sell it for around $5995. I bought a clean car at average wholesale. So if I’m a little price aggressive I will likely sell the car that much quicker. At 120k and the touring package I’m sure this Miata would be on the short list for a lot of buyers

Keep: What? Who me? If I were not in this business I would consider it. Every family deserves at least one fun little two seater so that the husband or wife can get away from the hassles of daily life.

So would a Miata be more fun than say.. my 2001 Honda Insight?   

Yes. It would. I am a frugal fellow. But I also like to have my (Indian) pennies rapidly appreciate and raid the clearance rack of the nearby organic supermarket if I can get away with it. A Miata yields half the mileage of the Insight around town. The return though can come through the winding one lane roads of the Georgia mountains. I do a lot of driving.

It’s hard to beat a car that offers the pure, simple fun of a Miata. So…

Should I start a rental program for the well-to-do?

Finance the vehicle to a soul seeking hedonistic fun and creditworthy redemption?

Sell the vehicle in a mano-a-mano battle against father time and cold weather?

Or keep it and reward myself for buying the right car in a tough market?

What says you?

(NOTE: Please avoid the ‘name’ semantics of this article. I know that the manufacturer calls it an MX-5 while certain enthusiasts still call it a Miata. I prefer Miata. Why? I love the Miata name and wish Mazda hadn’t acronym-ed and numericded themselves into anonymity. Great cars with limited dealer networks need names.)

This market has ceased to make sense. 

$7300 (plus auction fee) for a 2003 Honda Accord EX coupe with 220k and a bad rear bumper.

$8800 (plus auction fee) for a 2003 Chevy Tahoe with 102k and scrapes along the side.

$23,800 (plus auction fee) for a 2003 Corvette Z06 with 16k and some really crappy plastic add-on’s.

Keep in mind that last price was well over two grand higher than on Ebay. Same miles. No Wal-Mart quality chrome add-on’s. No interior detail needed.

What the hell has happened to the car market?

Well I’ll tell you. The first two sold to a Middle East exporter who will no doubt roll back the miles in their time honored tradition. A lot of salvage cars also head over there (the United Arab Emirates in particular) where thousands of immigrants spend their days using the finest hammers and blunt tools to bend these vehicles back into shape.

I once saw a neat video about how all this is done. Courtesy of a million plus vehicle a year salvage auction company. The video highlighted dozens of East Asians and Africans pounding out old metal and switching out the electrics. Parts would already be put in the shipping containers along with the carcass of a vehicle and sent to rebuilders a half world away.

It was interesting. Especially to the auction’s investors. Junk cars do make money and do employ an awful lot of people the world over.  However getting that video for public consumption in North America was somewhere between verboten and fugheedaboutit! I never managed to get that video for TTAC.

I don’t know who bought the Corvette. The dealer may have already had a member of the general public wanting to buy the car for him, which is as common as kudzu these days.

At this particular sale I always see non-dealers walking around the cars. Dealer sales are in name only these days. Nearly everyone buys vehicles for the public. However this is the only sale I’ve been at where the public is literally swarming around the vehicles before the sale. As a guy who has to spend $10k+ every year as a dealer for the right to sell ‘cars’ of all things… I don’t see why we even bother with dealer licenses.

This business is not rocket science in theory. But it IS challenging in practice. The ‘education’ comes from losing money on cars you should have never bought in the first place. Most members of the public are clueless when it comes to these things, and when I see a piece of junk sold at the public auctions, it’s often times an individual with no experience bidding on it.

I believe in free markets though. At least when it comes to buying cars. So you want to buy at an auction? Go for it. 

Just remember that auto auctions are a lot like Wall Street. You will always be the last one to know when you have bought the wrong thing.