The Kiplinger Question: Should You Buy a Detroit Car?
My first American girlfriend’s mother, a Manhattan slumlord, read the Kiplinger Letter. She drove a Ford. My American (former) mother-in-law (different person) read the Kiplinger Letter. She drove a Ford. Kiplinger’s paid circulation is a million; their website receives more unique visits than even TTAC, about 2m a month. When Kiplinger writes, America listens. And what’s on Kiplinger’s mind these days? “Should you buy a Detroit car?” Not a general question. They mean now, considering the dire circumstances. Kiplinger asks the question that is on the mind of the remaining 48.2 percent of Americans that still buy true blue American: “What are the risks of buying a vehicle from a carmaker that’s on the brink?”
The redlining banks think Detroit cars are a huge credit risk. Karesh just said buying American is a risk within itself, due to rampant customer carelessness on Detroit’s part. Studies and sales numbers show that the last remaining customers flee from brands that may no longer be there. What is the honest opinion of the all-American Kiplinger? After all, Kiplinger was named by Ethisphere as one of America’s most ethical companies of 2007 and 2006. Kiplinger says: Don’t do it. Here is their bottom line:
“I wish the U.S. carmakers, and the industrial Midwest, all the best. No one wants to see the pain associated with job losses. But although I’d love to play the patriot card and recommend that you support the American carmakers, why take the chance? You have enough problems with your retirement and college funds to risk another hit on your personal finances.
“If you need a car now, you’re going to get a sweet deal on any number of foreign makes. If you’d rather buy American, at least wait and see what happens before you commit. If the Detroit carmakers can raise enough cash to keep operating until 2010, when concessions on health care and labor contracts kick in, they have a good shot at surviving long term.”
If and when.
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I'll see Kiplinger's warning and raise him: I cannot recommend buying any new car now, domestic or foreign. Even if you are not affected by a personal credit crunch, lots of people are dumping young used cars and trying hard to get out of leases they cannot afford. Good used cars are ridiculously cheap for buyers who have the cash or credit to close a transaction. Avoid the dealers if you can and make a private party buy if you really need a car. Personally, I figure on waiting until at least 2012 before even thinking about buying any car. The market is changing so rapidly (both what consumers want and what technology can provide) that I prefer to wait out the shakeout with the well-maintained cars we have now. By 2012 we should have a no-illusions perspective on the true cost of fuel over the long run and some real-world feedback on what the alternative fuels can and cannot do. With any luck, the economy will be stable then as well.
I'm with Findude on this one. The only reason to buy any car is because you need a car and don't already have one. Or if you suddenly need a truck for your job and you don't already have one. Otherwise, be patient and wait. I'm happy I paid off my Prius a few years ago, and I'm hoping not to have to take on new debt for a couple years (if ever).