10 Biggest Auto Myths
1. You get what you pay for. No, cheaper cars are often better than luxury lemons.
2. Mercedes makes the best cars. No longer; even German drivers say they prefer Toyota and Lexus.
3. Hybrids are the future. Don’t bet on it; fuel economy is over-stated by half and they can fry you in an accident.
4. Saturn is a different car company. Yeah, it is a pain in Uranus.
5. Toyota and Honda have impressive reliability. No longer; Trannies, engines and sliding doors are their nemesis.
6. New cars are better than used. Only if you are a new car dealer..
7. US car companies are on the rebound. Call it a ‘dead cat bounce’ before rigor-mortis sets in.
8. You get a better deal paying cash. Only if you are from Bogota.
9. Dealers are more honest today. No, they just cheat you differently.
10. Cars are better made today. Partly, yes. Bodies are safer and more durable; engines and transmissions are less reliable and costlier to fix.
Ford Complaint? Call Florida—Ford will quietly move its entire Toronto-based Customer Assistance call centre to Melbourne Florida by next fall—Canadian staffers have already been laid off. Meanwhile, Ford and the CAW plead with car buyers to buy Canadian ‘to save jobs’ in Canada. Will the CAW finally act to save call centre jobs in Ontario? No, they will be too busy trying to organize Toyota for the umpteenth time, because that’s where the big payoff is found.
Edmonton’s Kentwood Ford $1,000 fine will encourage dealer strong-arm sales tactics—The small fine is essentially a license for all Alberta dealers to abuse customers; Ford Canada will likely remain silent and stick its head in the (oil) sands.
Autobytel will likely be delisted by NASDAQ and lose millions—The company will have to restate its earnings for 2002, 2003, and 2004. It has already missed one deadline to file updated financial reports. The company is moving away from its core business of selling customer leads to dealers.
New car PDI and freight fees will top $1,500—There will be no rime nor reason to charges. Vehicles made in Oakville will cost more to deliver than those made in Osaka.
Leasing will increase in popularity—Buyers will be hoodwinked by longer payment times, lower payments with higher interest rates, and lower residual values.
Dealerships will continue to lose parts and service customers—Independent shops cost about one-third less than dealers. Customers want honest, faster, and less expensive servicing. Already barely thirty percent of GM customers return for service after the warranty expires.
GM, Ford and Chrysler will embrace Canada-style healthcare
Pummeled by billions of dollars for employee health care payments, automakers will endorse a single-payer health system in stages, with lowered drug prices the first target. Initially, GM will set up just one health care plan for both salaried and hourly workers.
The future jobless: DaimlerChrysler chief executive Jurgen Schrempp, GM president Rick Wagoner, and GM vice-chairman (“Kid Kodak”) Bob Lutz—All three executives performed stupidly. An arrogant Schrempp has presided over the loss of shareholder value, a general decline in Mercedes quality, made and then dissolved global alliances with Hyundai and Mitsubishi, alienated customers and colleagues, threw away billions of dollars on the Smart minicar project, and brought out high-end models no one wanted; Wagoner gave a $2 billion ‘gift’ to Fiat and launched bland, unpopular new models; and Lutz didn’t ‘walk the talk,’ when he promised bold, new products.
Ford chairman and chief executive officer Bill Ford will leave later (Ford’s Board, not the Ford family will prevail); former Ford executive Lee Iacocca (“The trick is to make sure you don’t die waiting for prosperity to come”) is laughing in his pasta.
Edit: The Shrempp prediction has now become reality. You saw it first on Lemonaidcars.com.
China will become a major threat to automakers—A disregard for patents, contracts, safety, and quality control will see many dangerous and unreliable knock-offs sold around the world to third-world countries.
Malcolm Bricklin will pull a Detroit “Sting”— His vow to bring in China-made cars will turn to dust, along with the money of foolish investors who have never seen New Brunswick or a Yugo. Says Bricklin to questions as to who did his market research: “We’re not there, yet. Right now were going by instinct.”
Who says history doesn’t repeat itself?
Car journalists are dazzled by Bricklin just as they were by Bob Lutz and his bankrupt Cunningham Motors in the 90’s and Liz Carmichael, who conned auto journalists and bilked investors with her Dale sports car prototype in the ‘70s. Incidentally, Carmichael (who was said to be a six-foot 200-pound transsexual born Jerry Dean Michael) never manufactured the car apart from three prototypes (only one was able to run under its own power). Carmichael was charged with grand theft, fraud and securities violations, and sent to prison.
Heterosexual Lutz was hired as Vice-Chairman at GM and hasn’t changed.
DeLorean eulogies won’t mention his Vega/Astre disaster—John DeLorean was in charge of Chevrolet when Lemon-Aid was first published over three decades ago. We remember vividly how he lied to the public extolling the virtues of the Vega and Astre that were listed as Not Recommended by Lemon-Aid and then he recanted in a self-serving memoir released years later. In the meantime, Vega and Astre buyers were saddled with $3,000-$5,000 repair bills to fix warped engines and burnt-out automatic transmissions. At the time, the Chevrolet Vega/Astre, the (‘you light up my life’) Ford Pinto, and the AMC Gremlin were Detroit’s Troika of trash launched to fight Japanese imports.
John DeLorean, Chevrolet Division’s general manager responsible for the Vega, at the time ‘fessed up’ in his book, On A Clear Day You Can See General Motors.
He called the Vega engine “a relatively large, noisy, top-heavy combination of aluminum and iron which cost far too much to build, (and) looked like it had been taken off a 1920 farm tractor…Chevy engineers were ashamed of the engine.”
Vegas tested at GM’s proving grounds also posted abominable results. “After eight miles, the front of the Vega broke off. The front end of the car separated from the rest of the vehicle,” said DeLorean. “It must have set a record for the shortest time taken for a new car to fall apart.”
Ford will sell Jaguar and Rover and drop the Five-Hundred, Freestyle, Freestar, Thunderbird, and Sable—The company can’t afford these cars that have been greeted by underwhelming enthusiasm from buyers.
GM to drop Saturn/Saab, trim Buick/Pontiac, merge Chevrolet/GMC, and ramp up Asian small car/SUV co-ventures—GM insiders tell me the automaker will drop its Saab and Saturn divisions and reduce the number of Buick and Pontiac models, following unprecedented sales losses. GM has cut its earnings outlook for 2005 by almost 80 percent and posted a 6 percent drop in U.S. sales for the first two months of the year. Its U.S. market share also fell to about 25 percent, far below its share of 27.5 percent for all of 2004 and the 50 percent+ it posted three decades ago.
GM’s losses will likely lead to the departure of Wagoner and Chairman Bob Lutz.
Mercedes will offer sizeable rebates with its 2005s—This will be a desperate move to fight off the company’s poor-quality image.
Mitsubishi and Smart are in a ‘death spiral’—These two automakers lack the financial backing and dealer network to be successful.
Nissan quality will continue to decline; huge Quest rebates—Despite some engineering fixes that will improve Altima, Maxima, and Quest reliability and performance, Renault’s dictate that the two companies share parts will wipe out many quality gains. Nissan will offer sizeable rebates with its Quest minivan in the third quarter of 2005. Unfortunately, buyers still won’t risk their money on what they see as an over-priced, unreliable minivan.
Toyota and Honda hybrids will lose their luster—Buyers will grow increasingly wary of unproven long-term reliability, safety concerns (look at NHTSA database), $8,000 (US) batteries, and false fuel savings claims. Additionally, steep price increases are expected within the year.
‘Dirty’ diesel fuel will hamper diesel growth in North America—The fuel has too much sulfur content and legislation to clean it up won’t apply until late 2006. Even then, it won’t be as clean as diesel fuel sold in Europe.
VW’s new Jetta won’t pull the company out of its sales slide—Buyers are fed up with VW’s lack of new product and quality problems.
Low side-impact scores will make US government act—Recent crash test scores announced by IIHS showed most cars offer inadequate protection when they are ‘T-boned.’ Look for more stringent side-impact and head-protecting airbag rules to come from the NHTSA.