Category Archives: Automotive News

Beware of Buy Here Pay Here Auto Sales

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For many people a car is a necessity in life. Even with the best public transportation, daily commutes and errands, are much easier with your own vehicle. As a result, consumers who don’t qualify for conventional loans, may agree to unrealistic terms when purchasing an automobile.

A fast growing corner of the auto market, also known as “Buy Here Pay Here” auto sales, is being advertised as helping the consumer purchase a car, but more often than not, it is the dealership that benefits from the agreement. Buy Here Pay Here lots sold nearly 2.4 million cars nationwide last year, according to CNW Marketing Research. It is estimated that there are more than 33,000 lots nationwide making about $80 billion in loans every year. Some dealerships have been accused of purposefully structuring loans to guarantee the borrower will default. Higher purchase prices, interest rates nearly triple the national average, and aggressive repossession practices make it easy for the dealership to repossess the car and sell it to a new customer at the same high interest rates, and while still pursuing the old borrower for their debt. Some dealerships have been accused of equipping their cars with hidden GPS devices and remote-control ignition blockers to make the repo man’s work easier.

Dealers say they are offering a valuable service for people who can’t get credit for a car. They say they risk never seeing a payment, or the car again. When a buyer does default, repossessing can be a costly hassle. Some cars are never found while others come back so beaten up they have to be junked. “This is not the car business. This is the finance business,” said Ken Shilson, an accountant who founded the National Alliance of Buy Here Pay Here Dealers in Houston. “Not everybody has the stomach for it.”

There have been some crackdowns on Buy Here Pay Here dealerships. In 2004, an Ohio chain settled a federal class action for $21.8 million to customers who say they were misled about their loans. In 2006, the Kentucky attorney general reached a $7.4 million settlement with the nationwide J.D. Byrider chain to settle violations and deceptive sales practices. But these settlements are rare. Buy Here Pay Here businesses are both auto dealers and consumer lenders, it’s not always clear who has authority over them.

You can view the whole story HERE, as reporter Ken Bensinger of the LA Times explains Buy Here Pay Here auto sales and how they can take advantage of people with bad credit while providing a valuable service for someone who needs a car but can’t get credit.

August Car Sales Up In August

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GM sales strong in ChinaThe slowing economy has left consumers wary about making big item purchases, but according to a recent auto data report, automobile sales in August rose almost 8% from a year ago and 1.2% from last month. All of the large automakers have showed sales gains for the year to date, except for Honda and Toyota, whose dealers have struggled to keep inventory since the earthquake and tsunami in Japan early this year. Shortages of small, fuel-efficient cars, like the Chevrolet Cruze and Ford Focus, have also lead to increased prices on both new and used hybrid, electric and compact cars.

G.M. said it remains confident that industry sales will top 13 million vehicles this year, back to 2008 levels, when 13.2 million were sold in the United States. They intend to step up production by adding overtime shifts to plants that build the Chevy Cruze, in an attempt to fill the compact car void plaguing the auto industry. Ford said it hopes to increase its overall production by 9% in the fourth quarter from what is was in 2010.

But analysts feel the automakers are “playing chicken” with the economy. Stockpiling extra inventory while consumer confidence declines could lead to too much inventory and price reductions that could end up hurting the industry in the long run.

Stop Adding Air To Your Tires

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According to Goodyear, the days of manually adding air to under inflated tires could soon be a distant memory. The Goodyear Tire & Rubber Company, with the help of a government grant from the United States Department of Energy, are developing a technology that will enable tires to remain inflated at the optimum pressure without the need for external pumps or electronics. All components of Goodyear’s Air Maintenance Technology (AMT) will be fully contained within the tire.

According to industry research, driving on under inflated tires can decrease your fuel mileage by as much as 3.3%. Properly inflated tires will not only save you money at the gas station, but will lower automobile emissions, give a longer tire life, and will enhance the safety and performance of your vehicle.

Goodyear did not say when this technology would be available at tire retailers, but said the timetable would be accelerated due to recent government research grants in United States and European Union.

LA City Council Votes against Red Light Cameras

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In an unanimous vote on Wednesday, Los Angeles City Council has decided to terminate the city’s controversial red light camera program. According to council members, loop holes in the laws governing the program resulted in only about 60% of the tickets being paid, failing to generate enough income to keep the program going. Both the Police Commission and the Los Angeles Superior Court felt the program could not be enforced and should be canceled. Critics of the program felt that the city was using the program only for revenue and accused them of putting up the cameras at intersections that would generate the most income and did little to improve safety on the roads. Camera programs have been canceled by many cities and towns across the country and the viability of programs still in affect are being questioned.

Automakers Industry Goals Optimistic

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The auto industry has taken a substantial hit the last couple of years, and although it has continued on a steady pace of recovery, it is predicted that sales won’t return to pre-recession levels until at least 2016. Nissan’s chief executive predicts that by 2016, sales will increase by 82% globally while Ford and Volkswagen predict less growth of around 50%. Aside from believing the American market will recover, auto manufacturers believe that their growth will will be due to emerging markets overseas. According to auto market analysts, if the rest of the industry is as confident as these manufacturers, there will be over 20 million more cars on the market than what is expected to be sold. They predict that a consolidation of companies as well as OEM suppliers will be the only way to ensure survival.

Automotive innovations, especially in terms of next generation electric and hybrid vehicles, will be the biggest factor, but the question of whether consumers will embrace the technology will be determined by whether the infrastructure can support them. Other technological hurdles include vehicle connectivity increasing the safety of automobiles.

Automobile Quality Drops For 2011 Models

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According to this years J.D. Power & Associates annual U.S. automobile quality study, 2011 model year automobiles have ten percent more problems than last years models. While the overall quality of vehicles has improved, consumer complaints seemed to focus on significantly redesigned cars and trucks. The Ford Motor Co. took the biggest hit, falling to 23rd from 5th place just a year ago. Most complaints, however, were about the on board MYFord Touch infotainment system offered on the 2011 Edge and Explorer crossovers. According to Dave Sargent, vice president of vehicle research at J.D. Power, Ford would have been one of the top contenders in reliability if it wasn’t for MyFord Touch. “They made the decision to be a leader in this area, leaving them in a vulnerable position.”

The top of the list was controlled by luxury automakers and foreign brands, Japanese vehicles moved up ahead this year but played it safe by not introducing too many new models to its already established line up. Lexus lead the pack with Honda close on it’s heels receiving seven segment awards. Toyota saw an impressive increase in reliability after being plagued by problematic recalls of previous years.

The top 10 most reliable auto manufacturers, based on the least number of problems reported in the first three months of operation were:

  • Lexus
  • Honda
  • Acura
  • Mercedes-Benz
  • Mazda
  • Porsche
  • Toyota
  • Infiniti
  • Cadillac
  • GMC

Children And Automobile Safety

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Auto safety group, KidsAndCars.org, are petitioning General Motors and the National Highway Traffic Safety Administration to recall vehicles built before 2001, to have internal trunk release mechanisms installed. This comes after two boys died last week after locking themselves in the trunk of a 2000 Chevrolet Malibu. The incident, according to the safety group, is “eerily similar” to a case two years ago where a boy and his sister died in the trunk of the same model vehicle.

Kids And Cars first started as the Trunk Releases Urgently Needed Coalition (TRUNC), a group that focused on getting trunk release mechanisms installed in vehicles, but since then have broadened their area of concern to general safety of children. The group was the main push behind the federal regulation for glow in the dark trunk release handles inside of all vehicles built in 2002 and newer, and are currently pushing to have mandatory back up cameras installed in all new vehicles. KidsAndCars.org was the first and only organization to not only recognize the dangers, but also to begin collecting data and bring national attention to these incidents.

Buying A Car Made Easier With An App

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Car shoppers no longer have be at the mercy of a dealership sales person when shopping for a new vehicle. In the age of online resources and smart phones the resourceful consumer has a arsenal of information to help negotiate the best deal. Car research companies like Ebay Motors, Cars.com, Kelley’s Blue Book and Edmunds have free smart phone applications that allow drivers to check car prices and ratings while giving direction for nearby dealers. The app provides true market values, the Manufacturer’s Suggested Retail Price (MSRP), and helps the savvy consumer navigate the car buying process. Online calculators can help shoppers determine the type of car they can afford and how much a vehicle will cost whether paying cash, taking a loan or leasing the vehicle. Some of the apps offer a true cost to own feature which calculates how much car a buyer can afford, including taxes, interest, insurance, gas, and maintenance over the next five years. While not all apps may have information on used cars, providers say used car buyers will be offered that service very soon.