On January 01, 2013, the Chinese government will be implementing new automotive recall laws to increase consumer protections against lemon automobiles. The laws are likely to created disputes within the market as new regulations increase the accountability of manufacturers when it comes to quality control and documentation. Continue reading
Tag Archives: Automotive sales
Auto Financing Scam
In 2011, the Federal Trade Commission (FTC) held a series of discussions to explore corrupt practices in the automobile lending market. One abuse that seemed to be particularly prevalent was the “yo-yo scam”. Reports showed that consumer’s dealing with auto finance problems experienced a yo-yo scam approximately 30 percent of the time. Continue reading
LA Auto Show Debuts Latest Technologies And Greenest Cars
As the first major North American auto show of the season, the 2012 LA Auto Show will host some of the industry’s most important new vehicle debuts setting the tone for the rest of the year. Continue reading
US Suzuki Files For Bankruptcy
California based U.S. Suzuki, announced yesterday that they will stop selling automobiles in the United States as a plan to restructure the business. According to Suzuki, slow sales, low foreign exchange rates and expensive state and federal regulatory requirements Continue reading
GM Ford Alliance To Improve Fuel Economy
A manufacturing alliance between General Motors (GM) and Ford, expected to be unveiled next month, will have the two rival companies developing automatic transmissions designed to improve fuel economy. The alliance could save the companies billions of dollars as they work towards meeting demanding federal fuel economy regulations set for 2017.
GM and Ford have already successfully worked together building six speed automatic front wheel drive transmissions in 2002, introduced in 2006 in approximately thirty different models. Both companies are currently developing 8, 9, and 10 speed transmissions for front and rear wheel drive cars and light trucks and they hope that the agreement will not only speed up technological developments, but will allow them to reduce manufacturing costs.
Packing more gears into the compact transmission housings used in smaller vehicles is an increasingly tricky challenge, according to engineers. Automatic transmissions with more gear ratios and more sophisticated electronic controls are crucial to improving fuel economy but the limited space of compact and subcompact cars makes it difficult. The lack of space is one reason that subcompacts like the Ford Fiesta and Chevrolet Sonic do not achieve higher fuel efficiency than the larger Ford Focus and Chevy Cruze. Longer vehicles also have lower aerodynamic drag, which helps overall efficiency.
Developing transmissions in house will not only allow GM and Ford to tailor the components to suit their needs, but will eliminate royalty costs for licenses and intellectual property rights charged by their current gearbox suppliers. The new transmissions are expected to reach the market by 2015.
Restrictions On Buy Here Pay Here Dealerships
Buy Here, Pay Here is a phrase for used car dealerships in which the company is both the seller and the loan holder . For years, they have operated under the radar, typically selling vehicles to consumers with bad credit at inflated interest rates, making repossessions common. Last fall, the Los Angeles Times ran a three part series on Buy Here, Pay Here dealerships which drew the attention of businesses and government officials.
In a step to protect consumers from these predatory vehicle loans, Gov. Jerry Brown signed into law two bills regulating the practices of Buy Here Pay Here lots. The first bill will require these dealerships to provide warranties on every car they sell in California. The second will require dealers to post fair market values for their vehicles and give customers greater flexibility in making payments. A third bill which would have limited interest rates to 17% plus the federal funds rate, and provide buyers with a fifteen (15) day grace period before repossessing cars for a missed payment, was vetoed by Brown. Brown wrote in his veto message that he was not convinced the evidence merits dealers to be regulated by the Department of Corporations under the California Finance Lender’s Law. He added that if consumers still need more protection once those bills are implemented, he and his administration would work with the Legislature to find an appropriate solution.
New Generation Automobile Buyers
A trend in the automobile industry shows that the younger generation is not as interested in driving as the generation before. Not only are they buying fewer vehicles, but many don’t even have drivers license. Some reasons for this change include:
- The younger generation are more connected through internet and iPhones making them less reliant on owning transportation.
- Many live in urban areas where everything is at a walking distance, there is good public transportation or they have access to car sharing programs.
- Young people are facing soaring tuition costs, and the money they’re earning in their part-time, summer and first jobs is going toward paying for school and rent. Even if they could afford to buy a car, insurance is expensive and gas prices keep rising.
- They have grown up in an era where they have had much more exposure to environmental concerns.
Automakers have known for a while that they were going to have a problem selling vehicles to this generation but are unwilling to believe that they will not want actual cars. As a result, automakers spend more time talking about how well their cars interact with an iPhone than they do about engine performance, ride, and horsepower. Technology such as voice recognition are important to many of the younger drivers because it allows them to safely drive while still staying connected.
They are trying to attract the younger urban buyer by developing a fashionable small car that is easy to park and uses less fuel. Car makers have begun shrinking the size of engines, subtracting cylinders while adding turbochargers to maintain horsepower and acceleration. Smaller engines have become a selling point even in the United States, which would have been unthinkable a few years ago. The idea of electric vehicles has also become more widely accepted.
As these technologies become more common they will also become more affordable, hopefully attracting more buyers. While today’s young buyer seems more open toward the trend of smaller autos with more features, car makers have not abandoned the hope that as this generation gets older and becomes parents they will graduate towards roomier vehicles.
Auto Warranties And The California Lemon Law
In the United States all new automobiles come with a manufacturer’s written warranty. This warranty is a detailed document outlining what repairs the manufacturer will cover, for a specified period of time or until a certain mileage is reached on the vehicle. This warranty is usually accompanied by an implied warranty which is an unwritten promise that the vehicle being sold will meet certain standards and is fit to operate for the purpose in which it is intended to be used. Because this warranty is not written down, it is up to the buyer to prove that the seller withheld information about problems with the vehicle at the time of sale. If a vehicle is being sold “as is” or “with faults” the implied warranty will be void.
When dealing with used cars, warranties becomes more complicated. Some used cars come with the remaining manufacturer’s warranty if the expiration year or mileage limit has not yet been reached and some require the consumer pay to activate it. If the used car dealer picks up the cost of the remaining manufacturer’s warranty, it is considered a car warranty, but if the consumer is asked to pay an extra cost to activate the remaining manufacturer’s car warranty it is usually considered a service contract.
Consumers are often asked if they would like to purchase an extended car warranty. This offer is usually presented towards the end of the manufacturer’s warranty and is actually considered a “service contract. The extended car warranty details what repairs will be covered by the dealer, the manufacturer or an independent company at the expiration point of the manufacturer’s warranty. An extended car warranty does not usually cover everything in the vehicle and can become very complicated. When purchasing an extended warranty, there are five questions you should ask yourself.
- How long do you plan to keep the vehicle?
- Who stands behind the warranty? The automaker, the dealer or a third party company?
- Can you get a better extended warranty from another dealership or negotiate the price with the dealership you are at?
- Do you know what is covered?
- What is your repair history and the repair history of the model vehicle you are buying?
Many consumers find that they pay more for the extended car warranty than they earned back from it in covered repair costs. A few exceptions include vehicles with higher rates of mechanical problems, vehicles with expensive extra equipment, or if the contract offers free maintenance.
One misconception about extended warranties is that purchasing one will extend the California lemon law coverage. This is absolutely not true. The California lemon law only covers vehicles which started to have problem during the manufacturer’s written original warranty. Consumer advocates warn those considering an extended car warranty to carefully study what a service contract does — and does not – cover. Any verbal promises made to you should be noted and signed by someone of authority on the warranty contract you are purchasing.
