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.
Kiplinger is usually right.
The question is ,why anyway would you buy from a Company that you have had to bail out with your tax payer dollar? and it will be a bunch by the time this is done.If we were to figure the cost of the bail out on top of every car that is sold,I think that alone should be enough to keep most of us with any business sense from buying.Yes there will be those who think they just can’t live without that Camaro or Mustang or what ever but that is the American way,I will have what I won’t at all expense.
If there is a bailout the US car makers are going to need to stimulate sales since the economy is in the crapper right now. In California unemployment is now at 8.5%. That is freaking high and a number unseen since the early 1990’s when the defense industry collapsed.
That stimulus package should hopefully result in a $3,000 or so discount below what cars are being sold for now. I’m waiting for the fire sale. I’ll get a new car from them when they are 50% off. Otherwise I’m going foreign.
Too bad for car markers dealers are just as terrible in service as the cars themselves are. I can’t walk into a dealer without getting them asking for msrp and then trying to screw me with a high loan rate if I remind them of the rebate or discount.
There will not be a bailout.
There will be several bailouts. Because one bailout will keep Detroit solvent for what, 3 or 4 months?
The majority of Americans have a concern when tax dollars are taken from me and my kids and rewarded to an incompetent company who has done absolutely nothing to deserve it.
Taxpayers are taught in school that tax money goes to run the government. When they see instead that tax money goes to run for-(no)-profit companies, I can’t see even those loyal Buick customers happy to buy even one more Buick ever again.
Ah, another example of Kiplinger’s fine grasp of the obvious. I stopped reading the KL years ago because it taught me nothing.
W. M. Kiplinger, who founded Kiplinger’s, died in 1967.
The company was then taken over by his son, Austin H. Kiplinger (born in 1918). I imagine that Austin is probably retired and has a ceremonial position at this point in time.
I believe this is a perfectly valid question and one that is likely on the minds of many potential buyers.
Consumers already demand (at least subconsiously) a lower price for a domestic car because residual values are traditionally lower. The fear of owning an orphan, without warranty support, dealer support, an parts availability is a real fear. Best case your resale just evaporates. Worst case, you have a POS you can’t get fixed or buy parts for AND you can’t even sell it for pennies on the dollar. Just ask anyone who bought Peugeots or Alfa Romeos in the early 1990s.
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).