Wednesday, April 30, 2008

This could have been soooo much better

In A Crushing Issue, Joel Millman tells us the story of 4,703 Mazdas that were aboard the Cougar Ace, a freighter ship that capsized (but didn't sink) on its way across the Pacific Ocean. The story itself is very interesting and worth a read. He's also got a video, presumably to add further detail to the specifics of the story. But this video could have been soooooo much better. I wanted to see cars getting crushed. I wanted to see cars getting eaten by shredders. I wanted to hear the "pop, pop, pop" of the airbags inflating. But I didn't get any of that.

Well, at least we still have video on SSI's shredders (which we covered previously in a Friday Diversion).

Monday, April 28, 2008

Buying Cars on eBay

I read just the other day that eBay recently sold their 3 millionth vehicle. That's a lot of cars! But if you ask most people you know, not only have they never bought a car on eBay, they wouldn't even try.

Why not? Why are folks scared to buy a car online? There are two obvious reasons - first, it's not what they are used to and second, people feel like they need to physically see and drive the car they buy (and maybe even kick the proverbial tires). That first barrier - buying cars at a dealership or out of newspaper ads because that's they way dad did it - should be easy to overcome. Dad didn't buy Blu-ray DVDs online back in the day either, did he? Online shopping simply shouldn't be scary anymore. So, it's the second problem that's probably the most significant hurdle - not actually seeing the car or meeting the seller.

Let's talk a bit about that. Cars are basically a commodity today, no different than mp3 players or computers. You can get them anywhere and a Toyota Corolla you buy in Albuquerque is exactly the same as one you get in Abilene. In other words, if you check out a make/model/year that you like in your hometown, why shouldn't you then go and try to find that same car for the cheapest price no matter where it comes from? Isn't that extra bit of effort (and actually, it's probably less effort than haggling in person) worth saving a few thousand dollars?

One related fear to not seeing the car is not meeting the person who's selling it. I think most people expect to see their car seller (whether it's a dealer or someone selling their own truck) face-to-face. The funny thing about this, is nobody trusts car dealers. There's a reason that the unctuous used car dealer is a cliche. Here's where eBay's method is world's better. No, you never actually meet or see your seller, but you do know exactly how every one of their online transactions worked out. That's the key. If you sell cars on eBay, you simply can't afford to screw anyone. If you get a few - or maybe even just one - negative review saying that you are dishonest, your business is kaput. Nobody is going to send $15K to buy a car halfway across the country from someone they feel they can't trust. On the other hand, if a local dealer screws a customer, how does anyone find out? It could happen all the time and you'd probably never know. Your only hope is to check with the Better Business Bureau and hope that someone thought to file a complaint there, or hit up Google and hope someone posted to some message board. It's a crap shoot. The truth is, you probably won't find out. You actually have much less visibility into and information about the local guy than you do about an eBay seller on the other side of the country.

Accountability, visibility and convenience aside, the best reason to buy a car on eBay is the most basic one - price. With a little patience, you can find outstanding deals on eBay. Edmunds has a great feature called True Market Value pricing, where they show you actual expected prices you'd pay/get for a car. They show you three prices, Trade-In, Private Party and Dealer. Trade-In is what you would likely get for a car if you traded it in to a dealer. Private Party is what you'd expect to pay someone to buy their personal truck (i.e. through a newspaper ad) and Dealer is what you'd pay at a dealership. You pay more at a dealership because you're ostensibly getting a bit more backing behind the car, that they've cleaned and inspected it and you have some recourse if something goes wrong. The differences between these three prices can vary from several hundred to several thousand dollars. On eBay, you should expect to pay no more than the Private Party price even though you are buying from a dealer. If you are picky and look for No Reserve auctions, you can do even better. I have bought two cars on eBay and paid just above Trade-in for one and $700 below Trade-in for the other. I could have bought the car, driven it straight to a local dealership and traded it in for a profit. Beat that out of your local classified ads!

When you are saving that kind of money, it really helps to offset the other fears. Sure, there's a chance that the used car I'm buying is a lemon, but that's a risk with any used car, isn't it? Is a short test drive going to prove otherwise? Would one of those used-car inspections help? Maybe, but you can actually order one of those for most eBay cars as well. Even so, how much risk are you taking on? To use an example, say you want to buy a 2005 Honda Accord EX with the V6 engine. At a local dealership, I'd expect to pay about $17,500. I can find one of those on eBay right now for about $15,600. Wouldn't a savings of nearly $2K help offset any risk? Especially if you consider that I know that the seller has all positive feedback and has posted dozens of pics of the inside and outside of the car? Well, what if I decide that I'm willing to shop a bit abd I hold out until I get a car closer to the Trade-In value? Now we're talking about a savings of about $3,500. You could replace the transmission and still come out way ahead!

The bottom line is this - buying a car online makes sense. You can buy a great car from a reputable dealer and you can save thousands of dollars. Why would you want to do it any other way?

Saturday, April 26, 2008

Some Air-, Electric-, and Diesel-Powered Vehicles in the Pipeline

The past week or so was chalk full of articles on alternatively-powered cars. Upon seeing all these articles, I was astounded by just how much effort and investment is taking place in this area. Given the huge effort, it seems very likely that car buyers' options will be greatly expanded in the coming years.

We wrote previously about MDI's air-powered car (here and here). And Forbes has written a recent article on the firm as well. In addition to Tata Motor's license to produce the air-powered car in India, Forbes reports that Zero Pollution Motors has purchased a license for the U.S. market. Zero Pollution Motors hopes to offer a 100-mpg vehicle for about $18,000 by 2010.

For those of you interested in green ideas generally, you should check out Fortune's recent report on "11 great green ideas". They profile a solar company, a recycling firm, and alternative energy ventures, among others. Also profiled is Aptera, a firm that has already sold out its initial run of 1300 electric hybrid vehicles that aim to get 300-mpg thanks to revolutionary aerodynamics that nearly eliminate wind resistance and therefore reduce by two-thirds the energy needed to move the car. Venture Vehicles is also profiled. It expects its plug-in hybrid VentureOne (which also looks nothing like the cars seen on the road today) to hit the market in 2010 and get 100-mpg.

The Wall Street Journal reports that General Motors is becoming increasingly bullish about its Volt, hoping that it can go into production as early as November 2010. And it looks like GM is viewing it from at least two strategic angles as well--to "eliminate this perception of GM as the environmental antichrist" (according to Bob Lutz) and to help GM meet increasingly stringent CAFE (fuel efficiency) standards.

And finally, BusinessWeek suggests that some new high-mileage diesels set to hit the U.S. market could give hybrids serious competition. The article reports that more than 50% of new-car sales in Europe are diesels, and Volkswagen, BMW, Mercedes-Benz, Honda, Kia, and Mahindra have all announced plans to introduce diesels to the U.S., beginning this year.

Wednesday, April 16, 2008

Dash Express: Early Reviews

As a follow-up to our earlier post on the new networked GPS navigation device, Dash Express, I thought it would be interesting to check out some early reviews of the product and related service.

CNET likes the device (there's a nice video summary here as well) and thinks it has the possibility to introduce revolutionary change to GPS navigation. But it's not there yet. The most troubling thing they found was that the actual GPS functionality is pretty substandard: "As we drove around [San Francisco], we noticed that the Dash was slightly off the mark with its tracking; most of the time it was behind by a block, but it could be as bad as up to three blocks off." A block to three blocks off = missed turns while driving. Not good for something that's supposed to get you where you want to go more efficiently.

Engadget is a bit more bullish, likening Dash's community features to those first introduced by TiVo: once you experience the benefits, you wonder how you'd ever settled for less. But they also experienced some poor navigation results, with a larger than expected number of lost signals, mainly.

GPSreview.net has a comprehensive review posted, based on about 500 miles of driving experience with the Dash Express. They conclude that the device is currently geared toward hard-core commuters, and it's not for people looking for guided navigation in unfamiliar areas.

PC Magazine spent some time with the Dash Express as well, and they come to a similar conclusion: Interesting, but other devices are adequate and cheaper, for now. They do post some photos of the device and its screens. And they point out that the unit is designed to work in the United States only, so if you want to use a GPS device in other countries, get a different one.

As for me, I plan to wait before springing for a new Dash. I love some of the unique features, but the truth is, I don't drive enough during heavily-trafficked times that its real-time traffic info would be too useful for me. And I really like to take the GPS device with me when out of the car (walking around a new city, for example), and the current Dash device seems too bulky for that, and its communication signal seems too unreliable. By waiting a bit, I can hopefully get a Dash device that is portable (i.e., smaller). And, in a year or two, Dash will hopefully have enough early adopters adding serious value to its network and community features. Finally, in a couple of years, Dash will hopefully have worked out some of the substandard navigation performance issues that some current users are reportedly experiencing.

Tuesday, April 15, 2008

86 The 84-Month Car Loan

When I graduated from college and realized that I knew next to nothing about how to take care of my finances, I went and read several books on the subject. One of the pieces of advice that always stuck with me was that the five-year car loan was one of the worst "investments" you can make. Cars depreciate too quickly to justify paying for one for so long. It is always more sensible to go with a four- or three-year loan if you can swing it. And if you can't swing it, you probably can't afford that car.

Well, time marches on (sadly for me, it's marched a lot since I graduated) and the American populace has many more loan options, including the unbelievably bad seven-year auto loan. This is sort of the car version of the sub-prime mortgage. As the guys at The Car Connection point out, if you have to take a seven-year loan to buy that new jalopy, you can't afford that car. Odds are, you're going to be trading that car in for a new one in 3-4 years and with an 84-month loan, you'll probably still owe more than the vehicle is worth. Bad idea.

On the bright side, with the car market so soft these days, you should be able to find some legitimate good deals, like Chrysler's 0% financing.

Sunday, April 6, 2008

$48,000 for a Volt?

Autosavant has an article citing Bob Lutz claiming that a "realistic price" for the Volt would be 48 Large. Wow. My guess is that there wouldn't be too many takers at that price. But I'm also guessing that GM is angling for as much in government subsidies as they can get. The more the government will subsidize purchases of electric vehicles (EVs), the more the leaders in the market will benefit. And if GM can produce the Volt on time and as advertised, it should be a leader. Autosavant concludes that the net cost of a Volt to consumers will be a lot closer to $30,000 than $48,000, given subsidies and GM's (probable) willingness to discount the price otherwise.

Thursday, April 3, 2008

Networked GPS Navigation: Dash Express

Walt Mossberg of The Wall Street Journal recently reviewed a newly available GPS navigation device called Dash Express. While his trial didn't go flawlessly (the device tried to route him into heavy freeway traffic), the networked device seems to offer some meaningful benefits relative to traditional, stand-alone GPS devices offered by Garmin, Magellan, and others.
  • TruTraffic - Each Dash Express unit is wirelessly connected to the Internet. This allows Dash to monitor traffic speed on various roads and override standard, third-party traffic information with real-time, proprietary traffic information of its own. This could be handy for people who absolutely must get to a destination in the least amount of time and who might be able to choose an alternate route to avoid traffic. This feature, however, is dependent upon a critical mass of users adopting Dash to provide the data required to develop real-time traffic updates.
  • Map and Feature Updates - Dash can push out updates of its map database and new features to Dash Express units via their wireless networking capability. As a Garmin user, I have to connect to the Internet via a USB connection on my computer to update the maps (and sometimes I have to buy the latest versions), so I can see how this feature on the Dash device would be very handy. You'd always have the most up-to-date map / route information, and this feature alone would probably nearly cover the incremental cost of the wireless Dash Service for people who regularly pay to update their maps on other GPS devices.
  • Send2Car - When I use the Garmin, I still normally search for the destination on my computer first, just to get a sense of where it is. I then have to enter the destination into my Garmin Nuvi to tell it where I want to go. Send2Car allows Dash Express users to wirelessly send the destination location information from their computer to the GPS device instead of typing it in to the device directly. It can also be used to receive destination information from others' computers. (So your friends could send you the destination location information, for example.)
  • Gas Prices and Movie Times - While Dash doesn't provide a lot of information on this feature, I'm assuming you can ask the device to tell you the price of gas at nearby stations. It's easy to see how this could be useful and save money, especially while on a road trip. (Well, if the data are good!)
These networking features come free with each device for three months. Thereafter, users can subscribe to the Dash Service (anywhere from $10 to $13 per month, depending on contract length) to continue receiving the wireless networking benefits. Customers who choose not to subscribe to the Dash Service can simply use their device as they would any other standard GPS navigation device on the market.

Given that features such as TruTraffic require a critical mass of users, I expected to see more than a free three-month trial period for the wireless network access. By including the cost of the service in perpetuity (or even for 3 or 5 years, say) for the first 6 months the device is available (or to the first 100,000 buyers, say), I think they could have generated a lot of buzz and essentially acquired their required critical mass very quickly. I largely see the value of what they're doing in the data they collect from their network. If they get to critical mass and own a large network of users, there's not much incentive for competitors to try to replicate it. (Why would I join an upstart network when there's already one out there that works just fine and has lots of data feeding it?) So I would have expected to see them be much more aggressive trying to acquire users. It'll be interesting to see how quickly these devices get adopted. If they're not fast enough, they'll probably find some serious competition from the incumbent GPS device or map data providers.