Is now really the best time to buy a domestic car?
By Jason Buckland, Sympatico / MSN Finance
In this economy, our reaction to the demise of the Big Three automakers starts at, “Shucks, sad to see such North American institutions crumble like that,” quickly turns to, “The greed of those fat cats – good riddance!” and ends up somewhere in the ballpark of, “Hey, maybe there’s a deal for me hiding in all this mess.”
It's a pretty cruel progression, but we shouldn’t feel the need to apologize. If it’s not every-man-for-themselves out there now, it’ll never be.
So it’s with that in mind we present more fuel to the idea that now is the best time to buy a domestic car. It’s long been theorized that Buy Low logic applies to the auto market, but new information about retail prices, slumping sales and dealership incentives highlight just how low it really is.
Despite the gloomy business outlook for Ford, GM and Chrysler, prospective car buyers have little to worry about. “Very ironically, there’s never been a better time to buy,” a Ohio-based marketing professor tells Smartmoney.com. “Now they’re practically giving the damn things away.”
The Vancouver Sun reports Big Three dealers with slumping sales (down 9.6% overall in B.C. in 2008, for example, from a year before) are being forced to offer major deals or they’ll face going under. As a result, many now are more-inclined to toss around bargains like four-figure cash back incentives and 0%-financing to get you into their cars.
New numbers have also come to light that show why vehicles have rarely been this affordable for Canadians. Over the past 10 years, in terms of how many work weeks would be required for a Canuck to buy a new car, prices have been consistently dropping.
Down from a high of 24.1 weeks of before-tax family income in 1997, it took a Canadian household only 18.2 weeks to be able to afford new wheels in 2008.
All of this is moot, sure, if you buy a GM/Ford/Chrysler that turns out to be a lemon, but there are new developments on that front, too. When President Obama announced his government would back warranty claims from car owners should General Motors or Chrysler be unable to afford them, he surely put some confidence in those who wouldn’t even go near a dealership.
So as the Canadian government considers a similar kind of action to jumpstart sales, it’s at least conceivable that, yes, now might be a pretty decent time to buy domestic.
That’s what Tom Harris, from Nanaimo, B.C., tells the Sun, at least. He says customers have access to “the best deals he has seen in 25 years as a GM dealer.”
Posted by: Travis | Apr 6, 2009 2:46:41 PM
@Iam / Moe:
Sometimes spending more is saving. Factor in more than just the initial cost. New vehicles are cleaner, more fuel efficient, less likely to have problems, are under some form of warranty for at least 3 years, and comply with new-age standards. New vehicles will also have a much higher resale value over old vehicles.
@Ann:
Domestic = North America. Honda and Toyota headquarters are overseas. In fact, the only reason they build plants in Canada is to avoid the tariffs and duties from shipping.
@Oldtimer / Fraser Grunman:
Very good point. Really, the only reason that Imports would have any higher price would be due to domestic taxes increasing their prices. Otherwise, domestics would have already died.
@Steve:
These companies are actually American. A portion of the profits actually leave Canada. The only reason I see to support these manufacturers would be because of people losing their jobs. Other than that... They obviously made a product that the larger portion of the market felt was either inferior, or over-priced. Now they pay for it. I would kinda like to see Air-Canada die out as well. They've been bailed out too many times - ultimately wasting our money... I wish they would just let West-Jet take them over and stop using our money to keep something alive that the population doesn't use.
@300cthatwillripyouappart:
I'm still driving a '95 Acura Integra. At 290K, I've replaced the Timing Belt once, replaced my external belts twice each, and now my ignitor in my distributor has died. After I replace it, I'll be back on the road without a care. If your comparing domestic to foreign, it also depends on the driver and the conditions. I also average about 9.5-10 litres per 100km, with horrible driving habits like half-way flooring it off each red light.
Posted by: Neel | Apr 7, 2009 12:30:40 AM
THE BEST CARS ARE FOREIGN CARS PERIOD!!!!!!!!!!!
Im in the car service and repair business; for the amount of repairs you to do on DOMESTIC vehicles it sure is not worth buying them even at 1/2 price. Its good business for me; but you also need people to save money in these hard times. I see Honda/Acura/Lexus/Toyota brakes for instance last 80 to 100 000 kms easily; but make sure to replace them with the same OEM factory parts if not back to the 20 - 50 000 kms like Domestic cars. BMW/Mercedes are not so good on the brakes either...same as Domestics; unless you have the bumper to bumper comprehensive maintenance included warranty, then by all means go for it.
Another thing is fuel mileage...JAPANESE CARS win hands down....see for yourself... http://oee.nrcan.gc.ca/transportation/tools/fuel-consumption-guide/fuel-consumption-guide.cfm
For example Japanese VS German cars --- Lexus IS350 with a 3.5 L engine gets 10.8 L/100km city; 6.7 L/100kms Highway and BMW 330i with a 3.0 L engine gets 11.4 L/100kms city; 7.2 L/100kms HWY.
Even though the Lexus has a bigger engine it still outperforms BMW.
Buying Domestic may save you upfront dollars but long run you end up paying twice as much.
thanx
Posted by: Ann | Apr 9, 2009 1:12:15 AM
@Travis -
From Webster:
domestic - of, relating to, or originating within a country and especially one's own country
Last time I checked, North America is not a country.
Posted by: Ron Cross | Apr 9, 2009 4:27:10 AM
Bought a new Pontiac in sept. 2008, A 2009 Vibe, does this mean my Warantee is covered? Bought in good faith, can't see why I shouldn't be covered the same as people who bought later.
If we give up on our car industry, the billions lost in income taxes alone will more than hurt our econemy. It's not like the Government is losing Billions by propping up these industries. It's keeping people off welefare, for every job lost it afflicts at least 4 family members. And again about one third of a workers wages go back to the Government in taxes. Also goods purchased, without money, the spin off is tremendous.