Sammy’s guide to buying a new car, truck or SUV

I spend a great deal of time serving as a consultant to clients, friends and family members during the car buying process. In fact, just as I completed that sentence, I was interrupted by another call asking me for my opinion on which midsized sedan to buy

So in an effort to prevent another person from calling me, I’m publishing “Sammy’s Car Buying Tips.” By reading this simple primer, you’ll be in a position to make a smart, decision.

The key to this guide is to always give yourself many months to research, decide and complete the deal. If at any time you absolutely have to buy a car within a specific timeframe, you inevitably lose flexibility to get a vehicle you might want, as well as relinquish leverage against the dealer/seller.

Step 1: Narrow your search to appropriate vehicles
I can’t stress this enough: you should be focused on vehicles that fulfill ninety-percent of your needs, not the vehicle that delivers specialized capabilities for the once or twice per year activities. You wouldn’t believe how many people have come to me asking about which SUV or pickup truck to buy, and through simple (yet methodical) needs analysis concluded a sedan or minivan was the correct purchase.

So to get to the bottom of what you need, rather than what vehicle fits your desired image of your needs — ask yourself these questions based on prior years:

  • How many passengers will regularly riding simultaneously and how many will need children’s car seats?
  • How many times will I be towing a boat or trailer larger than a small utility trailer?
  • How many times per year will I be going skiing, hiking or driving icy/snowy/muddy roads that are not plowed/maintained?
  • How many times per year will I be hauling materials/garbage/yard waste?
  • How many times per year will people of 6-feet or taller be riding in both front and rear seats?Bottom line is that unless you plan to haul, tow or attack nasty roads many times per year, you’re better off with a car, wagon or minivan, and simply rent or borrow SUV or truck when you need it. Similarly, if you plan to be hauling more than two small children regularly, you’ll probably need a minivan, since three booster seats won’t fit across most sedans and wagons. (Conversely, why buy a minivan if you only have two kids and don’t ever plan to own a big dog or drive a carpool?)

    A good way to think about the different segments:

  • SUV – Only if you need ground clearance for muddy roads or snow drifts, or if you need to tow large trailers while also carrying many passengers. Otherwise, SUVs are cheaply built, expensive to buy and have a fuel drinking problem. They usually fill the role of wagons and minivans for people who are too insecure to drive station wagons or minivans.
  • Truck—Trucks are really only good for people who need to haul a lot of crap without hauling people. Too many people buy trucks when they should be buying a sedan or minivan. Keep in mind that the auto manufacturers love when people buy trucks, because they are really cheap to make, are poorly built, and sell for up to $20,000 more than a sedan or minivan of comparable interior space and utility. Think of pickups like a supermodel – great for a weekend, but are too expensive and annoying to marry.
  • Wagon– A sedan for people who need to haul something big, like a dog or equipment. A much better option for most SUV consumers, because they handle better, cost less, are better built. Wagons are almost always built on small and midsized car platforms, so often the rear cargo room comes at the cost of backseat leg room.
  • Minivan – The vehicle for a driver who will regularly be carrying more than two children, or more than three adults. Those who would have driven Oldsmobile Vista Cruiser station wagons in the 1960s and 1970s are the target for minivans. Minivans are perfect for people, pets and cargo. The downside to minivans is that they are impossible to park (notice how many minivans have dents in the rear corners!) and six cylinder engines mean a limited towing capability. Often they are purchased by so-called soccer moms who would be better suited by sedans.
  • Crossover– A compromise between wagon, sedan, SUV and minivan – which translates to a compromise in just about every type of trait. With a shorter wheelbase and higher center of gravity, they tend to handle poorly compared to sedans. Crossovers are too small to comfortably haul people or significant cargo, cost more than sedans and wagons, can’t tow much of anything, but get better fuel economy than standard SUVs. Think of them as halfway houses for former SUV abusers. Due to the inherent lack of benefits, this segment will be almost entirely gone within a decade as sedans return to popularity.
  • Sedan – The core transport in every country other than the US – and they were the core transport here too until the SUV craze. Sedans include four-door and two-doors (we call them coupes, but two-door cars are still globally considered sedans.) They are returning to popularity here due to the increased strength of offerings like the Honda Accord, Toyota Camry and Honda Civic. Midsized sedans are best for families with drivers under six-feet tall. Large sedans are primarily luxury-based. There are many sports sedans, which are midsized and offer the most pleasant driving experience while still maintaining utility. Compact sedans and coupes are generally cheaply built, and deliver less power, luxury and safety.
  • Sports car – You don’t need a sports car – nobody does. An entirely selfish purchase for people who weigh driving pleasure over utility. Sports cars tend to be among the best built vehicles. If it’s just you and one other person to carry, a sports car is wonderful.A note on AWD/4WD: Most people who buy AWD/4WD vehicles are doing themselves a disservice. AWD/4WD’s only purpose is to help get the car going in slippery conditions. Once going, AWD/4WD is a liability – reducing a vehicle’s ability to stop and turn. (AWD/4WD vehicles understeer, which means they push wide in corners.) AWD/4WD is marketed as a safety aspect, but it is absolutely the opposite, because it makes it easier to crash in the snow and ice. Furthermore, AWD/4WD systems are expensive to maintain and fix. (On-demand 4WD has a habit of locking-up if not exercised regularly, as well!) Unless you plan on climbing unplowed snowy roads regularly, you’re far better off with a front wheel drive sedan with stability control and a good set of snow/ice tires. A good set of winter tires can be mounted to rims for under $600, but AWD will cost $2000 or more to add as an option where available, plus the fuel mileage and maintenance costs will suffer.

    Step 2: Research
    Buying a new (or new to you) vehicle is easier now than it ever has been. Quite simply, as much (if not more) information is available to the general consuming public as is available to the average car salesperson. This means that unlike in the past, a well informed buyer can know any vehicle’s positive and negative traits, its MSRP, the dealer’s actual cost, and what everyone else is paying.

    And due to the sheer number of brands, models and trim levels, consumers have never had so many options. This remains true on all ends of the value/price spectrum.

    So your first to-do is to read through Edmunds.com, MSN Autos, Road and Track, Autoweek and the dreaded Consumer Reports. These publications will give all the statistics, pricing, options, and opinion you’ll need to form a basic opinion about various vehicles.

    Step 3: Go for a test
    Go to the dealers and check out all the top-rated vehicles in the classes that interest you, irrespective of price. If you’re in the market for a small sedan, even if you can’t afford one, drive a BMW 3-series to make the faults of all other cars in the class stick out like sore thumbs. On the other hand, some expensive cars can also make less-expensive alternatives look even better. For instance, after driving a Mercedes S430 the Toyota Avalon will prove faster, more luxurious and more comfortable, despite being less than half the price.

    Call the dealer to arrange to have cars ready for you to inspect. This is most important with newer or limited production models, but it also minimizes wasted time.

    Get in the vehicle. Set the car’s seat to a comfortable position, then either get into the rear seat to see if it can seat any necessary passengers comfortably. If you have kids, bring them with their car seats. Car salespeople will tell you how large a Volvo XC90, Subaru Forrester, Honda Accord, Acura RL, BMW 5-series or Yukon Denali is inside, but I’ve personally proven that at 6’4” tall, a salesperson or child in a car seat can’t sit comfortably behind me if I’m driving in any of these.

    Take the vehicle on a long enough test run to understand the pros and cons. If you plan to share this vehicle with a spouse, trade positions to get enough time in each seat. Keep in mind that passenger seats rarely have the same ability to adjust as the driver’s seat, so make sure both adults are comfortable in both seats.

    After you’ve driven a vehicle, head directly to the next dealership. You want the feeling of one car fresh in your mind when you test the next one.

    Step 4: Figure in safety
    Safety is a big deal to some consumers, so instead of taking Madison Avenue’s word that Volvo builds the safest vehicles (statistically, they do not!) go out and do your own research. Don’t take the dealer’s word, either, because just having front airbags means very little these days. There are big differences between makes and models in terms of safety and reliability.

    Visit the Insurance Institute for Highway Safety’s web site. Skip the meaningless static ratings, because when was the last time you got into an accident in a test lab? Go to two very important reports: Driver’s Death Rates by Make/Model at http://www.iihs.org/news/2005/iihs_sr_031505.pdf and Injury, Collision and Theft Losses by Make and Model at http://www.iihs.org/brochures/ictl/ictl.html. Both of these reports can be found by searching the IIHS site, and aggregate actual statistics reported to insurance and police. In other words, these reports show how the risk of death, injury, collision, and theft relative to other makes and models (normalized for the number of cars on the road) based on real world statistics.

    As you might guess, the 30,000-foot view of the reports indicate that big sedans are the safest, while small coupes and SUVs are the most dangerous. Cheaply built economy cars don’t fare as well as well-engineered luxury vehicles. And while the statistics aren’t quite in yet, allow me to predict that the current trend of putting third-row seats in midsized crossover vehicles and SUVs will prove very dangerous. As I’ve mentioned in my columns before, a Ford Explorer has a third row seat, despite being exactly the same length as a Honda Accord and Toyota Camry. Would you have your child ride in the trunk of an Accord? I certainly wouldn’t!!!

    No matter what vehicle you consider, you should be getting one with side-impact airbags and stability control. Side-impact airbags increase survivability in t-bone crashes by such a huge margin that they should be mandatory on all vehicles. For an average cost of $500 to add as an option, it’s the best money you can spend.

    Similarly, stability control should be a no-brainer to add to your new vehicle. Stability control (aka yaw control, active handling, stability management,) monitors the rotation of the car compared to the input on the steering wheel. If the computer senses the car is not going in the intended direction, it will apply any single brake to bring the car back under control. In other words, it does what a human cannot – choose one wheel to brake. Stability control will prevent spins and roll-overs.

    If the vehicle you’re looking at doesn’t offer stability control or side airbags, you have to ask yourself if it’s worth buying a car that doesn’t care to offer the two best technologies to keep occupants safe. In other words, the car you’re looking at probably is built cheaply for people who don’t know better – so go look at something else!

    Step 5: Consider reliability
    Reliability has a different meaning now than it did a few decades ago. In the past, bad build quality was blamed on lazy or poorly trained line workers. Since the majority of lines are automated with robots, reliability is now almost entirely based on the quality of engineering and parts. In other words, faults are either engineered in or not engineered out. Manufacturers have a pretty good idea of the probability of failure of most components in their cars. (The exception to this are the computer software elements, which often surprise the automakers with bugs, hence why Mercedes and BMW (mostly the computer-intensive 7 series) have had terrible times with reliability.)

    Domestic automakers are notorious for not engineering out problems and using parts that are known to be cheaper at the cost of reliability. Good examples are the leaky plastic intakes on 3800 GM V6 engines, C5 Corvette’s failure-prone column lock, Ford Expedition’s coolant hoses that run too close to the cylinder bank and are prone to leaking , and Chrysler’s premature transmission failure throughout the 1980s and 1990s.

    There are two reliability reports to consider as the gold-standard. The first is JD Power’s Vehicle Dependability Study, which ranks actual consumer complaints per 100 vehicles over a three-year period. (This can be found at http://www.jdpower.com/corporate/news/releases/pressrelease.asp?ID=2006133 .) Don’t place too much credibility on JD Powers’ IQS (Initial Quality Study), because it simply looks at the first three months of ownership, when most people don’t want to admit the car they just spent an arm and leg on has problems.

    The other is Consumer Reports Most Reliable list. Over 500,000 CR subscribers are surveyed regarding their car ownership experiences to get statistically relevant results covering almost all models. The report delivers best and worst in each vehicle category.

    From these two lists, one can establish some serious trends. Firstly, cars are more reliable than they ever have been. Secondly, there’s still a big difference between the leaders and the rest of the pack.

    Quite simply, if you want a car that won’t be a problem, go for a Toyota/Lexus or Honda/Acura. As established by JD Power, the industry average is 227 problems per 100 vehicles. Lexus is the best with 136 and Land Rover is worst with 438. Think Germans make good cars? Only BMW beat the average! Volvo? How about 27th place? Koreans as good as Japanese now? Not even close with Hyundai at 253 and Kia ranking fourth from last with 410 problems per 100 vehicles. All DaimlerChrysler brands were below average, showing that Chrysler products continue to place more importance on the looks of its cars than on the materials and engineering of them.

    Reliability translates to how often you’ll be at the dealership for repairs, plus there’s a resale value component. Of course, Porsches are below average, but with such great dealer customer service and fantastic brand image, owners are willing to put up with problems. On the other hand, Suzuki’s horrible reliability coupled with inept dealers mean you’ll have better luck curing herpes than selling a six-year-old Grand Vitara.

    Step 6: Rank ‘em
    You need to start with creating a list of the traits that are important to you: size, comfort, luxury, looks, affordability, acceleration, handling, image, ease of service, long-term value, and anything else you can think of. Then rank all the cars you drove.

    If performance is more important than reliability, then BMW or Audi might be a good choice. Reliability and resale value the keys? Toyota or Honda! Want the best bang for the buck, but don’t care at all about reliability or image? Hyundai. All about image over reliability, price or content? Mercedes. Oh, and if you rank buying American highly, check where the car is built! You’ll find more Japanese cars actually being designed and built in America now than “domestic” cars, which are predominantly built in Canada and Mexico!

    Okay, this is the time where I tell you what I’d buy in each segment:

  • SUV: Recommend – Chevy Suburban, Toyota Sequoia

    Avoid like the plague – Land Rover/Range Rover, Ford Explorer, any “small” SUV, the Jeep brand, VW Tuareg

  • Truck: Recommend – Toyota Tundra, Toyota Tacoma

    Avoid: Cadillac or Honda image trucks. If you’re considering these – you don’t need a truck in the first place.

  • Minivan: There are Honda Odysseys and Toyota Siennas, then there are all the others, period.
  • Wagons: Recommend — Subaru (they’ll shake, rattle and creak, but run forever.)

    Avoid: Volvo, VW and Audi, because quality stinks.

  • Crossover: Recommend – Buy a sedan or wagon.
  • Sedan: Recommend – for 99 percent of the world, a Toyota Camry or Honda Accord are perfect. (A Camry does 0-60 in 6-seconds…that’s faster than a Ferrari 308 GTB Quattrovalve, for god’s sake!!!) The Toyota Avalon is the best large sedan for taller drivers. In the entry-level luxury segment, BMW 3-series, Infiniti M and G are wonderful. In the luxury large class, BMW 750LI is amazing, provided you value luxury and performance over reliability and price. In the compact space, Honda Civic’s quality, safety, reliability, and resale value make it the only reasonable option.
  • Sports Car— It’s price/value in this segment. Low price means skimping on performance or interior materials. High price means more luxury/prestige or more performance.Step 7: Make the deal
    You need to go into the dealer knowing exactly what you want and how much you’re willing to pay. This needs to be based only on the dealer’s actual cost. To get the actual cost, subtract the dealer holdback from the invoice price (and add in destination fee and advertising cost, a non-negotiable item if the dealer participates in regional advertising.) Invoice and dealer holdback are available on Edmunds.com.

    Essentially, a savvy buyer will walk in, offer the dealer a fair amount of profit (like $500-$1500.) Know that the amount of success will be based on the availability and demand for the vehicle. Paying $1500 over cost for a Camry or Accord is reasonable. Paying $250 over cost for a Saturn Ion is reasonable. Getting $1500 off MSRP is a good hit on a Lexus LS.

    You can ALWAYS get money off MSRP. Usually the trick is to find a dealer who can’t move the stock of a car they have. In August 2001 almost every local dealer had $10,000 second stickers 2002 Corvette Convertibles. I bought mine for invoice price, when no Corvette enthusiast thought one could be bought for less than $1500 of MSRP. I just sent an email to the second largest Corvette dealer in the country who at the time was choking on 50 allocations each month. My local dealer’s Corvette allocation? One per year!

    Negotiate the deal separately from a trade in or financing, if possible. Know that it is worthless to try to negotiate a deal unless you are planning to buy that minute. Statistics say that if you walk out the door, you’re never coming back.

    Furthermore, set a time limit for the deal to be done, like 30 minutes. Tell the dealer you have to be somewhere, and that you won’t have time to come back. If you can’t come to a deal in the time allotted, simply stand-up, thank them for the time, and walk away. Go to another dealer. The reason is that the longer the dealer keeps you in the chair, the more likely they’ll sell it for a higher price. If your salesman walks away to get an “okay” or “sign-off” on a deal, follow them. Explain that you don’t have time to talk to anyone other than the decision maker. This is basic negotiations – deal with the dealmaker. The last thing a dealership wants is for you to waste the sales manager’s time, but they like the sales associate wasting your time. Turn the table, and you hold the power.

    What about leases? Two reasons for a lease: 1) you want a more expensive car than you can afford and/or 2)you want a new car every two or three years. If you don’t fall into one of these camps, just say no to a lease.

    Always be nice, courteous and down-to-earth. If the dealer senses arrogance, or feels you are too demanding and inflexible, they’ll kick you out to the curb. Realize you have to give them something to get something in return, so build it into your negotiation strategy.

    Most importantly, realize that you hold ALL the power. Vehicles are commodities. The same one can be purchased at many dealers. Be ready to walk if you’re not treated with respect or the dealer is unwilling to negotiate in good faith.

    A postscript

    I once spoke with a second-generation dealership owner about car salesmen. He made the comment that most dealerships look for salesmen of unquestionable loyalty, who “weren’t particularly bright.” The reason for this was that the sales managers (who he considered shrewd and very bright) wanted people on the floor who would tell the customers anything and believe it themselves. According to this owner, the sales manager wanted to be able to teach the sales staff to tell the customers the sky was red, and have them communicate it and defend it even if the customers knew the sky was blue. In other words, dealership sales managers want sales associates to lie, b.s., and misrepresent product, yet have full faith that they are telling the truth…

    …so be better informed than the sales associate!

    In closing, take your time, be critical and be very honest about how you really plan to utilize a new vehicle. Armed with the right information, you can’t go wrong.

    Of course, you might still have questions…so feel free to contact me. Everyone else does!

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    5 Responses to Sammy’s guide to buying a new car, truck or SUV

    1. Mike Barer says:

      You forgot to rank cars for single people to attract the opposite sex. Very important in this age of isolation.

    2. Bob Stahl says:

      Sam, I’m surprised you don’t mention “front wheel drive” at all.
      Is that the subject of a future article?

    3. Bob,
      I suppose I was trying to touch the basic subjects on which most current buyers are stuck. Right now people seem to be convincing themselves that they need AWD/4WD when they really don’t.

      FWD is a lot like all-season tires — not the best for anything, but the best for year-round driving. FWD cars, like AWD/4WD “plow” (understeer) in corners, and tend to take a little longer to stop. They are best, though, in snow handling, and are the easiest to “catch” should the car get a little sideways in the slick stuff.

      Most of the best snow cars I’ve driven or ridden in were FWD. The 2006 Toyota Avalon I bought in March was absolutely fantastic in Olympia’s snow/ice. With FWD, traction control and stability control, I was able to drive the Avalon like a moronic maniac and the car never got close to being out of control. And I never lost momentum, even going up the steepest hills.

      RWD (as well all know) is the best for performance driving, but worst for slick-weather traction. Even with great snow tires, going downhill around a curve in snow a RWD car can come unglued. For anyone (like me) who avoids snow, RWD is the absolute best for everything else.

    4. Mike,
      The type of car to attract the opposite sex varies widely with the type of person one wishes to attract. In LA, a guy should have a Ferrari or Aston Martin. In Olympia, WA, a diesel VW or Volvo would be a much better lure for the long-haired tree huggers.

      Given my looks and personality, I could have a garage full of Ferraris, Lamborghinis, Porsches, Jaguars, Bimmers, and Corvettes, and I still wouldn’t be attractive. Lucky for me, my wife looked beyond my curious exterior and dull personality when I asked her to marry me. Now it would cost her too much to get rid of me.

    5. Consumer Reports and J.D. Power both have serious shortcomings as sources of reliability data. You can read my take on them here:

      http://www.truedelta.com/pieces/shortcomings.php

      http://www.truedelta.com/piece/jdpower.php

      Because I personally wanted better reliability data, in the fall of 2005 I started collecting my own. I’m going to be providing clear, readily comparable, absolute repair rates. And I’ll be updating these results quarterly.

      Details here: http://www.truedelta.com/reliability.php

      I’m always happy to answer questions and consider suggestions. So if you have any, please get in touch.

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