TrueDelta

Rebates can change as often as every two weeks, though most manufacturers have at least a monthly rebate period. Problem is, no one wants to barely miss a higher rebate when buying a car, either by buying a few days too early or too late. What to do?

When I last bought a car, I did so at the end of the rebate period. A helpful dealer actually suggested filling out the initial paperwork that day, but then waiting until the first day of the following rebate period to complete it and take delivery, to see if the incentives changed. This way, they could file the paperwork for either rebate period, since there’s a short grace period for doing so.

As it happened, the factory-to-dealer bonus went up by $500, so I ended up paying $500 less. But the change could have gone the other way, and having begun the paperwork during the previous period would have protected me. (Or so I was told.)

Once the paperwork has been filed with the manufacturer, though, the deal is final. If the rebate goes up a day later, you’re out of luck.

For nearly a year I’ve been entering pricing information for 2008 models as it became available. Last night I finally entered the 207th, the 2008 Toyota Sequoia, along with the new Subaru WRX STI (not a separate model in my count).

There will be a 208th if Hyundai ever gets around to pricing the 2008 Azera. And a couple of trim levels have yet to be priced: the Buick Lucerne Super and the Mitsubishi Lancer Evolution X. But aside from those exceptions, the 2008 pricing database is as complete as it’s going to get. (Pickups and about  a dozen models that sell in low volumes aren’t included.)

Last year I didn’t reach this point until late February.

The work on the 2008s isn’t done. There have been some recent price increases, and there will be others before the 2008 model year is over. But the heavy lifting is done…for the 2008s.

Now on to the 2009s. First up will probably be the Dodge Journey, Pontiac Vibe, Toyota Corolla, and Toyota Matrix. Full pricing for these could be released any day now…

Recently I’ve heard of a few cases where someone went to a car dealer intent on buying one car, and ended up driving away with another. Now, sometimes such a switch will be for the better. But, in general, if you feel yourself considering a different car than you came in for, walk out.

Dealers are interested in selling what they have on hand. If they don’t have the car you want on hand, or they sense a possibility of switching you to a more expensive car, they will try to get you to buy a different car than you came in for. And they can be quite skillful at this. Many people get nervous in car dealerships, and perhaps excited as well, such that it becomes hard to think clearly. Especially when they’re throwing a ton of information at you. So it’s all too easy to only realize what happened during the drive home in the new car.

To avoid this outcome, if you find yourself considering a different car than you came in for at the car dealer, walk out. The car’s not going anywhere, at least not soon. Take a day or two to think it over back home, where you can relax and perform some additional research. Maybe the new car is a better choice. Maybe not. But the car dealer is not the best place to figure this out.

Ever since I learned the details of GM’s “dual mode” hybrid system, I’ve wondered what they’re going to charge for it. The system is more advanced and generally superior to those offered by anyone else right now, including Toyota. The fuel economy benefits are clear: with this system, fuel economy increases by about 50 percent in city driving and 10 percent in highway driving. But it’s also considerably more complex. And complexity costs money.

But how much? With the Toyota Camry, the Hybrid costs about $2,000 more than the regular four-cylinder Camry when both are comparably equipped. Toyota employs a more complex system with a third electric motor in the Highlander Hybrid. Which might explain why HiHy is priced about $5,000 more than the regular Highlander when both are similarly equipped. The same system adds about $3,600 to the price of the Lexus RX.

GM’s system is more complex still. So how much does it add to a vehicle’s price? Six thousand? Seven? Eight?

Well, I’ve now added the pricing for the Chevrolet Tahoe Hybrid and the GMC Yukon Hybrid to TrueDelta’s database. And the actual premium is over $9,000: $9,240 at MSRP and $9,397 at invoice. A loaded Tahoe Hybrid lists for $55,800. Similarly load up a Tahoe LT, and the list price is $48,025. The non-hybrid also has a $750 rebate, and includes about $700 in extra features, including foglamps, power recline and lumbar for the front seats, roof rails, and power-adjustable pedals.

I haven’t yet factored in the tax credit you’ll get if you buy the Hybrid. One group, the ACEEE, is estimating $1,800. Assuming you can get the tax credit–and many people cannot because of the Alternative Minimum Tax (AMT)–this still leaves the Hybrid with a $7,600 premium.

Even at this price, GM has been implying that they’re selling the system at a loss. They cooperated with BMW and Mercedes to develop the system. Those companies aren’t used to focusing on cost. Their involvement might have had an impact.

I’ve read many requests for this system in other GM models, and it’s coming to the Saturn VUE and probably some of GM’s midsize sedans as well. But unless they can get the cost down, I doubt many people will be putting their money where their mouth is.

Update: GM recently added $1,000 to the rebate of the regular Tahoe. So for the next few weeks at least the premium for the Hybrid is actually over $10,000.

GM and, to a lesser extent, Ford have been rolling out some vastly improved products. Reviews have been favorable. Yet their sales have yet to firm up. What gives? What do they have to do to regain the customers they have lost over the past few decades?

In the long term, better products will do the trick. But, as the saying goes, in the long term we’re all dead. GM and Ford might be dead before this sea change can occur on its own.

For a quicker result, they need to look at why people buy Toyotas and Hondas: they think they’ll get what they expect to get. Toyota’s quality reputation has taken a few hits lately, but nothing serious enough to shake consumers’ trust in the company.

In contrast, car buyers aren’t sure what they’ll get with a GM or Ford product anymore. And, if something does go wrong, they strongly suspect that the manufacturer will dodge responsibility to the fullest extent possible.

My advice to GM and Ford: if you want customers back sooner rather than later, you’ve got to take a much stronger stand behind the product.

It’s not just about a longer warranty. A warranty doesn’t only specify what the company is legally bound to cover. It also implies what the manufacturer is not legally bound to cover. Putting too much emphasis on the warranty effectively says, “Once the warranty is up, you’re on your own. By buying this car, you’re betting that we’ve done our job well enough. Don’t like that bet? Then don’t make it.” Put another way, a warranty suggests an adversarial relationship, where the manufacturer isn’t going to do something unless forced to by force of law. Few people enjoy a relationship that is entirely based on a legal contract.

So, while a longer warranty can certainly play a role in restoring confidence, these manufacturers need to go beyond the warranty and pledge that, if something goes wrong with the product, the manufacturer will do anything within reasonable limits to make it right.

What does this mean, really? It means putting yourself in the customer’s shoes, and saying, “If I were the customer, what would I expect the manufacturer to do?” Now there are always going to be rare, random failures in this part or that part with any car. Maybe the manufacturer should pick these up, just because they are rare and because it’ll keep the customer happy. But this sort of problem should be so rare that the potential impact either way is limited.

Of much greater significance are common failures that occur out of warranty, but short of 100,000 or maybe even 120,000 miles. Such failures are caused by a lapse in engineering, not just bad luck, and so the customer will rightly expect the manufacturer to take responsibility beyond the term of the warranty.

My suggestion to GM and Ford: pick up the tab on these common failures. And don’t take this step quietly, but as a clearly stated policy. Even today these and other companies have “customer care” departments that sometimes pick up the tab with out of warranty repairs. But how such decisions are made is unclear, and not anything that can be counted on in advance. What this says to the customer: “Maybe we’ll pick up the tab, maybe we won’t. You’ll find out when it happens.”

GM and Ford have tried the case by case approach, and it isn’t working. When they buy Hondas and Toyotas, Americans are saying they don’t like that bet. The solution: don’t make customers wonder whether you’re going to pick up the tab. Provide them with confidence that, if something goes wrong owing to inadequate engineering, the company will take care of it. The great majority of car buyers are not interested in placing a bet on a car company, even if they’re the sort of person who enjoys going to Vegas. Make them wonder, and they just won’t buy your car, even if it is much better than last year’s car.

For the past month or so, one of my top priorities has been getting enough owners of 2008 models enrolled to have results on a few in February.

How are we doing? Below you’ll find the latest counts (updated on 12-15):

Buick Enclave: 79

Other Lambdas: 31

Nissan Rogue: 36

Honda Accord: 35

Infiniti G-Series: 34

Saturn VUE: 34

Nissan Versa: 33

Nissan Altima: 30

Toyota Prius: 28

Cadillac CTS: 24

Mercedes C-Class: 24

BMW 5-Series: 20

Ford Escape et al: 20

Scion xB: 20

I think most of these will be in the February results, but with asterisks unless the count is already over 30. Members will get a preview of the preliminary results around the middle of January.

A few years ago, many European manufacturers started including free maintenance during the warranty period. For the 2008 model year, I think only BMW does. Why did they start? Why have they stopped? And what can you do to minimize the high maintenance costs on these cars?

European manufacturers started including four or so years of free maintenance for at least two reasons. First, high maintenance costs were a key reason more people weren’t buying their cars, opting instead for a Japanese or perhaps an American alternative. By paying for the maintenance, this obstacle was removed. Second, many of these European cars were leased, and people who lease are probably less likely to maintain a car well. After all, they aren’t going to own it for long. To avoid damage to the reputation of the brand, the manufacturers encouraged proper maintenance by picking up the tab.

So why stop? I can think of a couple of possible reasons. First, research probably found that the free maintenance wasn’t having a large enough effect on people’s purchasing decisions to financially justify it. TrueDelta didn’t help: I’ve considered factoring free maintenance into our price comparisons, but haven’t done so. Second, the dollar has taken a nosedive, forcing European manufacturers to cut costs. Free maintenance was an easy cost to cut.

So, except for BMW, European car owners once again must pick up hefty tabs themselves. What to do? Check the maintenance schedule in your owner’s manual. The dealer might add items not called for there; refuse those. It’s also possible that you or a friend who knows cars can perform many of the required items. Most will be the “inspect X” variety. It’s not hard to inspect a tie rod end, for example. There shouldn’t be too many items remaining. Have the dealer or an independent shop perform those, usually for a much lower price than you’d pay if you simply dropped the car off at the dealer and said, “Give me the 15,000-mile service.”

I don’t want anyone to spend time filling out the surveys unless there’s a good chance TrueDelta will be able to use the data they provide. So we start collecting data only when 25 of a model are signed up.

As a result, the percentage of the panel that was active was initially small. Actually, it was zero for nearly a year. The first round of surveys, in November of 2005, included about 200 cars. The panel only included about 2,000 cars at the time, so that percentage of enrolled cars included in the surveys was only a bit over ten percent.

As fast as the panel has grown, the number of cars included in the surveys has grown even faster (in percentage terms). Six months later, 1,000 cars were included in the surveys. Six months after that, 2,000 were included.

And then the growth really began to accelerate, to 5,000 cars last May, and 10,000 cars last month, two years after that first round of surveys.

This month, we have another milestone: the percentage of enrolled cars included in the surveys has passed 50 percent.

Since many panel members have two cars enrolled, the percentage of panel members included in the surveys passed 50 percent a few months ago. But too many are still patiently waiting to be included.

Many models are now within five owners of getting started. A list can be found on the bottom half of this page:

Models included in the Vehice Reliability Survey

If you know someone with one of these models who might be interested in participating, please let them know about this research. Hopefully it won’t be much longer before the great majority of models are included.

Every once in a while when I follow up with a participant in TrueDelta’s Vehicle Reliability Survey, I’ll be told that the car in question required “no significant repairs.” At which point I ask, what about the insignificant ones?

Unlike with Consumer Reports, every repair beyond routine maintenance and wear items (which are explicitly listed) should be reported. Even if it seems insignificant.

Why? Because different people are going to have different interpretations of what should count as “significant” (or “serious,” in CR-speak). Not only this, but extraneous factors will shape these interpretations. Was a loaner provided? Did the dealer provide good service? Has the car been reliable in the past? Does the owner generally like the car? How much of an inconvenience was it to take the car to the shop? And so fon.

TrueDelta’s method strives to minimize the roles of subjective interpretations and extraneous factors. So we ask that all repairs, even minor ones, be reported. Responses to some of the questions on the survey can be used to determine which repairs were truly serious when there are large enough sample sizes to make such an analysis viable.

Got my latest issue of Consumer Reports today, and they tested the Toyota Highlander, Buick Enclave, Ford Taurus X, and Subaru Tribeca.

I’ve discussed before how Consumer Reports refuses to divulge how scores are calculated as a matter of “policy.” Well, while their detailed impressions of these models generally match my own, their secret scoring system yields a top place finish for the Toyota, a sizable six points ahead of both the Buick and the Ford.

I do wish they’d say how scores are calculated, because the narrative and ratings leave it unclear how the Toyota finished ahead of the others.

Noted advantages of the Highlander: acceleration, transmission behavior, fuel economy, second row comfort, access (unclear how the Highlander is better here), rearward visibility

Noted advantages of the Enclave: interior fit and finish, steering feel, third row room and comfort (big difference noted), split third row, and cargo room

The secret scoring system must weight the Highlander’s advantages more heaviy than the Enclave’s. But I suspect that many buyers have different priorities, such as a useful amount of rear seat space and cargo room, that give the Enclave the edge. The Ford also has more room for people and cargo room than the Highlander, and so could also come out ahead of the Toyota for many buyers.

Consumer Reports needs to make its scoring system transparent, so car buyers can determine whether or not they have similar priorities and, consequently, the same top pick.