Establishing auto value is a bit more complex than it used to be!
A couple of decades ago, when you went shopping for a new car, it was
a much more straightforward proposition than it is today. In the old
days, you were more concerned with looks, amenities, the cost of
insurance and the total price. We were still fully immersed in
consuming. If you were looking for a luxury car, it had to have air
conditioning, power everything, an impressively lighted dashboard that
reminded you of a Christmas display in Saks Fifth Avenue and
preferably, leather seats. The perceived auto value revolved mainly
around how impressive your wheels were.
We hadn’t yet experienced the $4.50 gallon of gas. We put maintenance
and repair costs for fixing those dazzling panel of lights and
corresponding features conveniently under our mental rug of things
that happen to other people. If you had a great (and secure) job, a
$500 car payment didn’t even make you blink. This has all changed.
Establishing auto value today has become a complex analysis. Almost
everyone wants to drive a nice looking auto, but fuel economy,
reliability, registration and insurance fees are now important
considerations. As for all those power options, hey, you can roll your
own windows up and down. Electronic components spell trouble,
somewhere down the road. Air conditioning? That’s about the only
amenity everyone still lists as a must-have.
Today’s car buyer has become a hard sell, according to the car
manufacturers. So much so, that the ‘Big Three’ are now lobbying
Congress to bail them out of a mess of their own creation. They
evidently did not have the foresight to anticipate that fuel costs
were going through the ceiling, nor that the signals of a slowing
economy and tightening credit would come back to bite them in the you-
know-where. The consumer’s perception of auto value was changing and
they failed to see it coming. The result is a complete mismatch
between buyer and seller.
The ordinary buyer of today is establishing auto value based on more
down to earth criteria. With so many people commuting long distances
to work, fuel economy is primary. New cars don’t offer much here.
Ironically, if a new car provides good mileage, it’s likely a $30,000
hybrid. With all the talk of alternative fuels, not many buyers are
willing, or able, to spring for this sum of money. Who knows that a
couple of years from now, someone might come out with a reasonably
priced vehicle that runs on algae and doesn’t cost $30,000? The savvy
consumer is more likely to hang on to their current vehicle, a known
quantity, than to make a rash and costly investment in what Detroit
has to offer as ‘good’ auto value today.
People who now own vehicles with good resale value are far more
inclined to keep this good auto value in their possession rather than
fool with some unknown quantity. After all, if the Kelly Blue Book(TM)
is good now, why take a chance on a vehicle whose auto value can
tumble in the next year?
If you perceive that your car has good auto value for you today, why
rock the boat? Surely, in a country that travels to the moon and
performs heart transplants, Detroit will get around to providing truly
good auto value in the foreseeable future. Your best bet now is to sit
tight and force the technology.
