Should You Buy A Ford Now?

It seems that American automotive manufacturers are having a tremendously hard time the last few years. Whether you look at it from a marketshare perspective or profit margins or growth rates, all three (or two if you count Daimler Chrysler as a German company) are not doing as well as the Japanese competition.

Recently, Ford seems to have decided not to keep market share at the expense of profit margin and so they will be laying off workers and shutting down plants. Investors have been getting out of the stock of Ford's major supplier as a result.

Ford and GM both have fairly large liabilities in terms of pension plans that are on their books. They both need to fix their cash flow big time.

The real question you have to ask yourself is whether you think that tings will continue to get worse for Ford and GM? I am not yet convinced that the current Ford CEO can do the job. If things do actually get worse, will buying a Ford vehicle be a smart thing? If things were to get worse, do you believe that Ford will provide the same level of service for repairs, parts and guarantees? Will they be trying to save money in operations? Will they raise the costs of replacement parts? Will they lower dealer margins? Will they be treating you, the Ford owner, any different?

I am not worried about whether they will be around as a company and I don't own any of their stock. The worry I have is all the stuff that is in between.

Depreciation or How Not To Waste A Lot of Money

Quiz Time:

What is the difference between buying a new car from a new car dealership with 50 miles on the odometer or a same year car with 51 miles from a used car dealership?

The answer really has a few different aspects.

The first of course is 1 mile.

The second is financing - both dealerships have different banks that offer different rates and terms to you. Bring your own financing and you make this second difference moot.

The third is vehicle history but you can make sure that your vehicle is fine by using www.carfax.com - so that is moot.

The fourth aspect is the biggie. Say you did buy from the new car dealership and negotiated well to get a good deal. You sign the papers and drive the vehicle off the lot and do a U turn back into the lot and ask the very same dealership how much they would buy your vehicle with 51 miles on the odometer for. The answer is going to be $2000 to $6000 less than what you paid for it. You just got hit by new car depreciation. It happens to every new car once it has been titled and driven off the lot.

So, what can you do about it? Simple, you can save yourself by buying a used vehicle where the depreciation has been taken. So go find a 2006 or 2007 model year vehicle with less than 8000 miles on it and you can benefit from that $2000 to $6000 difference that makes the mileage difference pale in comparison. In fact, use that savings and buy yourself your next 10 to 50 tankfuls of gas.

Toyota becomes Number 2

Toyota has beaten Ford to the number 2 position. Good for them.

The Wall Street Journal and a few other papers are reporting that Ford may have to get rid of one of its luxury lines - most probably Jaguar.

What I can say is that the general public in the United States certainly has a good belief in Toyota building reliable vehicles. The market premium for a used Toyota vehicle is quite high if you haven't checked recently. Along with their Lexus brand, Toyota has certainly many fans of their products in the general population.

Now if only I could convince them to build some of the Lexus cars a little tighter - more like a BMW... That would certainly frighten their Bavarian counterparts.