Car Biz: Buy Now or Lie Low?

It gave me a wry chuckle when the stock market had a great fall on the day the economic pundits announced solemnly that we really are in a Recession.

Anyone with a pulse had known that for months; some with clear minds had been saying so for much longer. The investing mavens seem more like Chicken Little sometimes than like well-educated, thoughtful, big-picture stategists.

But life goes on for regular folks. Some of my friends and customers are pondering: in these troubled times of recession and economic contraction, is it a good time to buy a motor vehicle, or not? Here are some basic points to consider:

• Interest rates are low. Real rates are in the 4.5-5 percent range for purchasers with good credit. This contrasts with rates in the 12-15 percent range thirty years ago. Irresponsible companies that were ripping off customers are disappearing.
• Financing is available. Times of stress prune away the ineffective and weak, and strengthen the strong. The healthiest banks and credit unions will survive, and they will continue to make financing available to persons who themselves are financially viable. Bad decisions, leading to bad loans to bad risks, created this broad crisis. The institutions that made the worst decisions will disappear, but there are many survivors ready to help responsible people purchase needed vehicles.
• Quality is always economical. What applies to banks also applies to motor vehicle companies. Those which persisted in producing low-quality, high-cost, low-mileage vehicles with artifically-lowered finance rates and artificially-boosted residual values are cratering. The companies that produce high-quality, high-mileage vehicles for realistic prices are gaining market share and will emerge stronger. Their vehicles can be leased and purchased at the lowest real costs ever RIGHT NOW.
• Prices are very low now. Vehicles that six months ago were selling above MSRP are selling today for invoice. This includes high-mileage vehicles like our Civics, Fits, and Hybrids. There has never been a better time to get a low price in relation to value received. The market for selling and buying new and preowned vehicles has reached low ebb.
• Prices are likely to begin to climb next month, next quarter and next year. Manufacturers have cut back production, to restore a favorable supply-demand ratio. Now is a good time to get a historically low price.

This is an excellent time to purchase or lease a quality motor vehicle--especially one like my Hondas that embody high value, cost relatively little to operate and maintain, and can now be acquired at historically low cost.