Beware Of That Canadian Vehicle Warranty

Hey Cool Car Fans,

Earlier this year I purchased a vehicle for a client out of the Manheim dealer auction that was listed as “previously Canadian”. It was a 2015 GMC Sierra 1500 Denali and it was still covered under the manufacturer’s warranty for the powertrain. If this had been a Dodge or some other brand that would not be the case. Which is one of the reasons why people use me instead of dropping a coin into a vending machine with some online retailer who isn’t going to know this kind of information.

A powertrain warranty though isn’t what it used to be and this is something most people are not aware of. Recently, that GMC Sierra Denali that I delivered 7 months and almost 7,000 miles ago threw a check engine light. It turned out based on the “codes” that the client’s mechanic pulled that it had misfiring fuel injectors. The vehicle only has 39,250 miles on it and the fuel injectors are going bad. This is a known problem with the GMC and it’s about a $2,100 repair at the dealership because they replace all of the fuel injectors. My cost was $1,800 for my client, but it’s really something that GM should be recalling.

THIS IS WHY PEOPLE USE ME AS THE COOL CAR GUY: I HAVE EXPERIENCE WITH JUST ABOUT EVERY MAKE AND MODEL OF VEHICLE.

As I discussed in a previous article though GM and other manufacturers get out of recalling vehicles that have known issues all the time. In this case, you would think that it would be covered under the powertrain warranty, but it’s not! They call it a fuel system problem rather than an “engine problem” even though fuel injectors are in the engine. The mechanic I spoke with thought it should have been covered under the emissions warranty, but GM said “No” to that as well. This is way more common though than most people realize. Manufacturer’s call it a “limited” powertrain warranty, so that they can get out of fixing known issues under their powertrain warranty that they use to sell their vehicles. I’ve seen it with fuel injectors, transmissions and other engine issues where they put the repair into a different category to get out of fixing the vehicle under their limited powertrain warranty. It’s pretty ridiculous!

I need to write an article about a client of mine and his Mercedes C300 4Matic and the nightmare he went through with his Mercedes Benz that only had 40,000 miles on it. I wrote an article previously about the VW nightmare that I had a client go through with their Tiguan, which is one of the reasons why more people are leasing new vehicles instead of purchasing used vehicles that can have large repair costs. I’m also finding that I’m the only used car dealership who is really writing about these issues for the consumer. I had a client recently call me and they were going to get rid of their 2008 Porsche 911 and purchase a used Mercedes Benz. I said, “Don’t do it!”, you’re way better off getting a Porsche Macan because it’s a far better car than the Mercedes Benz you’re looking at for reliability.

It’s always funny to me when some people are concerned about how much I earn when finding them a vehicle, which is far less than Carvana or other online retailers pretending not to be car dealerships earn. It’s not how much I earn, but how much I save people that matters. I had a woman show up at my office the other day and I got her a 2005 Dodge Caravan ten years ago! It now has over 179,000 miles on it and it was in great condition for being almost 14 years old. She was back to have me find her another vehicle because she had so few problems with her vehicle over the past 10 years. The reality is and I say this quite often, “No two used cars are the same”. You can have two of the exact same vehicles sitting next to one another and one I would buy and the other I would send to the auction.

It’s not about the initial price, but what’s the quality of the vehicle you are purchasing. Make sure you know what you are buying before you buy it. Is it previously Canadian and now the warranty is void in the United States? Is the limited powertrain warranty not going to cover a known problem with the vehicle? Is the DEF system on the diesel truck a nightmare and you would be better off buying an older truck instead of buying a newer one that is going to be thousands of dollars in repair.

I’ve been doing this business for over 14 years and I am constantly learning and seeing new things. Many times I end up learning from my client’s and the vehicles they “have to have” that I don’t think is a good idea. I tell them to buy a Ford truck and their response is that “I hate Ford” and then I get them what they want “a Dodge” and it turns into a nightmare. Not every Dodge is that way, but certain vehicles in most brands are total crap, but people have done their own “research” online and they are the “expert”. That’s not my problem when people refuse to listen to good advice.

I buy, sell, trade and wholesale vehicles everyday and most people do it once every three, five or even ten years. They go online and get all their “data” for a week and then they are an “expert”, which is why I only try to help about 250 people a year. I don’t want to sell 1,000 vehicles a year and have all that brain damage and people calling me about the bad decisions they make. I setup CoolCarGuy.com as an automotive boutique for people who understand the value of working with someone who understands and knows some things because I deal with the powertrain warranties, I’ve purchased Canadian vehicles, I’ve spent $500,000 fixing vehicles and I know the myriad of problems that can happen with vehicles before and after the sale.

How many people know that a 2015 Porsche Cayenne S has a radiator hose running behind the engine and if it goes the dealership needs $3,500 to pull the engine and get started. How many people know that the 2012 VW Tiguan has a radiator leaking problem that can corrode the ECM unit and it’s a $2,400 repair? I deal with every make, model and price point of vehicle. The 2.5 motor in the Subaru tends to blow head gaskets at around 85,000 miles to the point that it’s almost a feature. The list goes on and on, so when you purchase a vehicle “As-Is” that you found online at a big box retailer pretending to not be a dealership or “one-price”, know that it’s “buyer beware”. Your great deal might not be such a good deal down the road.

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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com, a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.comor Twitter @coolcarguy

WHEN A CAR LEASE MIGHT NOT BE SUCH A GREAT DEAL

Hey Cool Car Fans,

I recently had a visit from someone trying to sell me some advertising for my car dealership and they shared with me the great deal that they got on their leased vehicle. I was curious so I asked them to send me a copy of their lease agreement to look it over. I’ll share with you how “great of a lease” it really was in this article to give you an idea of how wrong a lease can go and trap the owner for quite a while.

When she leased her new vehicle it had an MSRP of just over $42,300. After a full year of making payments of $685 a month, plus sales tax her buyout on the vehicle was actually over the original MSRP of the vehicle. Which means that of the $8,220 that she had paid to the leasing company over the course of a year none of it had reduced the purchase price of the vehicle. The interest payments on the lease actually increased the cost of the vehicle if she wanted to buy it out. It gets better though because it wasn’t even a 36 month lease, but a 48 month lease, so she still had three more years left.

How could she owe more than the vehicle MSRP on a lease? As I read the lease agreement I discovered that she had rolled negative equity into the lease of $3,600, so along with the document fee of $599 and a lease acquisition fee of $675 and a $599 maintenance agreement the end result was a capitalization cost of $47,780. Which when you start adding the monthly payments for a year it explains why the current buyout was actually more than the MSRP.

What was a bit tragic is the dealer she went to didn’t give her enough money for her trade, so she had negative equity that should have been far less or not at all. To top everything off, they only gave her 10,000 miles a year and based on how she was driving for her work the cost at $.20 a mile would be $4,000 at the end of the lease term to give it back to the leasing company. Her only option was to give back the vehicle to the leasing company at the end of the lease term.

IT CAN BE DIFFICULT TO GET OUT OF A BAD LEASE ON THE WRONG VEHICLE

I won’t be disclosing the vehicle in this article because that’s not as important as the lease structure and overall situation this person found herself in with what she thought was a great lease. The current buyout on her vehicle was over $43,000, but I could purchase the same vehicle at the dealer auctions for around $28,500 and it had a retail value of about $32,000. So, if we bought out her lease it would be a hefty loss. Much more than just riding it out until the end of the lease term and writing a check for $4,000 for going over the miles. The reality is that this was just a really bad lease.

In a few years, she might be able to get out of the lease depending on if the market changes for the vehicle she leased. The reality is that over four years of making payments of $685 a month, plus her sales tax, she would have been far better off to have purchased it instead of leasing. My guess is that the Manager she worked with didn’t explain to her the difference and look out for her best interest, but in the end she made the decision.

In this case she would have been far better off purchasing or financing this vehicle new or used. If she would have contacted me first I would have suggested we find her a slightly used one based on the depreciation, trade her other vehicle in for the tax savings and be in a far better position. Even had she purchased it new and financed it she would be in a better position than her lease, but this is definitely a vehicle that didn’t lease well and she should have bought it used.

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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com, a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide. Call or email John about your next vehicle! jboyd@coolcarguy.comor Twitter @coolcarguy

How Manufacturer’s Get Out Of Covering Recalls

Hey Cool Car Fans,

There are certain manufacturer’s that you want to lease instead of own. That is unless you have no problem writing a check for senseless repairs that are just not normal with other manufacturers. I’ve spent well over $500,000 fixing cars over the years, which is quite a bit compared to most people.

Recently, I purchased a 2012 VW Tiguan for a client with only about 38,500 miles on the vehicle.  You would think that with that few of miles that it would be in fairly good shape mechanically. I took it to the VW dealer to get a tune up prior to delivery and had it checked out. The VW dealership said there were not any serious issues and that there were no recalls for the vehicle.  A few days after I delivered it the vehicle it started to stall out on my client. This was not good and even though I had sold the vehicle “As-Is” without a warranty it just wasn’t cool that this VW was having these problems. She stalled out in the middle of an intersection, which was terrible and dangerous.

2012 VW Tiguan

I got the vehicle back and took it to another repair shop where they looked at it for about a week.  They couldn’t find a solution to the problem she was having after changing out a crank case sensor and some other possible solutions to the problem.  They reproduced the problem and after a week they thought that they had it fixed.

In the meantime, I went back to the NHTSA.gov website where recalls are listed for vehicles.  There were actually three recalls for these 2009 – 2014 vehicles.  You can see the recalls listed here and it’s very interesting how manufacturers play what I call, “the recall game” with the U.S. Government.  I’m surprised a good team of attorney’s hasn’t figured this one out yet, but hopefully they will read my article and see how it works.  Hopefully, we can get the manufacturers to comply and fix the problems they are creating for the consumer. The VW Tiguan that I delivered as a used vehicle with only 38,500 miles was having the exact same problem as 151,389 other VW Tiguan’s, but this particular VIN was excluded.

It was the same vehicle, same engine, same exact issue with the vehicle was stalling while driving, but you will notice that VW’s solution and reason for this was not even close to accurate. It’s a con-job to get out of paying for the real issue with their vehicles and paying more money for a hefty recall on hundreds of thousands of vehicles. Here’s what they state is causing the problem – ” When using winterized fuel, in certain conditions bubbles may form in the fuel system which could result in the vehicle stalling. “

That sounds so simple and friendly doesn’t it? “Why it’s just bubbles in the fuel system from winterized fuel. ” Want to know what the real problem was and the cost of the repair? Let me first tell you that I had to go back to another VW dealer and they wanted $600 to scrape carbon out of the engine from not using the Premium Fuel since it wasn’t covered under the recall. I loved that one. That definitely wasn’t the issue.

In fact, my client took it to a VW dealership in Colorado Springs and they had the vehicle there for two months. That’s right, they had her vehicle for two months to try to diagnose the problem that didn’t match their recall issue, even though the vehicle was “stalling”. They told her that they had to have a VW Engineer fly in from Germany who looked at the vehicle and determined that coolant from the radiator had leaked down the wiring harness that feeds into the ECM unit and corroded it. That’s a far cry from using the wrong fuel.

I went round and round with the technician after they quoted $3,800 to fix it and we got nowhere with VW. We contacted the VW Rep and got nowhere. I decided to go to another European vehicle mechanic I know here in Denver and told him the situation. He said it “was a known problem” with VW and their motors and engineering and that he could get a used ECM, have it reflashed, clean off the wiring harness and have it back up and running for about $1,500. Of course, my client by this time was worn out from the fiasco with VW since they had her vehicle for two months!

I couldn’t blame her and she opted for the $3,800 repair for something that should have been a recall item. I offered to pick up $2,000 of the repair bill for her, which is more than the manufacturer VW offered. I lost money getting her this vehicle, but it was pathetic how VW as a manufacturer handled this situation with their faulty engineering.

It’s pretty pathetic when The Cool Car Guy, who owns a used car dealership did more to stand behind a faulty 2012 VW Tiguan than VW did with their crappy engineering. Let me share this too about why I am calling foul on VW and their “winterized fuel” scenario for their VW Tiguan recall.

THE SAME MOTOR IS IN THEIR OTHER VEHICLES WITH THE SAME PROBLEM

Here’s an article showing that VW recalled 281,000 Passat and CC vehicles that were “stalling” and it wasn’t “winterized fuel”, but a faulty fuel pump – USATODAY.com

I used this 2012 VW Tiguan as an example for this article and obviously I was pretty ticked about how the manufacturer handled this situation with their vehicle. However, the reality is that many car manufacturers play this game with their vehicles to get out of paying for costly repairs. I’ve seen it with just about every manufacturer. It’s a shell game where they know there is a serious issue with a vehicle, but they can issue a recall for something cheaper that won’t cost as much to temporarily fix the problem. They can also exclude certain VIN’s with the real known problem and then make the customer feel like they have a problem and not their vehicle. Sometimes they will do the recall and it won’t fix the problem and the service technician’s response is “Well, the recall has been done, so we know it’s not that.” and the reality is that it never was that to begin with. It’s your word against theirs.

It’s not just recalls either. If you buy a Dodge vehicle that was previously in Canada you will not get the warranty transferred to the United States simply because it was in KM instead of miles. Which is definitely a “buyer beware” issue before you buy a Dodge to make sure it wasn’t in Canada previously.

In closing, I felt it was important to write an article about this issue because nobody is actually talking about recalls. And in fairness, many times manufacturers will actually issue recalls for the right issue as well and fix them. I’ve seen it both ways, so it’s very annoying.
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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com, a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide. Call or email John about your next vehicle! jboyd@coolcarguy.comor Twitter @coolcarguy

The Electric Vehicle Boom Is Underway

Hey Cool Car Fans,

About seven years ago a client of mine, who has way too much money and lives up in the Mountains of Colorado, told me that I should rebrand my business and just focus on electric and green vehicles. What’s ironic is that he made his millions in the oil and gas industry and actually owned an oil company at the time.

2017 Kia Soul EV

As The Cool Car Guy, I work with every make, model and type of vehicle, including hybrids and EV’s for my clients as well as tracking down a diesel pickup or a classic car. Basically, vehicles from one extreme to the other depending on what someone is looking for and if they want me to assist them in tracking it down for them. I have clients around the country who want very specific vehicles, including a used Tesla or other EV or hybrid vehicle.

Fast forward to 2018 and Tesla and other EV’s are now gaining in popularity, along with hybrid vehicles. Especially in States like California where gas prices can top $4.00 or $4.50 a gallon. This is one of the reasons why the Tesla Model 3 has been on track to be the number best selling passenger vehicle in the State of California in 2018. That just wasn’t happening seven years ago like it is today. Of course, I’m still not going to be changing me business model to exclusively being a green car only dealership.

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2017 Tesla Model S

GM is getting rid of the Chevy Volt hybrid in 2019, but it’s going to stick with the all electric Chevy Volt based on a demand for EV’s being more than the hybrid model. You have Porsche getting into the EV business to take on Tesla with their Porsche Taycan. I have at least one client who has already put money down to reserve his spot for one of these new Porsche’s. Just about every manufacturer is getting in on the EV bandwagon or going “green” with their vehicles to help reduce emissions. The reality is that the carbon footprint of most of these vehicles is not as “clean” as they are touting them to be because of how much it takes to create the batteries to run them.

Nevertheless, I don’t think that it’s the “green” factor that is driving demand for these vehicles as much as the economic factor. I’ve suggested numerous times that people are better off leasing a Tesla than buying one new or they should consider buying one used instead because of the massive depreciation. The economics that is driving the demand though is the simple fact that the cost of a gallon of gas in places like California, plus oil changes, maintenance, etc. is driving up the cost of owning a vehicle in these places. At $4 a gallon with a vehicle that gets 25 mpg it is $2,400 a year to drive 15,000 miles, which is about $200 a month for fuel, plus car payments, oil changes, maintenance, etc. An EV even if more expensive initially doesn’t have the additional costs of fuel and maintenance of a petroleum vehicle.

MORE CHOICES FOR THE ELECTRIC VEHICLE TODAY AND MORE TO COME

The electric vehicle is probably here to stay, which was a question less than a decade ago, based on the fact that so many manufacturers are now committed to building EV’s. A quick search through used vehicles available through the Manheim Dealer Auctions and there are about 219 currently available from a variety of car companies. These include the following for sale at this one dealer auction with more choices that are sure to be added each year:

  •  BMW (10)
  •  Chevrolet (18)
  •  Fiat (30)
  •  Ford (6)
  •  Hyundai (1)
  •  Kia (15)
  •  Mercedes-Benz (10)
  •  Mitsubishi (3)
  •  Nissan (68)
  •  Smart (11)
  •  Tesla (32)
  •  Toyota (6)
  •  Volkswagen (5)

We can expect more choices in the future as car companies continue to pursue offering EV’s as part of their product offering going forward. EV’s along with hybrid vehicles are going to become much more competitive and more people will be purchasing them as a cost savings alternative to petroleum based vehicles.
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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com, a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide. Call or email John about your next vehicle! jboyd@coolcarguy.comor Twitter @coolcarguy

The Honda S2000 Will Probably Become A Future Classic

Hey Cool Car Fans,

The other day someone asked me what I thought would be a good vehicle to buy today that will probably be worth more in the future as a classic car.  It had to be cool and really fun to drive and there were quite a few of them that came to mind right away.  One vehicle that I have noticed has been going up in price recently compared to what they sold for new is the iconic Honda S2000 roadster.  It was Honda’s last true sports car and a really cool one for sure.

The Honda S2000 was manufactured by Honda from 1999 to 2009 and sold worldwide.  It’s a super cool car that was one of Road & Track‘s Best All-Around Sports Cars,  I would have to agree with that assessment.  Honda created a great vehicle for the money and they ended up selling 66,547 in the United States over the decade that it was available.  That may seem like a ton of cars, but it’s really not since in 2009 there were fewer than 1,000 sold.  In 1999 there were only 3,400, so they are getting more difficult to find, especially with lower miles and in great condition.

I spotted a 2000 Honda S2000 with about 195,000 miles running through the dealer auction and it would still retail for close to $9,000 to $10,000, which seems a bit crazy.  Granted it was in excellent condition, but the original MSRP of this vehicle back in 2000 was $32,000.  The reality is that vehicles are getting more expensive on an annual basis and many people are turning to older cool cars that have already depreciated enough that they are affordable to drive.

WHAT ABOUT REPAIRS ON AN OLDER VEHICLE LIKE THIS ONE?

As The Cool Car Guy, I find cars like this for people who are into cars all the time.  It can take some time to find the right one that isn’t trashed or hasn’t been driven hard to the point that you’re going to spend a fortune in repairs.  It’s true that there are maintenance costs for some of these vehicles, but if you do the major issues such as a timing belt, water pump, brakes, tires, alignment, change the oil, etc. these vehicles can last a very long time.  As long as parts are readily available, you can usually go to an local shop and get repairs done for less.

This is another strategy to own an affordable cool car for the masses that many people often overlook. Certain vehicles hold their value much better than other vehicles.  Some vehicles you can actually drive for nearly free because of how they hold their value and appreciate after a certain time period based on supply and demand.  Of course, I can’t tell you that’s going to happen for sure, but I can tell you that I’ve done it many times.  The Honda S2000 is one of those vehicles that is unique, fun, engineered extremely well and popular enough that you can buy one at a good price and drive it for a few years and not lose a ton of money in depreciation.  The biggest challenge is just finding another buyer, but they are out there because more care enthusiasts are discovering how fun they are to own and drive.

This is a different strategy than one of my other ones where you can be driving a near new vehicle every three years and have most of the warranty in place during the time you’re driving it.  That strategy is really cool as well and it’s a great alternative to leasing.  I also have my unique CoolCarsForLife.com strategy where you can buy a vehicle like this one by borrowing against your cash value life insurance policy and paying it back on your own terms with no credit check or having the loan even hit your credit report.  If you know what you’re doing, you can do this at nearly zero net interest as a great way to fund a vehicle like this one as your daily driver or to own a fantastic future classic for Summer or warm weather driving.

Another great feature of the Honda S2000 is that after-market and OEM parts are readily available and you can still order parts from the Honda dealership as well.  There are also plenty of online forums and car clubs available for this vehicle because it’s a vehicle with a bit of a “cult” following.  Why wouldn’t it be since it’s such a cool looking car and it’s now affordable for the masses.  If you want me to track you down one like the photos in this article that I pulled out of the dealer auction website, just reach out to me through the contact form at CoolCarGuy.com.

Finally, if you want to read another perspective on why it’s a great time to look at this vehicle as a potential buyer be sure and check out the article over at TheDrive.com called Why Now Is The Time To Buy A Honda S2000.  If you decide this is a vehicle you want to own just get back with me and I’ll track it down.
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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com, a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

Richard Gere In A 1980 450SL In The Movie American Gigolo

Hey Cool Car Fans,

The other day I was cruising through Amazon television and I spot this movie American Gigolo with Richard Gere that came out back in 1980.  I remember this film because I was about 13 years old when it came out and living in Florida at the time.  Everyone was talking about this movie and what a big deal it was at the time, but I was just a kid, so what did I know.  I remembered though that the song Call Me, by the singer Blondie, came out and it was featured in the film.

I decided to watch the movie for free on Amazon and I didn’t make it very far into the film because it was really boring, but the opening scene featuring a 1980 Mercedes Benz 450 SL being driven by Richard Gere was really cool.  I’m including it in a Youtube video that I found in the post below and you can check it out for yourself and see what I mean.  You can even rent the movie on Youtube now, which you certainly couldn’t do in 1980.  If an ad pops up in the video be sure and close the ad.


This cool car back in 1980 was the bomb.  Today a new 2018 Mercedes Benz 450SL nicely equipped sells for over $100,000.  They start at an MSRP of around $88,200.

The 350SL and 450SL though from 1972 to 1980 had a unique look and body style with a 4.5l V8 engine under that hood that by 1980 with all the emissions regulations produced 160hp.  It was under powered for such a big motor and heavy car compared to one today.  It had such a cool iconic look that it was featured in this 1980 movie with Richard Gere being the American Gigolo.  I wonder if he owns one of these vehicles today?

What’s pretty amazing though is the NADA retail value on these 1980 vehicles today.  Mercedes Benz only produced about 6,000 of them a year, so it’s not like there are hundreds of thousands of these vehicles still around today.  The original MSRP was $35,839, which back in 1980 was a lot of money for a car.  Today, the retail on a 1980 Mercedes Benz 450SL ranges from $14,200 low retail to $42,200 high retail according to NADA.com.  Haggerty is not quite as aggressive and definitely more conservative, going as high as $32,100 and as low as $5,700 (good luck finding one that cheap that still runs or doesn’t need $10,000 in work).

DRIVE A CLASSIC ICONIC CAR AND DON’T WORRY ABOUT DEPRECIATION LIKE YOU HAVE IN A NEW ONE

As The Cool Car Guy, I find cars like this for people who are into cars all the time.  What’s really cool about this vehicle is that you can have me find you a 1980 Mercedes-Benz 450SL, depending on your budget, in a variety of conditions.  If you only have $10,000 to $20,000 to invest in a cool classic car consider having me track down one of these for you.   It might take some time to find the right car, but it’s worth it when you can get a vehicle that you know isn’t going to be losing money the minute you drive it off the lot.

I have written other articles talking about the benefits of going after vehicles that everyone else isn’t trying to buy.  They are harder to find sometimes.  How cool is it that a 1980 Mercedes Benz 450SL that sold new for around $35,000 is still worth more than a 2011 Toyota RAV4 that millions of people are trying to buy?

Which is one of the many reasons why I like really cool cars!

 

 

 

 

 

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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com, a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

The Fascination With The Disposable Electric Car

Hey Cool Car Fans,

It’s almost impossible to turn on the television or radio these days and not hear about Tesla and their electric vehicles or what I like to refer to as “the disposable car”. I have had so many debates with people about Tesla and my take on the electric car market that I figured I should write an article about why I feel the way that I do about the electric car market. Of course, people who like Tesla and electric vehicles are like people who were in love with Apple years ago. They had so much emotional passion that they refused to have any common sense that you could do the same thing with a Windows based machine that you could do with an Apple. It’s a similar “cult” following when it comes to Tesla.

WHY ARE ELECTRIC VEHICLES “DISPOSABLE”

First of all, it’s not just Tesla that makes electric cars. They are just the media darling and what people are most familiar with when it comes to electric vehicles. Here’s a picture of a 2015 VW E-Golf that is going for sale at auction that I pulled off the dealer auction website. The majority of people probably have no idea this car even exists or that it’s a fraction of the cost of a Tesla. It has a range of about 83 miles, so you can’t get very far on a battery charge with the VW, but other major brands have electric cars, including BMW, Nissan, Mitsubishi, Mercedes-Benz, Chevrolet, Toyota, FIAT and others.

There are plenty of options when it comes to getting an electric car, but the reason why I call them “disposable” is the same reason that Henry Ford created the Model T and won the automotive industry back in 1908. That’s 110 years ago by the way and you can go to just about any car show or parade in the United States and see a Model T that is still running down the road. It’s been “recycled” and is not disposable because it runs on gasoline and not electricity. Contrast that with the photo of this electric car pictured with Thomas Edison that you can read about at the PBS website, Timeline: History of the Electric Car.

Electric cars are super cool when they are new and shiny and the batteries are working great, but what happens when they get older and the batteries are not charging any longer? I know that people love to get lost in the ether of their imagination on what car companies will do for them down the road, but let me bring some reality to the situation. Car manufacturers are in the business of selling and leasing new cars. They are not in the business of creating batteries for your ten year old electric vehicle as much as you want them to be it’s not going to happen.  If you go to the support page of Tesla click here and see how much a replacement set of batteries are for any of their vehicles. At the time of this post, there wasn’t a link saying, “Battery Replacement” on their site. If you do a search online you will get all kinds of information from $12,000 to $28,000 to $40,000 to replace the batteries down the road.

Which is why if you’re going to get an EV you should lease it for sure because you don’t want to be the proud owner of one of these where the batteries are depleting continually.  It’s also why I call them a “disposable car”. Let’s just look at the Tesla Roadster for example that came out in 2008, so ten years ago now. It’s hard to believe it was that long ago, so Tesla has done extremely well lasting for a decade now as an electric car company.  However, eventually the batteries wear out and just like an iPhone or iPad you have to either update the batteries or sell the car for parts. It’s inevitable. It’s not like a 1908 Model T that you can get parts for and put gas in and head down the road.

WHY ARE PEOPLE FAILING TO REALIZE THE EV BUSINESS MODEL IS THE SAME AS APPLE

The Electric Vehicle business model came right out of Silicon Valley. You know, the guys who tell you that your first iPhone doesn’t work anymore or your iPhone 5c for that matter no longer accepts the latest software update, so you need an iPhone X.

That business model is the exact same as the EV business model. What’s your 10 year old computer worth? How about your 10 year old iPhone? The answer is not much or nothing at all. They are disposable products. In the meantime, you could buy a 1958 Porsche 550A Spyder for a cool $4.5 to $5 million at Gooding and Company or the Mecum or Barrett Jackson auction since they only built 39 of them and it will actually run with a tank of gas and some spark plugs. That’s not going to happen with a Tesla or any other electric vehicle ever. They are destined for the scrap heap because they are disposable cars, just like your disposable mobile phone and computer.

Which is why I’m not a fan of electric vehicles, like so many others in this industry seem to be. I like the fact that you can buy like a sweet 1958 Chevy Impala for example and drive it down the road on a tank of gas without hoping that some company from 60 years ago is still around to offer a battery upgrade to make the car actually work.

I like vehicles that you can recycle and that are not expensive disposable products. The sucker who buys that 2008 Tesla Roadster for the last time before the batteries die is like the same guy at the bottom of a pyramid scheme.  Eventually, he’s going to lose all of his money and have a nice lawn ornament or they will put it at the entrance to a junk yard as a novelty item from years gone by.
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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com, a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

The Incredible Depreciating Luxury Car Market

Hey Cool Car Fans,

I really enjoy driving European and other luxury brand vehicles, such as Audi, BMW, Mercedes Benz and other high-end cars. Who doesn’t? They often have great technology, handle extremely well on the road and have fantastic performance. However, everyone knows that there is a cost involved in driving these vehicles and so once they are out of warranty they tend to depreciate like a rock.

THE TOYOTA RAV4 VS THE BMW X5

The other day I had a client call me about consigning his 2011 Toyota RAV4 LE, so a base model vehicle with a sunroof, and it had out 60,000 miles on it. I looked up what the trade value would be on his vehicle if we didn’t consign it and I just sent it to the dealer auction. It was $10,000 based on what they have been selling for at auction.

As the conversation progressed, he said that he was thinking that he might want to also get out of his 2010 BMW X5 with the 4.8l motor that was pretty hard loaded. It had more miles than the Toyota RAV4 with around 94,000 miles on the odometer. I looked that one up for him as well and to his shock and amazement it was selling at auction for the same price as the 2011 Toyota RAV4, which was about $10,000 for a trade-in value.

That’s pretty unreal considering the 350hp 2010 BMW X5 4.8l had an MSRP of $56,300 before adding in all the options for the vehicle. It’s more like $60,000 to $65,000 by the time you start adding options on a vehicle like that one. And that’s compared to a 179hp 4 cylinder 2011 Toyota RAV4 LE with an MSRP of about $25,575. So, you have a high-performance german luxury brand that is over twice the amount of money new selling 7 to 8 years later for the same amount of money at auction and at retail as a basic Japanese SUV. Which means that if you’re into European vehicles be prepared to lose money or you can buy them at a substantial discount.

WHY DO MORE EXPENSIVE CARS LOSE THEIR VALUE SO MUCH

It seems pretty amazing that a more expensive vehicle would depreciate more than a less expensive vehicle, but part of the problem is the cost of parts and overall repair costs. Many times people who own a less expensive vehicle will work on vehicles themselves rather than taking it to the dealership for repairs. These people don’t count the time that they are spending fixing brakes or doing oil changes or other repairs into their overall cost of ownership. Most people who own more expensive vehicles don’t tend to work on their own vehicles, so they take it to the dealer at $150 to $200 an hour. They don’t always think about the fact that they could be going to a less expensive repair shop, with a lower hourly rate, for some of their more basic repairs.

For example, I had to replace a radiator overflow in a 2011 BMW 3 Series and the local BMW dealer wanted $500 to do it. I found the part on Amazon for $80 and had a local repair shop install it for me for a half hour of bill time for $50 and a $500 repair turned into a $130 repair. You can’t find after-market parts for most high-line vehicles for the first few years of production, so you have to wait a few years before you can find other options for parts than the dealership. The parts can be very expensive, which is one of the reasons why these vehicles do not hold their value the way the Toyota or Honda vehicles do. It’s a supply and demand issue because people want to have lower repair costs.

Basically, you can thank the dealers and the mechanics for depreciating your Euro luxury vehicles. If you know what you’re doing you can get a great deal on a luxury performance vehicle a few years old. Which is the case for The Cool Car Guy because I like driving vehicles that sold for $65,000 new for $10,000 to $20,000.

Of course, I shouldn’t be telling people this because the more people who figure this out the more expensive these vehicles are going to be and they won’t depreciate as much based on supply and demand. The reality though is as long as the majority of people keep wanting to drive a 7 or 8 year old Japanese vehicle for 50% off, I’ll keep telling my clients that they can be driving the equivalent year high-performance vehicle for 70% to 85% off and laugh all the way to the bank.
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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com that is a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

Should You Lease A Car If You Plan To Keep It 10 Years

Hey Cool Car Fans,

Last year someone asked this question on a website and I decided to answer it for them since so many people are anti-leasing today.  I think this is because most people do not take the time to understand how interest rates work on purchasing a vehicle.

Since I own a used car dealership, I primarily finance mostly used vehicles for people.  Most of my clients pay cash or they borrow against the equity in their cash value life insurance policies and pay back the insurance company using an unstructured loan.  This is by far the best way to purchase a vehicle because there isn’t any credit involved and you may payments on your own terms.  I explain this in detail at CoolCarsForLife.com if you’re interested in reading about that strategy.

You can check out my business model by visiting CoolCarGuy.com and what it is that I do.  I figured I would write an article about this topic though since so many people buy vehicles instead of lease vehicles.

13 YEARS LATER

Recently, I had a client track me down who purchased a used Acura MDX from me 13 years ago.  I was 37 years old when she purchased her last vehicle from me and she must have appreciated the experience to track me down again.  She was also impressed with the longevity of her Acura MDX that now had close to 180,000 miles on the odometer.  She was ready for a new one.  This is a woman who keeps her vehicles for a long time and she decided that she wanted a new one.

If she had purchased a new one the interest rate was pretty good, but it wasn’t amazing.  However, by leasing the vehicle her money factor was .00050, which is the equivalent of about a 1.2% effective interest rate.  She also didn’t want a huge payment on a vehicle that had an MSRP of $51,595 and leasing allowed her to only make payments on the depreciation of the vehicle.  By leasing it using what is commonly called a “closed-end lease” today, she was able to lock in the residual value and purchase the vehicle in the future for around $29,000.

THE RESIDUAL VALUE

Most leasing companies design their leases in such a way that if you go over the miles you purchase they are going to hit you with $.10, $.15, $.20 or $.25 a mile should you turn the vehicle back into the leasing company.  There are actually some leasing companies and manufacturers that will hammer you for the miles, even if you don’t turn the vehicle back in, which is crazy.  I’ve seen Mercedes-Benz do this and it’s a total “jerk”‘ move because you’re buying the vehicle and they don’t have any assumed risk or additional depreciation that it is costing them.

If it’s an “open-end commercial lease”, like on a truck for a construction company, then it makes sense to charge for the depreciation without a guaranteed residual value because they are structuring the lease that way upfront based on future unknowns.  The company might beat the crap out of the truck and it will be worth thousands less at the end of the lease, so the residual may not be locked in or it might be extremely low.   You want to make sure you read the lease agreement or know what you’re getting into when you lease a vehicle for sure and most people don’t.  When they get burned at the end they are ticked off because they thought that their Mercedes-Benz lease worked like their previous Toyota lease.

LEASING STANDARDS

Typically though, most leasing companies are going to structure their residual so that if you stay within the miles and you give the vehicle back they can sell it at auction and not lose money.  They are going to give you the option of buying the vehicle out without nailing  you for miles on top of the residual value, which is the right thing to do since you are sharing in the risk on the vehicle with them.  Some leasing companies, usually manufacturer’s like BMW for example, will put a really high residual on their car and that can give you a low payment, but they are banking on people going over their mileage, giving the car back and collecting money on tires, wear and tear and the mileage hit before sending it to auction or letting a franchise dealership buy it back.

The benefit though is that if you get the right lease and you lock-in the residual value then the miles are not really that important on the right vehicle.  An Acura MDX for example that you can buy for around $29,000 in three years with 12,000 miles a year is going to more than likely retail for more than that amount with 36,000 miles.  Which means that if you put on 45,000 miles you can still buy it out at the end of the lease and drive it another six to ten years and you should still be in great shape.  You have a lower payment for the first three years and a manageable payment if you choose to finance the remainder for the another three or five years.

I’ve leased Subaru’s, Honda’s and Toyota’s to people here in Colorado where they will look at the residual after three years and they realize they are in an “equity position” at the end of the lease term.  Often times they will call me and just ask me to help them buy their vehicle at the end of the lease.  The Toyota Tacoma or 4Runner is a great example of this kind of a strategy and many of the Subaru’s like the Crosstrek.  You get to the end of the lease and you realize that if you give it back to the leasing company Toyota or Subaru are going to sell it at auction for a few thousand less than what they are selling for online.  Why wouldn’t you just buy it out and sell it yourself or keep it?  These are what I refer to as an “equity lease” because you have equity in the vehicle at the end of the lease term.

GETTING THE VEHICLE YOU REALLY WANT

Instead of running around looking for the obscure off-lease, hard to find, overpriced used vehicle you could be driving a new vehicle and financing it over a longer term knowing that you’re going to keep it for 12 or 13 years like my client decided to do.  The first few years she is paying very little of the lease payment in interest and most of her payment is going toward depreciation.

Some of you may be thinking this is a really bad idea because you are financing the vehicle over a longer term.  The reality is the amount of interest she will pay is less for the first three years and she is going to keep the vehicle longer than someone who is buying a vehicle that already has three, four or even five years of driving on it.  This is the mistake and the reality that the financial wizards giving people bad advice don’t seem to understand.

If you buy a vehicle with 45,000 miles on it and you drive it for five years at 20,000 miles a year your vehicle now has 145,000 miles on it and it’s pretty much worthless.   If you finance or lease a new vehicle and you drive it for eight or ten years and it has 160,000 miles on it at 20,000 miles a year, it’s worth about the same as the genius who has 145,000 miles on their used vehicle.   The difference is your vehicle had a full warranty and no wear and tear on it to start.  In fact, you will probably get 9 or 10 years out of it as the original owner and are much more likely to maintain the vehicle to last.  The depreciation on a vehicle once it hits 145,000 miles compared to 180,000 miles is negligible.

The fact is that most people have to get out of their vehicles sooner than planned because they are paying too much in monthly payments to maintain them.  When a costly repair comes they have to unload them because they can’t afford the repair costs on their used car that they are still making payments on.
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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com that is a licensed car dealership in Lone Tree, CO.  He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

Why Do Car Dealerships Buy Vehicles At Dealer Auctions

Hey Cool Car Fans,

Someone recently asked me why so many used vehicles are purchased by dealers at auction.  I figured I would write a post explaining why auctions are used by dealerships to buy and sell cars.

WHY DEALER AUCTIONS

The first reason that dealers will end up being at a Dealer Auction is because they cannot choose what vehicles they take in on trade. This happens daily.  Someone wants to buy a Ford F150 that I might have on consignment and they have a Toyota Corolla to trade.  I may not want the Toyota Corolla in my dealership inventory taking up space and having to recondition it, advertise it, etc.  So, I send it up to the auction for another dealer to bid on it and put it in their inventory.  I just want to sell the Ford F150 that I have available, so I’m willing to roll the dice on the Toyota Corolla and send it up to the auction.

This is one of the reasons why most used car managers don’t really care about the trade value in the NADA or KBB book, but what the vehicle you’re trading is probably going to bring at auction.  Most people go in thinking that the dealership is trying to rip them off on their trade, but the reality is the used car manager doesn’t want to get stuck with a vehicle they don’t really want.  After you drive off, the used car manager has to decide whether to try to sell your nicely used vehicle with all of it’s issues or send it to auction.

THE BURN RATE OR THE TURN

Believe it or not, the car that you trade is not going up in value every month.  On the contrary, each month a third-party in the form of NADA and Kelly Blue Book are coming out with a book or website telling the world that your vehicle is worth less than it was the month before.  A dealer needs to unload vehicles that have been on their lot for 60 or 90 days to avoid loosing too much money in depreciation.  Most dealerships also have a floor plan with a curtailment, so they have to turn those vehicles or write a check to the floor plan company for part of the cost of the vehicle or the full amount.  Think about if you have fifty vehicles in inventory and the average curtailment is $1,500 and the dealer has to write a check for $75,000 to keep all of those vehicles on their floor plan.  That’s a big incentive to send it to the auction and unload the vehicle.

Dealers also have certain vehicles that sell better in their inventory.  If you owned a Lexus dealership and someone trades a Chevy Cruze the odds are pretty good you don’t want it in your inventory.  You send it up to the auction to free up capital that allows you to buy another Lexus or Toyota or some other used car that sells well on your lot.

The auction ends up being an efficient way to unload unwanted inventory or to pickup new inventory for the dealership.  It’s dealers purchasing vehicles from other dealers, so the emotion is out of the equation compared to buying from a consumer.  The consumer has an emotional tie to a vehicle where the used car manager doesn’t care – it’s just moving metal.

I use the dealer auctions quite often to find inventory for my clients for this very reason.
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Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com that is a licensed car dealership in Lone Tree, CO.  He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

The Cool Car Guy.com