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

What To Know Before You Swap Out Someone’s Lease

Hey Cool Car Fans,

A few times a year I will get an email or a phone call from someone asking me if they should take over someone else’s lease.  There are websites that offer this service and I’ve done this for some of my clients as well, not through those websites, but directly through the leasing company.  I only would do this when it makes sense.

I figured I would write a quick article about the benefits and disasters that can occur in assuming a lease or using a lease buyout service.

WHEN TAKING OVER SOMEONE’S LEASE MAKES SENSE

First of all, it rarely ever makes sense to take over someone’s lease because you are assuming the remainder of their financial obligation.

However, if you have credit issues and the person’s lease that you’re assuming has stellar credit you could really hit pay dirt.  The problem is that you have to get the leasing company to authorize you to assume their lease, so they are going to require that you have good enough credit and the financial ability to pay back the lease.  There is where the problem lies for most people because if the person who has the original lease obligation has better credit and a better financial situation than the person applying to assume the lease, what is the incentive for the leasing company?

The other time it can make sense is if you want to buy the vehicle at the end of the lease term and the person trying to get out of the lease doesn’t have that many payments left on it.  For example, let’s say that you are interested in buying a 2017 Porsche Macan.  You could take over someone’s lease that they have for $996 a month for 18 months and if the residual to buy it out at the end is $31.141 that could play really well for you.  You’re grabbing a much more expensive vehicle for under $50,000.   I saw this exact opportunity by the way.  Again, you have to see if it makes sense or if you are better off just buying the vehicle as I will discuss next.

WHY TAKING OVER SOMEONE’S LEASE USUALLY DOESN’T MAKE SENSE

As I mentioned before, assuming a lease could make sense if you have credit challenges and you can get a better lease payment than you would get on your own.  However, what if you have better credit than the person who’s lease you are assuming?  They maybe at a 6% effective interest rate and you could be getting a lease on your own at a near 0% effective interest.  The lease is being sold based on a payment, but it in fact might be a really terrible lease that you are assuming.

The residual may also be terrible as well.  If your goal is to give the vehicle back at the end of the lease and you can stay within the remaining miles that could be a good option for you.  What if you go over the miles though and the lease is setup where you have to pay $.25 or $,30 a mile for each mile that you go over?  If you go over by 10,000 miles you could be writing a check at the end of the lease for $2,500 or $3,000 to give the vehicle back.   What if you want to buy it out at the end of the lease term, but the leasing company bet wrong and put too high of a residual for the marketplace?  Then you’re in a situation where the best option is to give it back, so you basically just rented the vehicle with a higher level of risk.

If you have good credit and they have  the vehicle you want with a great residual than instead of assuming the lease, you might be far better off buying out the person’s lease for their remaining payments and the residual value.  You could then finance the vehicle or lease it using a used vehicle lease based on the buyout value.  This could work far better if you have good credit, instead of leasing a vehicle based on someone else’s credit.

 

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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

Mercedes Benz Billion Dollar Electric Vehicle Investment

Hey Cool Car Fans,

It started with Tesla getting millions of people fired up about electric vehicles over the last decade and now Volvo is planning to go all electric in the future with their cars.  Mercedes Benz has announced that they are going to be spending a $1 billion investment into their manufacturing hub in Alabama…

“The investment will go both to an expansion of the German luxury brand’s existing plant near Tuscaloosa and to build a new 1 million-square-foot battery factory.

While electric vehicle sales have been tepid overall, Mercedes has watched as Tesla jumped out has become a formidable player in the super-premium segment with its electric Model S sedan and Model X crossover. Now Tesla is threatening the lower, entry-level part of the luxury market with its lower-priced Model 3 sedan. 

The company is pursuing an “anything Tesla can do, we can do better” strategy,” – USAToday reported.

This is for the production of its all-electric EQ SUV.  Which is going to be the first all-electric SUV from Mercedes Benz and it’s going to be a big deal as more car companies are getting into the electric automobile market.

ARE ELECTRIC VEHICLES REALLY THE FUTURE

The consumer is driving the move toward electric vehicles with the success of Tesla in the marketplace and as people want a choice beyond the combustible engine.  What most people fail to realize is that the electric vehicle is the ultimate in planned obsolescence.  Car companies were accused of this tactic for years back in the 1970’s and 1980’s when vehicles would have parts that would break or wear out and have to be replaced.

A petroleum based engine is designed to run on gasoline or diesel fuel and it can be rebuilt.  When batteries wear out they are finished and have to be replaced and it can be extremely expensive.  Some people argue that this is no different than rebuilding an engine that can also be expensive.

THE COMPUTER AND CELL PHONE LESSONS

The problem is that the batteries that work today probably won’t drive the vehicles of tomorrow.  Car manufacturers are in the business of selling new vehicles and not updating used vehicles to the newest technology.  Nowhere is this more true than in the cell phone and computer market.  Is Apple offering an “upgrade” path for your original iPhone?  What about your 386SX computer from the 1980’s?  They are dead.  If you want to upgrade an old cell phone with the latest technology you have to buy a new cell phone.  It’s not any different with the future of the electric vehicle.  The cost to replace batteries are not going to be less, but they are going to be more.

You can see this with the Toyota Prius, but the difference is that your Prius can also run on gasoline, so it just becomes a heavy Corolla if you don’t replace the batteries.  This is a photo of a 2001 Toyota Prius with about 266,000 miles on it.  The cost for a replacement battery after 16 years is more than you would pay for the entire vehicle.  If you do some research you can pick up a used battery pack for about $1,600.  Proving the reality that EV batteries are not a sustainable long term technology nor will they be supported at a reasonable price.

The challenge for electric vehicles is not the new car market for consumers, but it’s actually the used car market.  Most people are afraid of buying electric vehicles that are five years old and having to replace the batteries in the future.  The lifespan of batteries in electric vehicles today is about ten years, like in a Toyota Prius.  It’s pretty difficult to convince someone to pay top dollar for a used electric vehicle when they are concerned about the battery life and the cost to replace the batteries.  In 2015, Autoblog.com had an article titled “Tesla Roadster battery pack replacement will cost $29,000”.  That’s crazy expensive for another 10 years of battery life in an older vehicle.  You don’t hear too much talk about this though from the media and Wall Street darling do you?

Which brings me back to the fact that Mercedes Benz is  making a billion dollar investment into electric vehicles.  Why wouldn’t they?  The consumer is failing to realize that they are helping to sell the car manufacturers on turning their vehicles into a very expensive appliance, like their cell phones and computers.

In the meantime, for all of those petroleum haters out there, this is a 1970 Nova SS Tribute that I spotted on the Manheim Dealer Auction for around $25,000 plus shipping and dealer profit.  You could get this super cool vehicle that is still worth almost as much as those expensive Tesla batteries after 47 years of driving.  And for only about $10.00 in gasoline drive it down the road without having to update anything.  Best of all, this vehicle should be worth about the same or more in another 47 years where that electric vehicle is destined for the crusher.  Which is why classic petroleum based vehicles are the ultimate in recycling!

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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 Luxury Cars Cost More Money

Hey Cool Car Fans,

As The Cool Car Guy, I assist people in buying, selling, trading and leasing vehicles on a regular basis.  I work with people from all walks of life, but as you might expect a good portion of my clients drive luxury and high-end vehicles.  I also have clients who drive the no frills “bean can” as well or people who are on a limited budget.  I often am asked by people why they should spend the additional money for an Audi, BMW, Mercedes Benz, etc. than on some of the less expensive vehicles on the market.  Many people think that these vehicles are all created equal, but nothing could be further from the truth.

I decided I should take the time to write an article on why luxury vehicles are more expensive than other brands on the market. Many people assume that it’s all about just selling a vehicle for what the market will bear.  Which is a nice way of saying that they think that all vehicles are the same and therefore they are ripping people off with a brand name.  It’s true that the manufacturer needs to turn a profit, but when you buy a more expensive vehicle you are also getting a product that costs much more to produce.  The components are more expensive to build the vehicle.

I actually run into this even with other people in the car business who don’t like Porsche, Audi or BMW or Mercedes Benz because they are expensive to repair.  It cracks me up because some of these people are Used Car Managers and people who actually sell cars for a living.  It’s as if they have no clue about what it under the hood and like a typical teenager think that just because both cars have a USB port they are the same technology.  They don’t seem to understand that there is a difference in the quality of components being used in the vehicles.  Let me illustrate this fact with just a few components to show the difference in pricing.

LETS LOOK AT THE BRAKES TO START

Brembo brakes are usually found on a vehicle like a Porsche 911 Turbo or a high-end Audi.  You can grab a set of these over at Tire Rack at a discounted price of $1,916 for a kit at the time that I posted this and this particular one fits on a1983 Porsche 911SC Targa.  Those do not include installation time at $150 to $200 an hour at a dealership or even at some of the specialty shops.

Contrast that with a set of rotors for a 2015 Hyundai Elantra GT that you can grab for $122.83 and these are much better than what the manufacturer would put on.  These brakes are not even close to the same in performance or quality which is why they are more 15 to 16 times less money!

ENGINES AND TRANSMISSIONS

Here’s the engine for a 2011 BMW 335xi, which I happen to own and drive as my daily driver here in Colorado.  It’s a 6 cylinder twin turbo engine that produces 300hp.   If you needed to replace this engine it would cost over at CarMonkeys.com close to $11,000 for a used one and that’s a deal.

Contrast that with a 2011 Toyota Camry 3.5l V6 that was their top of the line motor for that year that produced 268hp and it would be about $4,500 for that used engine at CarMonkeys.com.  That’s less than half the price even though they both have six cylinder engines.  Why?  They’re not even close when it comes to performance, components and technology that has gone into the two engines.  It’s not as drastic in price difference compared to the brakes, but it’s 2.5 times the price on the used market for the same six cylinder engine.  Obviously, they are not the same.

As you start to go throughout the vehicles and add up the cost of components like brakes, tires (run flats on the BMW or Mercedes Benz for example), the transmissions, shocks, struts, all-wheel drive systems, sound dampening, the quality of interior, you discover that everything costs more on the luxury vehicle.  You can keep going with this sort of exercise in other aspects of the cars.

If it were truly a case of the manufacturers gaining huge profit off these cars and they were not that expensive to produce than companies like Hyundai would be much more competitive with their new Genesis vehicle.  Instead they have only been able to beat the price of a Lexus by a very small margin in their pricing.  They are focusing on offering a longer warranty as a key buying point.  After all, the cost to surround a person with airbags and have the same quality components to compete with their target market of a Lexus and Acura isn’t any less.

The bottom line is that you get what you pay for when it comes to buying a vehicle.

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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 Autonomous Cars Are A Pipe Dream

Hey Cool Car Fans,

Each month there are new articles talking about the benefits of the autonomous car and how Silicon Valley is going to change the automotive industry with cars that drive themselves. They are definitely working on these vehicles and want the world to buy into their fascination of putting everyone into a self-driving taxi cab.   Like this article over at TechCrunch entitled: “Business models will drive the future of autonomous vehicles”.

This is actually a great article on the topic of autonomous vehicles and the challenges facing this new technology.  Including such issues about whether people will buy an autonomous vehicle or just pay for a ride share or who will control the software or if cities will tax them or how they will navigate and not run into a trolley to name a few.

Manufacturers and software giants are all jumping on this bandwagon because they see dollar signs and an amazing future of self-driving vehicles.   Which means it’s going to happen eventually, but does it mean that it’s actually a good idea or that it will be successful?  One article I read was so ridiculous that it said that the car of today would be like the horse of the past.

I for one am not buying into the Wall Street carnival barkers trying to raise the stock prices on these companies investing in this new technology.  It reminds me of when we had video cassette recorders that were going to replace Hollywood.  Remember that amazing technology with the dominating company known as Blockbuster?  You would go and rent a movie and then have to return it or get hit with a huge late fee.  That evolved into BETA that was going to replace VHS and before you knew it we had DVD’s and today we stream Netflix and HBO.  They were all going to replace the movie theater, but the last time I checked Hollywood is still earning billions and people are still going to the movies.  The hype didn’t deliver and most of the previous technology has disappeared because the demand was replaced with something easier and better.

WHY IS THE COOL CAR GUY SKEPTICAL

It’s really simple.  What’s the benefit of “riding” in an autonomous car?  People buy things based on benefits.  Is the benefit that you can get car sick looking at your phone while the vehicle drives you around?  Do your kids like to ride in the backseat of your vehicle today?  Does that car above look like something you want to hop in and have Google drive you around?

An autonomous vehicle simply means that a computer or some programmer in India is driving your vehicle instead of you and you’re just a passenger.  How is this any different than taking a taxi cab today with a real person driving you around, while you get to sit in the front or the back seat?  Seriously.  What’s the additional benefit?  The word autonomous?  Oooh.  It sounds so sexy!  I’m not making this up.  They are all scrambling to create an overpriced and glorified taxi cab.  Michigan is building an $80 million autonomous car testing site according to AutoWeek.  What?  Why?  Do they have an $80 million testing site to train taxi cab drivers?  If someone proposed that the first reaction would be “Are you crazy?”.  Well, that’s what you’re doing morons!

An autonomous car will pick you up and take you where you want to go, like Lyft or Uber, but instead of Lyft or Uber having a driver the vehicle drives itself.  Amazing!  Is it going to get you to your destination faster than an Uber or Lyft driver today?  Will traffic tickets no longer be given since all vehicles go the same speed or are they going to be sent to Google or Uber to pay the fine?  What about if it gets in an accident?  Who’s liable at that point for the system failure?  The automobile manufacturer?  The software company?  The “rider”?  Do you have to carry insurance or will it be like when you rent a vehicle from a rental car company?   Will all of these ancillary industries go away, so you no longer can rent a car?  Is the car gong to smell better?  Is it going to cost you less money?  Again, what are the actual benefits?  Is anyone asking this most basic of selling questions?  “I want an autonomous car, so that I can text and drive?”  That seems like the only benefit at this point to me.

And there are actually people who are betting on this and trying to tell investors and the rest of us that in the future autonomous cars will replace all of our current vehicles. Really?  If that is true, couldn’t you just sell your car tomorrow and just take Lyft or Uber wherever you want to go?  Why wait for the autonomous car revolution when you can get a ride from Lyft tomorrow?  I use those services quite often going back and forth to picking up a vehicle, but they haven’t replaced my vehicle.  In some cities people do not own a vehicle and they only take a taxi cab.  I had friends in Chicago years ago who lived downtown and they didn’t own a car.  They took a taxi or a limo everywhere they wanted to go.  That’s the market for autonomous cars.

WHERE ARE HUMMER, SUZUKI, PONTIAC, OLDSMOBILE, SATURN, ETC.

Finally, here is what Google, Uber, Lyft, Tesla and even Ford and the other car manufacturers are apparently forgetting and missing when it comes to selling vehicles.  Hummer was a successful brand for a while, so were Saturn, Suzuki, Oldsmobile and Pontiac.  Don’t forget that Chevrolet and GM needed to be bailed out for their bad decisions in the past and even filed bankruptcy.  Many of these car companies trade hands like a deck of playing cards because the market is saturated from a manufacturing standpoint and the marketplace is extremely fickle.

The automobile industry is crazy at times.  How many vehicles are hot for a period of time and then they stop selling?  And everyone is scrambling to create a self driving car without actually knowing if the market even wants it.

I have yet to have one person tell me that they cannot wait for an autonomous car.  I have had people tell me they are still waiting for a landspeeder!  And you will notice that Luke Skywalker was actually driving the landspeeder in Star Wars and it wasn’t driving itself.
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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