Hey Cool Car Fans,

I have taken a long break from writing at The Cool Car Guy’s Blog. I’ve been crazy busy delivering vehicles to clients over the past couple of years. We moved from Castle Rock, Colorado to Rio Rancho, NM back in April of 2021. We took advantage of the ridiculous home prices caused by inflation to sell our home from COVID-19 like millions of other people around America. CoolCarGuy.com is still in full swing in Lone Tree, CO.

I decided I needed to write an article on the real reason that car prices have gone through the roof since I own a car dealership. Especially, when I hear all of these talking heads on Wall Street trying to tell everyone that this is temporary because of a microchip shortage.

First of all, let’s talk about the fact that traditionally cars are depreciating assets. In a normal economic climate if you buy a new car and drive it about 15,000 miles a year that vehicle is going to drop in value. A vehicle typically depreciates about 30% to 50% over three years. This is how leasing a vehicle works. When you lease, you pay for the depreciation of the vehicle.

Let’s look at a Toyota 4Runner as a real life example. In 2018 a Toyota 4Runner had an original MSRP of $34,810 – $45,160 depending on the trim level and options. An SR5 Premium with 4WD had an MSRP of $36,400. It should sell at auction three years later with 45,000 miles coming off of a lease for about 25% of the MSRP price. This means that it should have depreciated to about $27,300 if it lost 25% of its original value. This is pretty amazing because they hold their value extremely well compared to other vehicles in the marketplace.

Typically, 4Runners depreciate about 25% to 30% over 3 years where many other vehicles depreciate 40% or even 50% of their original MSRP during the same period. If you leased it and drove it 45,000 miles and gave it back to the leasing company at the end of the lease, it should be selling at auction for around $27,300 at the high end in a good market. Is this true after this Covid-19 world that has been created with $5 trillion of money dumped into the economy? Not even close.

IN JUNE OF 2021, A 2018 TOYOTA RUNNER SR5 PREMIUM IS SELLING AT AUCTION FOR MORE THAN THE ORIGINAL MSRP – SAY WHAT?!

The graphic above is a screenshot of what a 2018 Toyota 4Runner SR5 Premium with an average condition of 4.0 out of 5.0. This vehicle right now is selling for $38,500 minus auction fees. It didn’t depreciate at all in three years, but in fact it appreciated. It is selling for more than the original MSRP, This is not normal by any stretch of the imagination. Which means that if you leased this vehicle, you are in a profit position should you want to get out of it.. Call me if you’re in this situation by the way or you have a leased vehicle before you give it back to the leasing company.

WHAT IS GOING ON AND IS THIS REALLY A MICROCHIP SITUATION LIKE THE MEDIA WANTS EVERYONE TO BELIEVE?

If you turn on the major news programs you will hear their narrative that the problem is primarily supply shortages since the chip manufacturers quit making components. While this is true, let’s put the automobile market in perspective. In 2019, which was before the Covid-19 virus outbreak, automakers sold more than 17 million vehicles in the U.S. for a fifth consecutive year. That seems like a large number of vehicles and it is, but that’s the new car market. There are over 276 million used vehicles in the United States. Did they all disappear?

Of course not. In 2019, the same year that 17 million new vehicles were sold, almost 41 million used vehicles were sold. These used vehicles were not waiting on microchips. The reality is that we are living in an economy with run-a-way inflation.

The Federal Reserve has pumped over $5 trillion into the marketplace. This is causing inflation and they have kept interest rates down, which is driving up the prices of just about everything, including automobiles. They are in a Catch-22 because they can’t tell everyone there is massive inflation and unemployment, even though it’s obvious and you don’t have to read tea leaves to figure it out. They don’t want to create a Wall Street panic and sell off because Capitalism works on consumers buying automobiles, houses, food, etc. Nobody wants to overpay for things and lose money if they have to sell.

Almost 10 million people unemployed, while they are saying that there are 9.4 million jobs. Sure, if you want to go and earn $10 an hour when the average price of a new vehicle is over $40,000 right now. In what world does that work financially? It doesn’t. By shutting down the economy the government stopped a train going 100 miles an hour and the cars in the back are now starting to hit the front of the train. They are trying to convince people that this is just temporary because of the Covid-19 shut downs and it’s all going to come back to normal soon. Maybe in a few years, but you can’t just put the derailed train back on the tracks and keep moving.

You can’t have run away inflation and not have a major increase in wages for the poor and middle class to be able to afford to buy “stuff”. It is economics 101 and any kid who has ran a lemonade stand will understand this. Imagine you pull up to a lemonade stand ran by a 10 year old and you expect to get a cold glass of lemonade for $.50, but to your surprise it’s $10.00, warm and in a dixie cup. You look at the kid and he says, “Sorry but I can’t stand out here all day for fifty cents a glass. You know with the cost of water, ice and lemons these days I have to charge $10 or the math doesn’t work.” Is that a sustainable business or is that lemonade stand going to cease to exist?

Nobody can afford to pay for that kid’s lemonade unless it’s some rich guy in the neighborhood who just wants to give the kid some money each day and buy his lemonade. And these dummies in Washington and at the Federal Reserve are trying to tell everyone that isn’t what’s happening. That’s exactly what is happening. They have pumped $5 trillion into this economy to try to help the kid at the lemonade stand, but it’s not sustainable. They have millions of people getting paid more to stay home than if they worked a job.

The reality is that unemployed people cannot get financed to buy used cars or houses. Millions of people have had their credit destroyed because of the government lock downs, so even if they can get financed it’s going to be at high interest rates. You can’t get a loan if you don’t have a job or bad credit, so these millions of people are not trading out of their vehicles. They can’t. They have to keep them and drive them or pay cash for a vehicle. And that’s why we have a shortage of overprice used vehicles right now. It’s supply and demand for sure, but it’s not just because of missing microchips for new car production. In the words of James Carville in 1992, “It’s the economy stupid”.

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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

Hey Cool Car Fans,

I’m often amazed at what some dealerships get away with when it comes to charging for their repair services. Recently, I purchased a 2017 BMW 430 x-drive vehicle for a client and I always get an oil change and inspection prior to delivery.

In this case, I dropped the vehicle off at the local BMW shop where they say advertise that they use Castrol synthetic oil and they charge $135 for an oil change. This is a bit high, but I wanted them to check on recalls as well as look over the vehicle as well for any warranty work that’s needed. I was told by a tech that it is actually Pennzoil synthetic that they are using, while advertising Castrol, which is really pathetic that some franchise dealerships do this sort of thing.

I wanted to get a tire rotation as well for my client and they called me back to tell me that it was $60 for a tire rotation. This is pretty unreal considering that if you go to a local tire shop and ask them to check the brakes they will usually do a tire rotation for free. Most smaller repair shops charge at the most about $10 per tire, so $15 a tire at a dealership isn’t that terrible.

However, I’ve seen shops charge as much as $125 for a tire rotation, which is totally insane. In my case, time is money since I typically get a vehicle in and if I’m taking it to a franchise dealership it’s easier for me to pay for an overpriced tire rotation and oil change than run it around to various shops. It’s also a good idea when you are first getting a used car to run it to a franchise dealership and even if you get an oil change or tire rotation you are now in the system for that vehicle as the new owner for recall notices, etc.

Also, if you need warranty work down the road the vehicle has been in the system for any future warranty issues that may come up. I can’t tell you how many times I’ve traded for used vehicles and I have gone to the franchise dealership to get warranty work done and there is no record of any work done in the system.

It can be a pain if you can’t prove proper maintenance has been done as some manufacturers like to play games about their warranties. I have found that some manufacturers want you to do all routine maintenance on the vehicle at the dealership in order to honor the warranty. They are not supposed to do this, but they often do depending on the brand.

Most mechanics will tell you that tire rotation is an integral part of car care regimen. It’s important that you rotate the tire position of each tir every few thousand miles. The advantage of doing routine tire rotation is that it can increase tire longevity, which is a cost savings of having to replace tires. It also can improve safety while driving. The tires can be rotated in multiple patterns and there is some debate on the best way to rotate depending on the tires and the vehicle, but you can usually check the owner’s manual for the recommended rotation pattern. However, people often change the type of tire or tread pattern from the original tires.

I’ve often found too that many manufacturers put on really cheap tires initially, which makes sense since they are looking for cost savings when they are manufacturing a vehicle. I’ve seen the cost of a tire rotations range from free – $125 and if you buy a set of tires many places will offer you free rotations. It’s important to shop around when you’re getting vehicle serviced. The cost tire rotation lies between $24-$120 relying on where the motorist takes his intermediary.

THE COST OF REPAIRS ON SOME VEHICLES CAN BE COSTLY AND FRANCHISE DEALERS CHARGE AS MUCH AS $300 AN HOUR

If you’re going to a dealership to get repair work done it’s important to ask what their “dollar per hour” charge is for service. It’s pretty crazy, some of the franchise dealerships are charging attorney rates to work on your vehicle.

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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

Hey Cool Car Fans,

One of the things that I often like to do is find really cool luxury or exclusive vehicles through the dealer auctions that had a huge original MSRP and see what they are going to for today. I am going to do a number of articles on these type of vehicles to give my readers an idea of how you could be driving an amazing vehicle for a huge discount compared to what they sold for new.

The media tends to focus on the new car market, but the used car market dwarfs the size of the new vehicle market year after year. People know that they can save thousands of dollars driving a used vehicle compared to a new vehicle. If there are 18 million new vehicles sold there is usually about 42 million used vehicles that are sold each year.

There is also a number of third-party websites that put the value of what a used vehicle should be selling for based on miles and condition, so it’s pretty difficult to get burned buying a used vehicle. Unless the vehicle is total junk to begin with, but many times you can find a diamond in the rough. I decided to post this iconic 2000 Rolls Royce Silver Seraph as an example.

MOST VEHICLES DEPRECIATE AND SOME MORE THAN OTHERS, BUT CERTAIN VEHICLES REACH A POINT WHERE THEY DEPRECIATE VERY SLOWLY

The 2000 Rolls Royce Silver Seraph is a great example. In the year 2000 this vehicle had an original MSRP of $219,900. Fast forward 19 years later and you can find these vehicles for anywhere from about $52,000 on the low end to $87,900 on the high retail end. Thats as much as a 77% savings for an older Rolls Royce. Here’s a link to the NADA book value where you can see what the current value is a vehicle like this one.

This particular vehicle that was listed in the dealer auction only had 34,000 original miles. It was manufactured in the deep royal blue color with the stratos leather interior. It included a sunroof and the seat piping had french navy color with the burr walnut wood veneered interior trim. It even has the veneered picnic tables and navigation with two umbrellas. If you want to read the Wikipedia section about this vehicle you can find out about it by clicking here.

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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

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

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