Consumers clutch cars longer, choking March sales
DETROIT — She wants a new car, but Pamela Davies is still driving the very first one she purchased.
Even with 81,000 miles on her 2001 Toyota RAV4, the stay-at-home mother of two young children isn't ready to give it up. Her husband's 1999 Corolla, with 136,000 miles on it, is fine for now, too.
"We had originally planned to replace the RAV4 with a minivan when we had a second kid, but then I realized I could fit two car seats in it and put it off," said the North Chelmsford, Mass., resident. "Until one or both of my kids' knees are squished up around their ears from being crammed in the back seat, or the car stops running, it's staying with us."
Davies said her family could afford a new car, but the two they have are fully paid for. She and her husband would rather not take on a monthly car payment as they save for college and retirement.
The recession has forced the Davies and many other Americans to rethink their spending habits. One result: They're making their old cars last longer.
According to J.D. Power and Associates, the average age of vehicles traded in at U.S. car dealerships in February was 6.1 years. That's up from 5.6 years a year earlier. That trend is expected to contribute to another month of depressed auto sales when carmakers report their March results on Wednesday.
Consumers are starting to see vehicles as long-term investments, said Trevor Traina, founder and chairman of the car ownership Web site DriverSide.com. Automakers for the most part have stopped offering leases, which allowed people to drive a new vehicle for $200 or $300 a month and repeat the cycle every few years. People are taking better care of their old wheels instead.
Davies, 31, has been eyeing a new $34,700 Toyota Highlander hybrid. Instead of giving in to the impulse, the family spent about $1,000 last year on car maintenance, including four new tires, a few oil changes and regularly scheduled tuneups.
"We're holding on until the bitter end," Davies said. The family would have to get another car should their Corolla die, but she said they would purchase a used one, or something less expensive than the Highlander.
Car owners like Davies are one reason auto parts stores such as AutoZone Inc., Advance Auto Parts Inc. and O'Reilly Automotive Inc. have seen rising sales.
They're also one reason the new car market is in the tank.
"The desire to own a car for two to three years is dead," Traina said. "It's like people have woken up from some kind of consumer dream of flipping a car the way you change clothes."
Deutsche Bank Securities analyst Rod Lache estimates that U.S. auto sales for March will decline 43 percent from a year ago to a seasonally adjusted annual sales rate of 8.6 million vehicles. That would be lowest figure since Ward's Automotive Group began tracking monthly sales data in 1980. There were 16.1 million vehicles sold in 2007.
Wachovia Capital Markets analyst Richard Kwas forecast a March annualized rate of 9 million vehicles, just under February's rate of 9.1 million. J.D. Power is predicting an annualized rate of 9.2 million for March.
Such poor sales make it more difficult for U.S. automakers to survive even as they reduce costs through job cuts and other restructuring efforts. General Motors Corp. and Chrysler LLC are requesting more aid from the government on top of the $17.4 billion they've already received. Ford Motor Co., although not seeking aid, has drawn down the remaining $10 billion on its revolving credit line to help it get by.
It's not much better for foreign automakers like Toyota Motor Corp., which expects its first annual net loss since 1950.
U.S. automakers have said the Obama administration's stimulus efforts and aid to their financing arms should help spur new car purchases, particularly in the second half of the year, but it's unclear if that's enough to bring about a significant turnaround.
"The remainder of the year continues to be an open question," said Gary Dilts, J.D. Power senior vice president for global automotive operations, in a report this week. "We're still seeing economic headwinds and reduced consumer demand for new vehicles, making it a tough marketplace."
Automakers and analysts say there is demand for new cars. The recession, however, has kept that demand pent up.
All the news coverage of the economy being as bad as it was in the 1930s has instilled a sense of paranoia in Liz Nelson. The 25-year-old public relations account executive from Santa Clara, Calif., has been driving a 1996 Acura Integra since 2003, but she's having second thoughts about a new car because of what she calls "the downfall of the economy."
"My car sounds like it's dying. Every morning when I start my car, I pray that it will get me to the train station so I can make it to work," she said.
Nelson is the type of person the automakers are trying to rope in. She realizes that rebates and financing offers could give her an incredible deal on her dream car, an Infiniti G35 Coupe.
She plans to purchase a used car before the end of the year instead.
Mar 28, 2009 at 5:20 p.m.
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From my personal experience, I switched from American cars in the mid-90's. Until I get burned by a Japanese auto, I will NEVER go back. I have had 2 Hondas and 3 Toyotas and I have had incredible luck(and resale value) with all of them. The American cars were a mess and the value at trade in time reflected this. Quality might have been improved, but thankfully the foreign cars that I have owned, have never come close to giving me a reason to switch back over and find out first hand:) FWIW--I change my timing belt at 100K and it's a $300 expense to have the dealer do it. I have never had one break on me. So please don't let the fear of timing belt maintenance dissuade you from trying a Honda or Toyota. Not that big of a deal......
Mar 28, 2009 at 5:18 p.m.
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redder -- I could not agree with you more! My '96 Chevy S-10 pickup has nearly 300,000 miles on it now and still runs as strong and as quiet as the day I bought it (27 mpg city / 33 mpg hwy). It has been paid off for just over then years now!
300,000 miles and I do not ever hesitate to jump in and take long (2-3,000 miles trips) in it... how many people would do that with a car with only 80,000 miles on? 150,000 miles?
Why? Regular preventive maintenance. Oil & filter change every 3-5,000 miles; keep everything else properly lubricated (hinges, seals, etc.); maintain tire pressure; etc. I also generally kept to GM's maintenance schedule (e.g. replace certain items even if not worn out every 36,000 miles; tune-up and coolant flush and fill every 100,000 miles; etc).
The only "major" things that I have had to do in nearly 13 years of ownership?
96,000 miles: replace leaky head gasket (free, GM covered this)
108,000 miles: replace u-joint, rebalance driveshaft, replace clutch ($700, throwout bearing had worn away -- back then I towed trailers and drove off road in Arizona quite a bit)
127,000 miles: replace water pump ($40, did it myself)
170,000 miles: replace transmission and clutch (this was "the" biggie: $4,200 parts and labor... but it beat spending $25,000+ on a new truck!)
230,000 miles: replace clutch ($400)
I've probably replaced tires, oh, six times now, brakes eight times times, shocks six times, so that comes to somewhere in the ballpark of....
$ 8,000 for regular wear.
$ 2,000 for oil changes.
$ 1,500 for other regular maintenance.
$ 5,200 for "major" repairs.
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$16,700 in twelve years or about
$ 1,400 per year
Compare that to most new car payments or leases: say $350 / mo is $4,200 per year!!! I have saved somewhere around $3,000 per year for nearly ten years.......
Mar 28, 2009 at 5:12 p.m.
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truth1 timing belts are found in most Ford and Chrysler and Some GM (remember the Chevette) 4 cylinder engines as well. The engines that grenade when the belt breaks are interference engines.. not all cam timing belt engines are interference engines. So lets be factual or knowledgeable on SOMETHING...by the way all engines use belts to drive accessories so they must work fairly well and be DEPENDABLE...
Mar 28, 2009 at 5 p.m.
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Today American built cars have nearly the same quality as foreign built cars. Unfortunately the stigma from many years ago still exists that foreign cars are superior in quality and reliability. Hopefully American car companies (i.e. Tesla Motors) will lead the way in the clean car technology and it will ALL come from America.
Mar 28, 2009 at 4:57 p.m.
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truth1 - I love the GM 3.8L V6 it'll go forever! Unfortunately, the 3.1, 3.4, and 3.8L GM engines all have significant flaws with the intake manifold gaskets and many owners of cars with those engines report having to replace them 3 or 4 times during ownership at $500-$800 a pop. The "superior" DexCool coolant is to blame, and unfortunately have caused more problems than it's worth in the long run. GM did produce a manifold gasket kit that will supposedly solve the problem of them failing, so if anyone has that problem with the V6 motors of a GM product, get the genuine chevy manifold kit and you won't have to replace it every 30k miles or so.
Mar 28, 2009 at 4:43 p.m.
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SOME imports may require less maintenance, but SOME require MORE...most imports have that stupid "timing belt" that needs replacing and leaves you sitting if it breaks or can ruin the entire engine....All brands have some models with "belts" and I don't want any of 'em...Most of them don't use any less gas either.
Mar 28, 2009 at 4:22 p.m.
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redder: your judging Americans purchasing vehicles by domestic or import in how they maintain cars holds as much water as a cheese grater. It's a known fact most imports require less maintenance. Kinda blows you theory out of the water. 22 years didn't teach you much when it comes to diversity or comprehension.
Mar 28, 2009 at 3:55 p.m.
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you can buy domestics built in foreign land and you can buy foreigns built domestically. its all gray these days:)
Mar 28, 2009 at 2:55 p.m.
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American designers did some real stupid stuff though, like you not being able to shut off the dome light with the door open if you want to..I also have to turn on the ignition to run the windows on my Olds 88 as there is no power to them even with the key on "accessory".....how stupid
Mar 28, 2009 at 2:37 p.m.
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Let me explain a little something to you folks here. I have been a in the auto industry for over 22 years. I am at the dealership level so please dont put me in the factory catagory. American cars are built just as good as anyones cars. The problem is the fact that AMERICANS just plain don't listen. I am now with imports, and our customers understand that by doing preventive maintenance your vehicle will last a very long time, domestic dealers and owners DO NOT DO MAINTENANCE. Do not ask me why but they don't. I hear it all the time, "I had this car for 5,6,7,8 years never did a thing to it" I then start deducting. You must do your maintenance to get life out of your vehicles. You people spend more money on your lawn mowers than your cars and expect them to survive. It makes zero sence. Do what needs to be done and your vehicles will last 200, 300,000 miles just like the imports. They are not built any better they just are taken care of better.
Mar 28, 2009 at 2:21 p.m.
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There has been a lot of real junk made by both American AND foreign companies, you just have to pay attention to the models and years....Anything with the GM 3800 engine with under 100,000 miles is almost guaranteed to be a bargain AND good fuel mileage........I also use 100% synthetic lubricants...This makes a big difference too and it more than pays for the extra cost of it.
Mar 28, 2009 at 2:12 p.m.
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I've got over 220K on my two foreign cars and they still run like new.
I sure don't miss the repair bills on my American built cars as my current vehicles are paid for and maintenace free.
Just ask anyone who has made the switch. It's more money in you back pocket in the long run.
Mar 28, 2009 at 1:45 p.m.
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truth1 you under estimate you Buick LeSabre we have a 1997 with 195,000 miles getting 27mpg in town. American cars do there part well in my household. Foreign auto manufactures cars have continued to grow in size and weight in last 5 years to become Americanized, there is a reason.
916 your comparison in Japanese cars to American cars is ignorant brain washing. Properly maintained cars operate longer period. Btw..Honda and Toyota final assembly plants are in the USA with USA made quality. BMW even has an assembly plant in the USA.
Mar 28, 2009 at 12:39 p.m.
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woody, I'm not even sure that Detroit has yet faced up to the fact that it builds inferior product. It's only in recent years that fleet quality has become really competitive out the door, but Japan-branded vehicles are still far and away superior at the ten-year mark. And South Korea's quality has been improving by leaps and bounds. Consumers, you know, notice that. It's their money; why should they throw it away?
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By the way, the only vehicle being produced in Janesville today is Isuzu. Chew on that one.
Mar 28, 2009 at 12:33 p.m.
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And what kind of car do you want to be in when the idiot on a cell phone texting smashes into you...the Toyota or the Buick? I'll take the Buick!!
Mar 28, 2009 at 12:27 p.m.
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It's smart to buy foreign made goods so our manufacturing base disappears? I don't think so.
Mar 28, 2009 at 12:24 p.m.
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Oh yes, and it will probably have about 250,000 miles on it when I'm done with it.
Mar 28, 2009 at 12:19 p.m.
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I just bought a 2002 Buick Lesabre with 75000 miles for $6000 that gets 25mpg on short trips and will last me about 10 years with very little maintenance/repair costs and drives/is like brand new with leather seats....I don't understand whats with people wnating to spend ridiculous money on a stupid rolling tin box.
Mar 28, 2009 at 11:02 a.m.
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Woody.....These are just smart consumers making smart decisions. It was a good move to purchase a Japanese car to begin with. It will last twice as long as a comparable American car. Now with the economic crunch, they can hold onto their car will little fear it will cost them any amount of money other that simple maintenance.....
Mar 28, 2009 at 9:23 a.m.
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That is just terrible! Whaa! Whaa! Whaa! We should feel terrible that these people can't continue supporting Japan by buying their products. I feel so sorry for them...don't you?
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