Archive for May, 2008

Pain at the Pump – For You and the Automakers

Monday, May 26th, 2008

As gas prices rapidly approach four bucks a gallon, Americans are feeling pain at the pump.  So are the automobile manufacturers and dealers.  Rising gas prices and their negative impact on the economy are causing consumers to put off vehicle purchases or to trade in their gas guzzlers for smaller, more fuel efficient cars.  As a result, automakers and dealers are experiencing a significant decrease in sales and profits.  Although small car sales rose over 7% the first four months of this year, SUV sales have dropped 28%, minivan sales fell 20% and pickup truck sales dropped nearly 18%.

This trend is especially hard on the American auto manufacturers whose profits depend heavily on sales of large trucks and SUVs.  Although the “Detroit Three” (GM, Ford and Chrysler) now offer dozens of smaller cars that get around 30 miles per gallon (with much improved quality), they still build far more trucks and SUVs than their Asian competitors.  While Detroit can shift its production to the more fuel-efficient vehicles to some extent, it can’t just turn on a dime.  The development cycle for new cars (from research to design to production) can run anywhere from three to ten years, severely hampering an automaker’s ability to adjust to sudden market changes.

Since the auto manufacturers can’t magically replace their inventory with more fuel-efficient vehicles, they have to develop more creative ways to market the vehicles they already have.  The traditional solution is to offer large cash rebates and zero-percent financing to make slow selling vehicles more attractive to consumers.  This year, that hasn’t been enough.  So, some automakers have created a new type of incentive – discounted gas!  This program is very clever, as it speaks to consumers’ greatest area of pain.  But, is it really a good deal?

To answer that question, we have to read the fine print, make some comparisons, and actually do the math.  (Yuck!)  Most programs limit the amount of gas that can be purchased at the discounted price to cover fuel for 12,000 miles per year for three years.  Most Americans drive closer to 15,000 miles per year, so the discount will not last the entire year.  The discounted gas program uses the combined city/highway fuel economy estimates for each vehicle to calculate how many gallons of gas add up to 12,000 miles.  For example, an SUV with a combined rating of 15 mpg will give you an allotment of 800 gallons of gas per year.  At the discounted price of $2.99, that comes to $2,392 per year.  If gas prices stabilize at $4.00 per gallon (which some economists say is likely – yeah, right), you would save $808 per year or $2,424 over three years. 

That sounds like a pretty good deal.  However, we must consider that the vehicles offering the special gas program tend to have lower fuel economy ratings than their competitors (which is why they aren’t selling in the first place).  Going back to our example above, if you instead purchase an SUV that gets 22 mpg, you would only need 545 gallons of gas to get you 12,000 miles.  At $4.00 per gallon, you would spend $2,180 – that’s $212 less per year (or $636 over three years) than what you would have spent with the discounted gas program.  If gas prices soar to over $4.50 per gallon, then it’s probably a push.   Of course, if you keep the gas program vehicle for more than three years, you will go back to paying the same high price for gas as everyone else, while driving a less fuel efficient vehicle.  Any amount of money you saved under the discounted gas program will be quickly lost. 
Furthermore, the gas deals typically reduce the amount of the cash-back incentives you can apply to the purchase of the vehicle.  Sometimes the gas savings makes up for the difference in the incentives, but sometimes it doesn’t—particularly for vehicles with large cash incentives.

Unfortunately, there is no magical solution to the gas price predicament.  If you have your heart set on one of the vehicles offering a discounted gas deal, and the gas savings is greater than the cash incentives, then take advantage of it.  However, if your goal is simply to save money at the pump, then you are better off purchasing a more fuel efficient vehicle.  Or maybe a bicycle.

2008 Tesla Roadster

Monday, May 26th, 2008

The 2008 Tesla Roadster is a fully electric sports car developed by Silicon Valley Entrepreneur Martin Eberhard and electric motor inventor Nikola Tesla under the company name Tesla Motors. The car is assembled for Tesla Motors by Lotus at their plant in Hethel, England along side the Lotus Elise. The cars are then shipped back to Tesla’s plant in California for installation of the powertrain and other final components.

Despite being 100% electric, the Tesla Roadster is no wind-up toy! The little two-seater can travel 225 miles on a single charge of its lithium-ion battery back and requires only 3.5 hours to re-charge, very much like a cell phone. The car ships with a home charging station and costs only 2 cents per mile to drive. The 6,831 cell lithium-ion battery pack weighs about 1,000 pounds, more than a third of the weight of the 2,700 pound car, and gives off zero emissions. The battery is warranted for 100,000 miles or five years.

Although the Roadster’s body is made of light weight carbon fiber materials, the car has passed all of the required U.S. safety tests. The all-torque electric motor makes 248 hp and can accelerate from 0-60 mph in under 4 seconds, topping out at 125 mph. The rear mounted engine redlines at 13,500 rpm with practically no noise at all. When did going green become so sexy!?!

The two-speed, rear wheel drive Roadster starts at $109,000 and comes in practically every color in the metallic rainbow. Air conditioning, heated leather seats, power windows and locks, cruise control, a single CD stereo with iPod interface, Homelink universal transmitter, and even a retractable cup holder are all standard. Safety features include four wheel anti-lock breaks, traction control, a tire pressure monitoring system, and dual front airbags. The Tesla sits on a set of high performance Yokohama tires mounted on 16” alloy wheels in the front and wider 17’s in the rear. A double insulated soft top is standard, but a removable, carbon fiber hard top is also available.   Other upgrades include a premium sound system, Bluetooth, satellite radio and touch screen navigation with voice guidance. You can even squeeze a set of golf clubs in the small, rear trunk.

If you’re thinking, “sign me up!” – get in line. All of the 600 cars that Tesla plans to produce for 2008 are spoken for, and they are now taking orders for the 1500 cars they plan to build for 2009. A mere $60,000 deposit is required to place an order. Tesla’s first dealership opened in the trendy L.A. neighborhood of Westwood, where Hollywood, Beverly Hills and Brentwood meet. Not surprisingly, Hollywood’s elite, including Arnold Schwarzenegger, George Clooney and Jay Leno, were among the first to place their orders. The first Telsa Roadsters were delivered to their excited owners in late March. Lucky dogs!

Learn more about the Tesla Roadster at Jay Leno’s Garage!

Top 13 Most Fuel Efficient Vehicles

Monday, May 26th, 2008

The following 13 vehicles are rated the most fuel efficient in their class, according to EPA estimates and Forbes.com:

strong>Two-Seater:  Smart Fourtwo (33 mpg city / 41 mpg highway)
Subcompact:  Toyota Yaris (29 mpg city / 36 mpg highway)
Compact:  Mini Cooper (28 mpg city / 37 mpg highway)
Hybrid:  Honda Civic Hybrid (40 mpg city / 45 mpg highway)
Midsize:  Toyota Prius Hybrid (48 mpg city / 45 mpg highway)
Large Car:  Honda Accord (22 mpg city / 31 mpg highway)
Hatchback:  Honda Fit (28 mpg city / 34 mpg highway)
Wagon:  Volkswagen Passat (21 mpg city / 29 mpg highway)
SUV:  Ford Escape Hybrid (34 mpg city / 30 mpg highway)
Minivan:  Mazda 5 (22 mpg city / 28 mpg highway)
Truck:  Ford Ranger Pickup (21 mpg city / 26 mpg highway)
Sports Car:  Audi TT Coupe (23 mpg city / 31 mpg highway)
Luxury: Mercedes E320 Bluetec (23 mpg city / 32 mpg highway)

New North Carolina Cell Phone Law is a Hoax!

Friday, May 2nd, 2008

I recently received an email describing a new law that is supposedly going into effect on July 1, 2008 in North Carolina. The law would prohibit drivers from talking on a cell phone while driving, unless they use a hands-free device. (Drivers under age 18 would be prohibited from using any type of wireless device.) The email gives extensive details about the new law, including penalties for breaking it.

Unlike most emails of this nature that I receive, I believed it to be true because I had heard about the new law from other sources, including mainstream media and even a NC DMV employee. I have recently learned that THIS EMAIL IS A HOAX! According to the North Carolina General Assembly’s website, no such law is scheduled to take effect in North Carolina. The law described in the email is actually for the state of California. The content of the email was taken directly from the California Department of Motor Vehicles Code publication on their DMV website.

There are currently laws in North Carolina prohibiting cell phone use for some drivers. Drivers under the age of 18 may not use a cell phone behind the wheel, except to call their parents or law enforcement in an emergency situation. Bus Drivers are also not permitted to speak on cell phones while driving. A law outlawing cell phone use while driving (except with a hands-free phone or head set) has been introduced into the N.C. General Assembly several times over the past few years. The law was passed by the State Senate in 2007, but it was not ratified by the legislature.

Even though it looks like North Carolina drivers will be permitted to talk freely for a while longer, it is only a matter of time before such a law is passed. Although many of us do it on a regular basis, talking on a cell phone while driving is dangerous. Not only is it a significant distraction, but it takes one hand off the wheel that could be needed to help control the vehicle to avoid an accident. Talking on the phone also limits your ability to turn your head to see clearly while backing up or changing lanes.

Remember – being a good, safe driver requires paying constant attention to your surroundings, having quick reactions, and maintaining total control over your vehicle. You can’t do any of these things while holding a cell phone. You didn’t see Danika Patrick using a cell phone at the Japan 300 last week, did you?

Drive Safely!