We often suggest that a customer should investigate and compare the cost of insurance for a vehicle they are considering purchasing.

There is a guide that every new vehicle dealer is required by law to furnish you a copy of that compares insurance ratings of new vehicles. The government compiles this book using accident data from most accidents. The rating that a particular vehicle has can greatly affect the premium you’ll pay for collision insurance. Remember that if you finance your vehicle you’ll be required by the lender to have collision and comprehensive insurance coverage. Even if you’re not financing you should have those coverages if your vehicle is worth more than you can afford to lose if it was totaled.

So here’s how it works. A police report says that the driver was going 35 miles per hour and hit a parked vehicle. The insurance company pays the claim to fix the vehicles. That data is compiled along with possibly a million other accident claims each year and the circumstances of the accident. They are then able to spot trends where one vehicle costs more to fix in a similar accident than another. This happens because of the way some vehicles are engineered or built and also because of the cost of repair parts. A large percentage of accidents result in the insurance company paying to have the damaged vehicle repaired so they are very interested in the cost to fix a vehicle.

We once had a Mitsubishi traded in. The customer said they couldn’t afford the insurance, it was three times higher than the same size class and value Chevy we sold them. Recently we found a dash assembly required (because the air bags had deployed in an accident) to fix a Chevy was slightly more than $400.00 and a dash assembly for a similar competitive make vehicle was $3,800.00. That’s why insurance premiums can vary so much from one vehicle to another. Remember that if in a certain accident one car costs $5,000 to repair and a different vehicle costs $8,000 to repair, the insurance company is going to charge a higher premium for the second example.

Finally, when there are safety recalls, that can increase your premiums because it’s not always easy to prove if a vehicles system failed that caused an accident.

Often when visiting with friends and customers the subject of service and warranty comes up regarding different makes of vehicles. It’s important to consider your time and convenience when purchasing a vehicle. If you buy a vehicle that requires you to take it 35 miles for service, does that fit your lifestyle? Many times I’ve had people tell me that they do their own service, or their vehicle never needs warranty repair. I agree, a majority of vehicles never need anything except for routine maintenance which can be done many places. However, vehicles are complicated; they have over 20,000 parts on average. Most parts are designed to last the life of your vehicle, but sometimes things go wrong.

So, here are some things to consider:

Does the dealer offer free loaners? The Birdnow Dealerships do for as long as you own a vehicle that was purchased from us. A customer told me the other day that he had to rent a vehicle while he had his vehicle serviced at a metro dealer. The rent was $175.00 for the four days his car was in the shop.

What happens if there’s a recall? The average vehicle needs to be checked at a dealership four times and those numbers are basically the same for American brands as is for foreign brands. Most customers only hear of safety recalls such as is the case right now with millions of Toyota models. Many times there are what are called “campaigns” where the manufacturer sends you a card asking you to stop so a dealer can check something that might be a problem, that is different than a recall.

How much is the dealers labor rate? The Birdnow Dealerships offer just as good of service, with technicians that have the same levels of training, if not more, for a fraction of the labor charged by many other dealers.

In conclusion, here’s a story that I think will really drive home what I’m describing. One day a customer came in with a GMC truck that was a year old and still under warranty. He wanted to trade for a new Chevy. Trading every year isn’t unusual, but his reason was a bit unusual. He’d become angry at the treatment he’d received at the GMC dealer he’d bought his truck from. He left angry, telling them he’d never be back. When he got home, he opened the phone book to look in the yellow page for another GMC dealer. He was unpleasantly surprised to see that the closest one was 45 miles away!

2/1/2010 UPDATE:

WOW! I just listened to the president of Toyota beat around the bush for ten minutes on the Today Show about the problems that over half the Toyotas have with accelerators that stick. This problem has been happening for around ten years. He wouldn’t guarantee that the repair they’ve come up with would fix the problem. Also, does anyone else wonder how a problem they’ve been aware of for ten years can all of a sudden be fixed with a washer under the pedal and that they’ve come up with this in less than a week? He referred to this as a rare problem….I hope no one I know experiences that rare problem!

(Click here to read the earlier post about extended warranties.)

From the St. Louis Post-Dispatch:

US Fidelis suspends sales of service contracts

I’ve added some pictures of what can happen to a vehicle if you leave chargers plugged into the outlets. Actually for years I’ve unplugged electric items at home that I know aren’t going to be used for a while for the same reason, or while on vacation.

In most cases, if there’s a short circuit, just like in your home, a circuit breaker will trip to avoid a fire or shock to a person (shock regarding your home 110 volt circuits, not your vehicle) What can happen, however, in your vehicle or your home, is what happened to the vehicle in the pictures. The charger itself got hot enough to melt and start a fire, but it wasn’t drawing enough power to trip the circuit breaker. The fact that the vehicle was in the home’s garage could have even created more of a disaster.

At the dealership, over the years, we’ve encountered a few situations also where those chargers actually drew enough power to discharge the vehicle battery over a few days. That’s always inconvenient, to have your vehicle not start after sitting at the airport for a week!

Last year as part of the restructuring of GM and Chrysler in bankruptcy, approximately 2000 dealers were abruptly terminated, or in the case of GM dealers told that they would lose their franchises no later than October of 2010.

GM and Chrysler claimed that dealers cost them a lot of money. Here’s a good way to look at this. Consider dealers as the only customer of the manufacturers. Also be aware that virtually everything we get from the manufacturer, we pay for. Canceling out dealers would be very similar to a dealer filing for bankruptcy and in the bankruptcy stating that the dealer would no longer sell to people whose last names started with A through the letter D. Less dealers mean less competition and fewer choices for getting service for consumers.

I’ll admit that some dealers might have been too close to one another, but wouldn’t it have been a better plan to allow the market (that means the customers) choose which dealers would survive? Many dealers lost franchises because the manufacturer wanted to combine their brands under one roof. Here’s an example of that: In the Waterloo Cedar Falls area, Holdiman Motor lost their Jeep and Chrysler franchises. Those franchises have already been given to a different dealer who had the Dodge franchise. Even in bankruptcy the Jeep and Chrysler franchises had considerable value yet the manufacturer took them from one dealer and gave them to another dealer. This, I’m pretty sure of, was done with no payment to Holdiman, or charge to the other dealer.

There are rules and laws that protect dealers from manufacturers using such tactics. But in the shroud of bankruptcy they were able to bypass those laws. There are also rules and laws that protect dealers from unfair competition and also require that all dealers pay the same amount for their new vehicles from the factory. Those laws and rules were created years ago to ensure that there were convenient service and price competition available to consumers and that little dealers wouldn’t be unfairly forced out of business. The alternative will be no place but large towns having auto dealers. The big dealers would like that, you won’t….

I’d love to hear your thoughts on this subject.

The Birdnow Dealerships are going to launch a first of its kind 24/7 emergency message service for our customers. All of our customers will begin receiving a card with a toll free 24/7 emergency contact number on it. We are calling this card our VIC (Very Important Customer) cars. Only our customers will have access to this number. When calling, a live operator will ask which of our locations you normally do business with, or which one of our locations you’re closest to, and, at your choice, will call a specific manager, or the emergency contact managers of that store. If no one answers, if you wish, an email will be sent to all emergency contact managers at all of our locations. As soon as possible one of our emergency contact managers will call you back and see how we can help. Each of our managers will have a complete list of contact numbers for all staff in the entire Birdnow Dealerships organization. So, for example, if you normally do business with our Oelwein location, but it’s the middle of the night, you call our VIC emergency operator, and our emergency operator isn’t getting an answer to their phone call, an email will be sent to all emergency contact managers. Early the next morning, the first emergency contact manager that sees the message will call you, find out how we can help you, and will use our master list of all employees to call the appropriate person from the store location that can help you. Our 24/7 operator will have contact information for after hours towing, etc. to help you, but our purpose is not to replace emergency services or roadside assistance. Examples of what we would be able to help with is a loaner on the weekend, or advice on where to have a damaged vehicle towed.

This is just one of many things that make our dealerships unique. We like to say that we have all the benefits of a large dealership (a lot of vehicles to choose from, many sources of lenders to get you the best possible deal, better trained technicians and equipment) but not the negative things big dealerships can have. (high service labor rates, turnover in sales staff, high pressure to buy today, don’t care attitude once you’ve purchased from them, etc.) The Birdnow Dealerships are one big family, spread across NE Iowa, if you’re a Birdnow Customer you’ll be at home at any of our locations.

This article is mainly meant for my Iowa friends. And of course you need to consult with your tax preparer before you ever make a purchase that involves your consideration of a tax write off or deduction.

In Iowa, this is the last chance to deduct the use tax (the 5% added on for road construction) that is added on any vehicle purchase. We often refer to it as sales tax, but it’s really called use tax.

There are also some very good tax deductions for purchases made for business. Again, you need to discuss this with your tax advisor. Using my companies as an example, we are going to purchase two new trucks with snow plows. They are 100% deductible this year. We are also going to purchase a five year old truck with a plow also. That one, because it’s used, is 20% deductible this year and the remaining 80% at the rate of 20% per year for the next four years.

This year inventory is lower that I ever remember. This is in part because of the success of the cash for clunkers program, and also plant shut downs because of retooling, etc.

Every year we have customers that wait for the last minute and then are in a big hurry to get something bought. They sometimes ask us if they can order and pay for a vehicle in December, but take delivery after the first of the year. It’s my understanding that if the IRS is aware that is what happened, they’ll disallow it.

Take advantage of the selection now, or pick from what we have coming, or we’ll even locate a vehicle for you at another dealership, if we don’t have what you want.

I’m sure you all heard about the cash for clunkers program the government approved a few months ago. Now that the dust has settled, here are the thoughts I have.

First of all, the program was approved months before it was able to be implemented and used. The final rules didn’t come out until a few days before the program began.

Second, the website that we dealers were to use was overwhelmed most of the time, but most especially in the beginning. There were also lots of vague and unclear rules as well as rumors. One of those rumors was that only a certain amount of dealers would be allowed in the program. That caused most to be on line at 6am central time on opening day, along with dealers in other parts of the country, as early as 4 am on the west coast. Of course, that overloaded the system, maybe even caused it to melt down…. It never seemed to recover. Then, there was the next big rumor. It was announced, only on some internet news sites, that the program would be shut down at 8 am the following morning. Any sales not in the system by then wouldn’t be honored. There was a concern that no one knew for sure when the money would all be committed, and what would happen to those last rebates if the money was gone. Think what your reaction would be if you’d bought a car from us, got the Cash for Clunkers rebate, only to have us call you back and say that the rebate was not available because we couldn’t get the sale reported or the money ran out? So, my staff was at the dealerships as late as 1:30 am trying to get all of our sales reported. This, all because the website was so slow.

Other reporting problems were: We’d get a sale rejected, but there would be no explanation what was wrong. The response would simply say that there was an error, or multiple errors. We later found that a rejection was caused by there not being a comma after a persons last name, before their first.

Many dealers (not us) had to stop the program because they had so much money outstanding waiting for government payment,  that they couldn’t do any more. Or in some cases they became worried that the government somehow wouldn’t pay.

The requirement that the engine be destroyed in the clunker trade in vehicles was not a good idea at all. It caused vehicles to have to be hauled, rather than driven to the salvage yard at a much larger cost. It will further cause the price for used engines to go up and be in shorter supply. If the goal was to stop the clunker trade in from ever being used on the road again all that would have been needed is the requirement the title be transferred to a junking certificate. There are many folks who can’t afford any option but to fix up their old vehicle, believe me I know as we help many people in this way from our Birdnow Auto Recycling business at Fayette.

In the end, we got all of the money promised, and sales were good for a month….

What’s the scoop on extended warranties?

I notice lots of ads on TV, spams on my email, cards in the mail, even phone calls wanting to sell the above.

Here’s what you need to know. I personally don’t buy extended warranties on anything. But, I would buy one on a vehicle. Here’s why. A vehicle is very complicated, and it’s not a throwaway item. Consider a higher priced item such as a refrigerator. It sits in the corner, doesn’t get bumped over the road, go from 25 below to 100 above, and only has a couple of moving parts, but an extended warranty might cost as much as 25% of it’s purchase price. On the other hand, a good extended warranty for a vehicle will only cost 5 or 6 percent of the purchase price.

Here’s the most important information of all, if you decide to buy an extended warranty. Buy it from the dealer that you expect to get your service at. I could tell you stories of other extended warranty “companies” that:

• Made us wait five days before an adjustor could come and look at the broken part.
• An adjustor that examined a vehicle, left, and told the warranty company he didn’t think the vehicle had been serviced properly. (not the case at all) but coverage was denied.
• A company that denied coverage after we had taken out the transmission because they’d already paid another dealer to fix it.
• A company that denied a claim because some total limit had been reached.
• Numerous occasions where my staff had to wait on hold for up to an hour to get to talk to the company.
• Numerous times that a company either went out of business or never existed in the first place! There are actually scams that solicit you to pay them and send a worthless piece of paper. The trouble is, by the time you try to file a claim, it could be months or even years later.
• So many loopholes that we can’t get authorization on a repair that appears that should certainly be covered.
• Not being able to get paid at all after we thought we had authorization.

Our policy, as well as most dealers, is that we’ll be happy to repair your vehicle, but you’re on your own to collect from a warranty company other that the ones we represent. Simply put, if you buy our warranty, it’s almost like factory warranty, we handle all the paperwork.

Remember that we’re interested in making sure you’re satisfied with and get a good value on a legitimate product. Our reputation is at stake as well.

Here are some important service items to help you prepare for winter!

• Check the level of antifreeze, it should be at least -35.
• Flush and fill your car’s cooling system. Check belts & hoses
• Check battery and charging system.
• Check brakes.
• Inspect your tires and have them rotated and balanced. Inspect front end parts and check for proper alignment
• And of course, don’t neglect changing your motor oil. We recommend in nearly all cases to do this every 3000 miles.
• A routine coolant system flush is quick, inexpensive and easy way to prevent sludge, lube the water pump & protect from corrosion. We recommend doing this every 5 years or 50,000 miles. We are aware that some manufacturers recommend longer mileage intervals, but we think to be excellent preventative maintenance to do this at lower mileage intervals.
• Another item that is critical is a transmission flush. The need for this varies for various vehicles. For instance, a truck that hauls, tows, or plows snow should be flushed at 25 to 30 thousand miles. Cars can go as much as 60,000 miles, but in all cases should be done every five years. Again, this differs from what your owners manual might say, we are only using our years of experience to make these recommendations.

There are many things you can do to prepare for winter, but when it comes to the mechanical components of your car, you should trust our experts to analyze and tune-up your vehicle as needed. We’ll be happy to check most all that we list above at no charge. In other words if we find your belts, hoses, antifreeze protection level to be adequate, we don’t charge for that. You only pay for actual needed services!

Not only will you have peace of mind on the road, your car will last longer, run smoother, and use less gas.