Auto Bailout: 7 Reasons Why You Should Buy a Car Now

Auto Bailout Develops a Formula to
Save You Money Buying a Vehicle

Reason # 1: The Automotive meltdown is a one in every 100 year event that has developed a once in a lifetime buying opportunity for the American consumer.

The automotive business is experiencing a meltdown of historic proportions. All the current publicity is focused of the big 3; GM, Chrysler and Ford. I’m here to tell you that it goes way beyond the big 3. Toyota, Honda, Lexus, Mercedes Benz, Hyundai, Kia, Subaru and Volkswagen have all been slammed. Every manufacturer in the world has been effected. We now operate in a global economy. What is good for the US is good for Europe, China and rest of the world. This scenario has built the most one sided buyers market in my lifetime.

Reason # 2: The Home Credit Crisis is Starting to Thaw

The current automotive implode virus was born several years ago in the days when easy money was available in the housing market. This is a very simplistic picture and the very abbreviated short version of what happened. As people started to default on their home loans, banks started to tighten their standards on new home loan or a refinancing.

As this started to gain steam, new home purchases started to go in the tank. As new home purchases started to tank, home builders stopped building homes. Next, Charlie the carpenter, Mike the mason, Paul the plumber and Rick the roofer started to get laid off.

Charlie the carpenter purchased a new Chevy Silverado at the height of the building boom. Charlie was making good money and his $527.00 monthly payment was no problem. Today Charlie is out of a job and has no income. Charlie is 90 days late on his truck payment. His bank no longer makes loans to carpenters, masons, plumbers etc unless they can come up with 30% down payment and proof of income.

Reason # 3: Follow the Money

So the Charlie’s of the world are not trading their vehicles within normal trading cycles. One every 36 months or so. For your local car dealer this picture is a double whammy. Fewer car sales. Fewer trade-ins. Less revenue. And it trickles on down from here and spreads to the entire community. Fewer loans means the banks are not making money. The bank can’t make a loan so the lending manager makes less money. When Brittany the banker makes less money Brittany can’t afford that new dress she wanted to buy. In a normal economy you could follow the money. Today money is not flowing so the national economy, then the local economy, comes to a screeching halt.

Reason # 4: The Cost of Gasoline

Let’s add another ingredient to the perfect storm…the cost of gasoline. Although there has been a dramatic drop at the pump from close to $5.00 a gallon this summer to under $1.60 a gallon the damage has already been done.

When gasoline is close to $5 a gallon the market floor or trade in value for SUV’s and trucks collapses. It got so crazy this past summer that rumors where rampant that manufactures would completely cease production of SUV’s. Not True. Since this summer though, used vehicle values have returned to near normalcy. Plus, because of the slow down, some dealers still have lots of these undervalued SUV’s that can be picked up for a song.

Reason # 5: Reduced Production

Reduced production in 2009 and 2010 will produce a sellers market. If you have been following the Big 3 congressional hearings on capital hill they are all promoting a huge reduction in the production of any and all vehicles. While they may be overstocked now the 2008’s will soon be gone. For every car a dealer sold in the past he would order one to replace it. Today if they sell two cars they will only order one, instead of two as a replacement. That is a 50% reduction.

So what does this mean? As the 2008’s are sold off there will be fewer 2009’s shipped to automobile dealers. Let’s say demand increases by a modest 20%. (Remember sales right now are at historic lows, off by as much as 50%, and our population is not shrinking.) As demand increases but available inventories do not increase, demand will eventually outstrip supply. When that happens the price of automobiles will go up.

Reason # 6: Supply and Demand

As new cars supplies shrink available used vehicles for sale will, in turn, dwindle. Remember the over supply of used cars now on the market….well, they won’t be here for long. Now is the time to go out and get your best deal on a new or used car, truck, SUV, crossover or mini-van. All the factors have lined up in a perfect auto buying storm to help you get the most vehicle for the least amount of money. Now is the time to take action.

Reason # 7: Remember Brittany the Banker?

Well Brittany’s wardrobe really started to suffer. (Remember she could not buy that new outfit because her pay had been cut?) When the bank where she works had their weekly loan committee meeting Brittany spoke up. “If we don’t start lending money we are going to go broke!” In every community there is a Brittany.The money is there. It is available to loan. Walk into your local bank or auto dealership and ask for Brittany. .

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