Are the Most Popular Fuel Economy Cars in the United States Outselling Its Truck Rivals in 2008?

Although the price for gasoline has come down over the past months, the one question that keeps protracted in car buyers mind is the direction of gasoline prices for the coming months and years ahead. Although no one can predict the future prices at the pump, but with the current recession in the works, many doubts that it will be anywhere but up.

Running a check at U.S. Retail Gasoline Prices indicated that from July 2008 until November 2008 the country is currently enjoying the lowest average gasoline prices of $1.93/gallon (regular grade) in November 2008. The second lowest gas price was back in January 2007 at $2.15/gallon. It then rose to $3.22/gallon in May 2007, down to $2.75/gallon in September 2007, up again in March 2008 at $3.30/gallon before reaching its peak of $4.12/gallon in July 2008.

However can we assume that sale of fuel efficient new and used cars are tied to the price of gasoline. You will be surprised by the findings below!

Let’s take a look at the most popular cars and trucks sold in January to April 2008:

TOP 10 MOST POPULAR CARS AND TRUCKS FROM JANUARY 2008 TO APRIL 2008

  1. Ford F-Series
  2. Chevrolet Silverado
  3. Toyota Camry
  4. Honda Accord
  5. Honda Civic
  6. Toyota Corolla/Matrix
  7. Nissan Altima
  8. Chevrolet Impala
  9. Dodge Ram
  10. Ford Focus

From January to April 2008 above, the list contain all the familiar faces but if you look at the list of Top 10 Most Popular Cars and Trucks in May 2008 below, you’ll find a wind of change was forthcoming.

While the prices of gas fluctuate during a period of uncertainty, American drivers are not only using less gas but they are not taking any chances by also changing their vehicle as well. Just take a look at America’s favorite Ford F-Series trucks that have been the top selling brand for the past 2 decades. By May 2008, it has dropped by 5 ranking while the fuel efficient Honda Civic took over the top spot. More importantly you will notice that cars are overtaking trucks as the best selling vehicles during the period in comparison. There is no surprise here as car buyers reacts according to the cost of gas.

TOP 10 MOST POPULAR CARS AND TRUCKS IN MAY 2008

  1. Honda Civic
  2. Toyota Corolla/Matrix
  3. Toyota Camry
  4. Honda Accord
  5. Ford F-Series
  6. Chevrolet Silverado
  7. Nissan Altima
  8. Ford Focus
  9. Chevrolet Cobalt
  10. Chevrolet Impala

Now, let’s tracks the most popular cars and trucks sold in July 2008 when gasoline prices were at its peak during the period in our review.

TOP 10 MOST POPULAR CARS AND TRUCKS IN JULY 2008

  1. Ford F-Series
  2. Toyota Camry
  3. Honda Accord
  4. Toyota Corolla/Matrix
  5. Chevrolet Silverado
  6. Honda Civic
  7. Nissan Altima
  8. Dodge Ram
  9. Honda CR-V
  10. Chevrolet Malibu

Surprisingly, Ford F-Series reclaimed the Top position again! During this period, Ford was facing high F-Series inventory resulting from unexpected drop in their sales from previous months, have geared up additional discount and promotion to ramp up sales. The result for July 2008 clearly showed that Ford has achieved its target amid lower sales. It also indicate that Americans are unfazed by the high gas prices and are not averse to high gas consumption when it comes to choosing their preferred vehicle especially when offered deals that are too good to pass up. The U.S. consumer love affairs with the popular trucks remain strong despite what the statistics says. On top of that, the car segment that have been anticipating higher demand due to high gas price but did not offer much incentive are not seeing any significant changes to their ranking. The result may have dampens demand for such cars instead. As gasoline prices continue to decline from July 2008’s peak, it was not surprising to see that demand for Trucks, continue to rise in tandem albeit lower sales due to the current ongoing credit crunch.

In my own thoughts, the discounts and promotions offered by car dealers for trucks could be large enough an incentive for buyers to offset against the imminent rise of gas. However, with gas prices continuing heading south, and buyers getting the best deals at the dealer, it seems truck buyers have won the bet this time round.

Automobile Dealerships – Valuing Blue Sky

Blue Sky is the intrinsic value of an automobile dealership, over and above the value of its tangible assets. It is sometimes equated to the goodwill of a car dealership.

Most articles regarding the blue sky value of new car dealerships cite a multiple of earnings formula, such as three times earnings, four times earnings, and so forth. The idea that “blue-sky” can be determined by anything times anything is just plain wrong.

Even NADA the National Automobile Dealers Association in its publication entitled “A Dealer Guide to Valuing an Automobile Dealership, NADA June 1995, Revised July 2000 bemuses, in part, with respect to valuing a dealership by using a multiple of earnings: A Rule of Thumb valuation is more properly referred to as a “greater fool theory.” “It is not valuation theory, however.”

In its Update 2004, NADA omitted its reference to “fool”, but referred to the multiple formula as rarely based upon sound economic or valuation theory, and went on to state: “If you are a seller and the rule of thumb produces a high value, then this is not a matter of great concern. Go for it, and maybe someone will be stupid enough to pay you a very high value.”

A dealership’s blue sky is based upon what a buyer thinks it can produce in net profit. If potential buyers think it cannot produce a profit, the store will not sell. If it can produce a profit, then variables such as desirability of location, the balance the brand will bring to other existing franchises owned, whether or not the factory will require facility upgrades, and so on and so forth, determine whether or not a buyer will buy that particular brand, in that particular location, at that particular time.

I have been consulting with dealers for nearly four decades and have participated in over 1,000 automotive transactions ranging from $100,000 to over $100,000,000 and have never seen the price of a dealership sale determined by any multiple of earnings unless and until all of the above factors have been considered and the buyer then decided he, she or it was willing to spend “x” times what the buyer thought the dealership would earn, in order to purchase the business opportunity.

To think otherwise would be to subscribe to the theories that (1) even though you think a dealership could make a million dollars, the store is worth zero blue sky because it made no money last year; and (2) if a store has been making $5 million per year you should pay say 3 times $5 million as blue sky even though you think you will not produce that kind of profit. Both propositions are absurd. If a buyer does not think a dealership is worth blue sky, then what he is really saying is that he sees no business opportunity in the purchase and therefore, in my opinion, he should not buy the store.

Each dealership is unique with respect to its potential, location, balance that its brand brings a dealer group, and condition of facility. The sale is also unique with respect to whether it is a forced liquidation, orderly liquidation, arms length, insider, or a case where an anxious buyer is trying to induce an unwilling seller. There are management factors to consider, length and term of leases, possibilities or non-possibilities of purchasing the facilities and whether or not the factory wants to relocate the store or to open a new store up the street.

In the car business it is impossible to pick a dealership or a franchise out of a hat, multiply its earnings by some mystical number and predict either what the dealership is worth, or what price it would sell for – and it doesn’t matter if you are talking about a Toyota, Honda, Ford, Chevrolet, Chrysler, Dodge, or any other dealership. At any given time one franchise might be considered more or less desirable than another, but they are all valued in the same manner.

Why You Should Access an Online Auto Loan Calculator?

The importance of an online auto loan calculator should not be undervalued. People can easily calculate the monthly amount of money they need to give to a dealer as part of the repayment of the car loan he or she has taken. It is very easy to access a calculator over the internet. You just need to visit a car dealer website and access the same free of cost. Usually the home page itself contains the EMI car loan calculator. You need to select the interest percentage, type in the lending amount, and choose the maximum number of months within which you prefer to pay back the money to get the monthly equated amount with a single click of the computer mouse.

Auto dealerships selling brand-new cars as well as used ones usually offer new car loans plus used car loans, 24/7 whenever a person asks for. The process of loan application is also pretty easy and hassle-free. Whenever you plan to buy a car and for that matter need the required sum of money, what you can do is simply access the internet. For people who don’t have an internet connection at their home, they can go to a nearby cyber cafe to open a couple of reliable dealer sites to go through the car loan application procedure.

Every website contains comprehensive information about auto loan rules and policies. One of the main benefits of applying for a new or used car loan from a dealer is that they don’t hesitate to approve loans to people with a bad or no credit rating. A soft-copy loan form is available in these sites. A potential car buyer needs to fill up the form adding his personal details such as name, permanent address, age, gender, phone number, email address, etc. The data in each online form gets stored in the database of the dealer for them to access the same anytime of the day or night for getting in touch with the car leads for successful conversion.

The primary advantages of using an auto loan calculator are given below.

Measuring Per Month Payment – To make it easier for people to repay the lending amount, almost all car dealers of today have introduced the concept of EMI or Equated Monthly Installment. The borrowers should calculate the payment amount in advance to save money and also avoid confusion using an online calculator.

Saves Time – Of course you don’t have to run after the dealers to know the amount of money you need to pay back. You can easily do calculate the amount yourself using an EMI car loan calculator.

Saves Money – You can become a better decision maker once you calculate the auto loan options that best suits your monthly budget and lifestyle. You should choose the car loan plus payment option that is within your budget.

Crack the Best Deal – Numerous auto dealers offer loans against different interest rates. However, you need to identify the dealership who is giving car loans against a small rate of interest and calculate the amount of money you need to pay every month. A car dealer who is giving loan against a small interest rate and for an extended period should be preferred.

Seinfeld’s Soda Machine Theorem of Converting Your Prospects Into Buyers

One of my favorite Seinfeld episodes is the car dealership, where Jerry is looking to buy a new car in a dealership from Puddy, his mechanic and Elaine’s boyfriend at the time (George does a hilarious candy bar lineup, but I’ll talk about that one another time). Anyway, Elaine is trying to break up with Puddy, and she’s trying to convince Jerry (and herself) that their relationship has finished in one mighty blow. Jerry says there’s no way that’s possible and that: “breaking up is like trying to tip a soft drink machine over – you can’t do it with one strong push, you have to rock the darn thing back and forth until it finally tips over”

Words of wisdom indeed.

But wise old Seinfeld’s proverb can be applied to more than just dating.

That idiom is right for making a sale too – rarely does it happen with one mighty blow of conviction (that does happen once in awhile, but only with people who know, like and trust you already, i.e. they’re on your house list, usually past customers).

So how do you rock the proverbial soda machine into a sale?

Well, the first obviously (and popular) way is through emails.

Now, one important thing you need to remember when building your email sequence (that your competition is probably not doing because they don’t know what the hell they’re doing) is

People don’t want to be taught – they want to be entertained

The emails are where you bond with your audience and they get to know you, so don’t try too hard teach your audience. Rather, give them some entertaining content with a bit of soft teaching (i.e. tell them what they need to do to fix their problems but NOT HOW to do it), so they enjoy (and even look forward to) your emails, and they get the sense they’ve learned something informative while enjoying themselves.

Another way to rock your audience back and forth until their wallet falls out, which I’ve written about in previous articles, is engaging with them offline.

Direct mail still is, contrary to common belief, a very effective (and much less crowded nowadays) way to connect with qualified prospects and get them to bond with you even faster.

How come you ask?

Because sending someone direct mail with some attention-grabbing mechanism (check out my article about Dan Kennedy and the “grabbers” concept) creates 2 strong beliefs in your prospect’s mind:

That you’re a real person, not some virtual bot or a wet-behind-the-ears newbie trying his luck online, and…

That you’re a serious business – who else sends stuff by mail nowadays? Only big corporations, insurance companies, and the government. Although this is usually a much-hated crowd – they’re perceived as VERY serious, so being a part of that crowd gives the same sense of seriousness to your business.

To stand out of the crowd, go to the extents that your competition will dare not follow.