Lemon-aid author says Ford’s rescue plan ‘too little, too late’

Ford Motor Company is bleeding red ink and embarking on a desperate plan to convert their truck plants and import six, smaller European vehicles. But Lemon-Aid author and self-professed car curmudgeon Phil Edmonston says “it may be too little, too late.”

“Plant conversions will burn through more billions and new products won’t likely be introduced until late 2009,” says Edmonston. “Furthermore, each time American carmakers have imported their European small cars into North America, the vehicles have been unreliable, poorly serviced, and sales disasters. Think of the Ford Cortina and GM Firenza as two notorious examples of fuel-frugal vehicles rushed onto the Canadian market during the last fuel crisis in the 70s.”

In yet another massive blow to a North American automaker, Ford announced the worst loss in its history this week, a staggering $8.7 billion hit in the second quarter. Ford blamed the downtown on high gasoline prices driving consumers away from its big SUVs and trucks. But as I’ve written here before, the writing has been on the wall for a long time and Ford’s glacial attempts to address the changing market is largely responsible for the mess it finds itself in.

For far too long, Ford, GM and Chrysler have been mesmerized by the fat profits they were making from large trucks. According to Edmonston, a $10,000 profit was normal on these monster trucks, while economy cars brought in perhaps a 10th of that. But that hasn’t stopped companies like Toyota and Honda from reaping large rewards from smaller vehicles and they are not facing the same struggles now.

Edmonston says he believes Ford can turn things around but he believes the company’s rescue plan should include the following:

1. Expand co-ventures with Asian and European automakers like Mazda who know how to make profitable and reliable small vehicles. Ford has successfully done this on a small scale with the Ford/Mazda Escape/Tribute small SUV and the Escort economy car.

2. Sell money-losing Volvo.

3. Cut retail prices by 15 percent and make sure Canadian prices are no higher than American prices.

4. Drop the estimated average $1,500 Transportation Fee on new purchases.

5. Extend the base warranty on all vehicles to 10 years/160,000 km.

We’ll have to wait and see if Ford takes any of Edmonston’s advice to heart.

Eat your import? I think not

Two news stories caught my eye this week. The first concerned the Honda Civic’s enduring popularity with Canadian drivers, while the other predicted that Toyota would shortly topple GM as the world’s top automaker. Neither of these items should be a surprise to anyone who follows the auto industry, but they do once again highlight the terminal malaise facing the North American automakers.

When I first stepped into my first Honda Civic I was awestruck by this little car’s looks and handling. The fact that it had a reputation for bullet-proof reliability sealed the deal immediately. Compared to my first car, a 1982 Mercury Lynx which subsequently self-destructed in its first year, my little Civic was a revelation.

That was back in 1991 and even then Honda had been well-established in North America. Since then, the company, along with Toyota, has made constant inroads with a simple formula of selling well-made cars that people want to buy. The Civic, which is now outselling Ford’s F-series trucks as the top selling vehicle in Canada, is still miles above the competition from Ford, GM and Chrysler.

Don’t get me wrong though. I wish the now inaccurately named Big Three would produce better cars and they are making improvements on some fronts. But I’ve owned several GM products, one Ford (the ill-fated Lynx) and a Chrysler, and none of them has impressed like the Hondas and Toyotas I have owned.

Once upon a time I worked as a daily newspaper reporter in Oshawa, Ontario, the home of GM Canada. On more than one occasion I had to drive my import into a CAW protest or strike and endured sneers and caustic remarks about my choice of wheels. And I always felt compelled to respond to those attacks.

For one thing, I couldn’t afford any of the GM vehicles made in Oshawa. But even if I could, why would a young guy want to drive their dad’s Oldsmobile or some other mid-sized GM sedan like the awful Chevy Lumina. Sure, I could have bought a smaller GM car like the Chevy Sprint, but that was actually a rebadged Suzuki Swift. I drove those at the newspaper. They had three cylinder engines – need I say more.

At least my Honda was made in Ontario and supported Ontario communities, I would argue. And besides, just because my neighbour builds houses for a living doesn’t mean I should put my family in one of his homes if I don’t believe it to be best built product available. Does it?

Rust proofing that actually pays off

Depending on where you live, rust can be a real killer when it comes to resale value. Here in Toronto, the road salt is layered on so thick that your pant cuffs are permanently encrusted through the winter months.

Because of that, rust proofing can be a real life saver when it comes to preserving the body of your beloved vehicle. But not everyone needs to fork over big bucks for rust inhibiting products and not all rust proofing methods are worth the money you’ll pay for them.

First of all, car owners need to assess how long they expect to keep their vehicles. Most new cars are well-protected at the factory and can last 5-7 years before any rust perforation problems begin to show. Therefore, if you tend to trade in your cars every five years then you needn’t bother.

Secondly, if you do intend to keep your vehicle beyond five years, you shouldn’t shell out hundreds of dollars for rust proofing at the dealership. Not only is it most often over-priced, but it is also no better than a rust inhibition package at an independent rust proofing franchise. In fact, some dealers simply send out their vehicles to those same franchise stores and mark up the cost.

For the record, the two companies most often recommended by consumer groups like Car Help Canada and the Automobile Protection Association (APA) are Krown and Rust Check. Both offer a reliable product that costs about $120-$140 for most cars and trucks. And although it is recommended by those companies as an annual application, the consumer experts suggest 3 or 4 applications are all that you will really need for proctection that will last the life of your car.

Both companies offer a product that is NOT dripless. That’s because a good rust inhibitor needs to be viscous enough to seep into every nook and cranny, so you do have to expect a bit of dripping for the first day or two.

As for electronic rust proofing products, I have seen no scientific proof that these work in automobiles and in my opinion they are most likely worthless. Some gadgets marketed amount to little more than a nine-volt battery and some wires. Quebec has previously banned one kind of electronic rust proofing gadget and the five-year warranty offered by some is not long enough to establish anything. Sure, it may work on boats and bridges, but a car is an entirely different thing and even if it did work on sheet metal, many experts argue that is “not likely to protect vulnerable lines, pipes and connectors,” according to Car Help Canada.

Why can’t Canadians access invoice car pricing?

South of the 49th parallel, U.S. car buyers can simply Google their way to the invoice price of just about any car they like. But up here in Canada that same information is jealously guarded by the manufacturers. Why the difference? I’m not entirely sure, but I suspect the inequality has something to do with greater public access to information in the U.S. and a greater willingness of dealers down there to share the info.

But perhaps I’m getting ahead of myself. Let’s first examine what the invoice price is and how it can help consumers. The invoice price is essentially the dealer’s cost on a car. This cost is always lower than the manufacturer’s suggested retail price and the difference is called the mark-up. Knowing exactly how much the dealer paid for a particular vehicle can be a very empowering bargaining tool.

Generally speaking, mark-ups vary from about nine to 20 per cent over the invoice price. Cheaper cars tend to be on the lower end of the scale while luxury models are more likely to command a higher mark-up. Most people would probably be surprised at how little dealers make on new cars. And in Canada where compact and sub-compact cars make up more than half of all new car sales, it is easy to understand why some dealers are struggling to make ends meet. But that is their concern and not ours at the moment.

Now, anyone who thinks they can negotiate a car price down to the dealers invoice is dreaming in Technicolor. The best most people can hope for is to knock a few percentage points off the MSRP. For example, on a compact car like a Honda Civic or Toyota Corolla, a good deal would probably be about $600-$700 off retail. On a more expensive car though, the savings could be into thousands of dollars.

The best advice I can give car buyers is to use the services of a non-profit group like Car Help Canada or the Automobile Protection Association (APA). They not only have access to invoice pricing, but also offer pre-negotiated pricing that is often a far better deal than you would be able to negotiate for yourself. And best of all, you don’t have to deal with pushy salespeople, even pushier business managers and all that back and forth baloney. Both groups have been around for years and are dedicated to helping consumers navigate their way through the car industry. There is a membership fee for their services, but the payback is instant and well worth it if you purchase through them.

Ford Flexes, but can it muscle the competition?

This last week I’ve been test driving the all-new 2009 Ford Flex. And so far I must say I am enjoying this car. It has lots of elbow room, plenty of muscle and can carry a fair amount of gear or people. But not all is well in Ford Land and this vehicle, as sharp looking as it may be, epitomizes a big part of the problem

For one thing, the Flex is only available with Ford’s 3.5-litre Duratec V6 engine. In city driving with the all-wheel-drive model, we’re talking a punishing 14 litres of fuel for every 100 km driven. The official rating for city mileage is 13.5 L/100 km on this model, but of course the published fuel economy is always overly optimistic.

With numbers like that, it’s hard to imagine too many people clamouring to own one with the escalating price of gas. For 2010, Ford does plan to introduce a new “Ecoboost” turbocharged 3.5-litre engine which will offer better performance and use less fuel, but I still think there ought to be a 4-cylinder or hybrid version offered for these times. Ford’s Escape Hybrid is an excellent us of gas-electric technology and I can’t understand why the company has been so slow to make greater use of hybrid engines.

The Flex also has another big albatross around it’s neck and that is the price. At $33,354 for the base FWD SEL and up to $40,474 for the Limited AWD version, the Flex is far above competing vehicles like the Dodge Journey, which seats the same number of people, starts around $20,000 and comes with a 4-cylinder engine choice.

The Journey may not be as Funky as the Flex, but as gas prices go higher, fuel economy is quickly becoming the number one concern for new car buyers

Ford Flex vs. Dodge Journey

Coming soon to MoneySense magazine – a battle between two of the latest SUV alternatives. The 2009 Ford Flex and the 2009 Dodge Journey are both vying for drivers who are thinking of trading down from their monster trucks into something better on gas but still roomy inside.

I don’t want to give away too much before publication, but I am impressed with these two new people haulers. Both seat up to seven people in three rows with fold-flat seats in the back and lots of cargo space. You’ll have to read the article to see who comes out on top, but I think it’s fair to say the Flex wins on style, but if fuel economy is your driving concern then the 4-cylinder Journey model comes out on top at the pumps.

Unfortunately, automotive writers are often handed the top of the line version of each vehicle they test drive, so it is sometimes hard to get a feel for the base or mid-level models that most people will likely buy.

The Journey I drove last month was the RT version, while the Flex I am driving right now is the SEL version. Both are nicely equipped but pricey.

As with any brand new model though, there can be first-year glitches to work out so savvy buyers might want to wait until those bugs have been squashed and the initial buzz has died down. The deals and financing offers are also likely to be more generous in the second year, especially if fuel prices keep going the way they are.

Welcome to the truth about cars

Welcome to my blog, which I am dedicating to the absolute, unbiased truth about cars and related technology.

My background is journalism, but don’t mistake me for a groveling automotive hack at the beck and call of the manufacturers. Yes, I too test drive vehicles provided by the automakers, but I don’t jet around the world to drive the latest Land Rover in the Sahara and I don’t pull any punches.

Instead, my writings provide straight-forward and practical advice for car owners.  In fact, I am one of the few automotive journalists endorsed by Phil Edmonston, creator of the  best-selling Lemon-Aid new and used vehicle buying guides. I’m also the former communications manager for the non-profit consumer association Car Help Canada.

In addition, I am also an appointed consumer trustee for the Ontario Motor Vehicle Dealers Compensation Fund and a member of the Ontario Motor Vehicle Industry Council’s communications committee.

But enough about me. This space is dedicated to educating consumers thourgh information they won’t likely read in the automotive section of their favourite newspaper. Why is that? Well, because automotive sections and car magazines owe their very survival to the ads placed by car makers and their dealers and biting the hand that feeds you is very unpopular these days. And with the automotive industry in such upheaval, any criticism of domestic automakers in particular is seen as almost unpatriotic.

Of course, I too feel for the struggling automakers and even admit to a soft spot for GM having lived and worked as a journalist in Oshawa, Ontario for many years. However, I also see the disappearing jobs and financial losses as entirely foreseeable events that could have been avoided or at the very least minimized. More about this later, but suffice it to say the current train wreck should have slammed on the brakes a long time ago instead of clinging to this reliance on the giant profits from massive fuel-sucking trucks.

Anyway, I hope readers will enjoy the future posts on this blog and use it as the smart shopper’s resource I envision to be. If enough people get on board I’ll consider launching a full-blown website with even more useful information for car drivers.

Happy motoring!