Wednesday, February 18, 2009

A Kind Of Prisoner's Dilemma

Jesus. Obama has just managed to push through a stimulus bill, and now--the very same day as he signs the stimulus--the car companies are back sheepishly asking for billions more. I can't imagine how these companies could more clearly demonstrate their managerial incompetence than with this turn of events, which has the double-whammy effect of making us feel like idiots for being duped into giving them the first billions and of making clear that further assistance is absolutely pointless. We're now virtually guaranteed to see them making the same plea again and again, and we have no reason whatsoever to think they've NOW hit on just the right approach to guarantee solvency. OK, so maybe they're not responsible for the tanking economy (though I think one can argue they've played a starring role in their own demise), but can the management of a multi-billion dollar concern not project better than a Magic 8-Ball? I'm an idiot with no business training, and I feel I could have predicted a lot of this.

But what to do? The previous aid came after urgent pleas that the industry's very existence was in imminent peril, and god knows what else in our teetering economy would be sucked down in the same vortex. Now we have exactly the same stakes plus the billions in (borrowed) public money we just threw down that hole, and all of it tainted by the demonstrated incompetence of the management teams upon whom rests any hope of a viable US auto industry. (Aren't these the same white good ol' boys to whom the Republicans gave huge tax cuts because they're the ones who drive the economy? Or is the teetering economy another liberal plot like global warming?) There's no good solution. Take the aid back away from Chrysler, I suppose, and let them go; concentrate one's efforts on salvaging the viable portions of GM.

***

So much for my philosophical hand-wringing; on to the practical.

Here's my deal. I'm shopping for a new car to replace my three year old Civic. I determined a long time ago that I wanted three things in my next car: AWD, more interior space and a more upscale interior (leather, heated seats, automatic climate control, etc.). I've narrowed my search down to two finalists, and now I'm flummoxed about what to do. My two prospects are the Honda Pilot and the Ford Flex (well, I'm still also considering an Acura RDX and a Honda Ridgeline, and I could be persuaded by a really good deal on an Acura TL AWD as well, but I've mostly eliminated these choices).

My dilemma is this: all things being equal, I really like the Flex better than the Pilot. I never thought I'd say that, but it has a more spacious interior, is noticeably quieter, and I can get a tremendous deal on one. The Flex has been getting glowing reviews on the Long Term Test blog at Inside Line over at Edmunds.com, and I can order one and get exactly the equipment I want (which I've never done before). I've taken two test drives in the Flex and it's a really nice drive. It would be a nice car to live with, especially on my long drives to and from Kentucky, where my Civic gets good mileage but is noisy and rides like a buckboard. But I've had only one Ford in 27 cars--and that one years ago, an unimpressive Escort--and I have little doubt that it will be a more troublesome car in the long haul than the Honda (I've owned a bunch of Hondas and never had a lick of trouble with any of them). My local Ford dealer offers a seven year / 100K mile warranty, which will help, but it's still a weaker prospect than a Honda which will likely not need repairs at all. And I'm concerned about resale value. A $40,000 Flex can be had without much bargaining for $33,000 or so, which makes a mockery of the $40K sticker price. And because nobody else thinks they will age very well either, I'm bound to give up even more when I go to trade it in three years hence. Hondas typically lead the pack in resale.

So I no sooner feel decided in these deliberations than I either get another salvo of bad news about the American car industry or I stop by my local Honda dealer for an oil change and find myself test driving a Pilot. Surprise, it's a really nice car, and... it's a Honda! But here we are with our car industry hemorrhaging its life's blood away (and who knows what of the US economy with it), and it's hard for me to not care what happens. This seems a bad time to stand on some principle--the principle that our industry should sink or swim in the marketplace, that we should reap what we sowed--especially when an American manufacturer has in fact built something that's in the vicinity of what I would ask them to build. On paper I really do like the Flex better than the Pilot.

So what to do? I feel quite assured that a Honda Pilot--in addition to being aptly named--would bring me years of trouble-free and gratifying service. I love my local Honda dealer, too: they are a no-bullshit dealership (no high pressure, no bullshit compulsory fabric protection and pinstripes, etc.); I am eagerly given the keys to anything I want to test-drive, and they offer me a very reasonable bottom-line price without any haggling. But Honda is not hurting as a company relative to the rest of the industry (including Toyota, which will lose $6 billion this year for their first loss in history--a measure, I think, of just how bad the economy really is); they will not much miss my purchase. The Ford dealer is an unknown to me. Their sales department has been more typical of what I expect than the Honda dealer, wanting to get all my information when I stop by to look around, and accompanying me on test drives. (I suppose that's only fair; we have no history.)

Jeffy and I have talked about the "mercy purchase" before, and as a general rule I'm opposed to it. And now when I have nearly talked myself into thinking it wouldn't in fact be a mercy purchase, here come GM and Chrysler basically admitting that they are quite unable to cope, that their best thinking of only a month ago is now--yet again--catastrophically wrong. Ford is not joining them at the moment, but it still leaves my legs a bit wobbly. While Ford does in fact seem on sounder footing than GM, with a pretty nice lineup of models available and in the pipeline, their history seems about 1:1 lemons-to-success stories.

So why a prisoner's dilemma? Because my one purchase won't matter for beans in the end, at least not to Ford's well being (though the wrong choice might matter for my blood pressure). And in any case, I'm already going to be paying for the stimulus which will go much further toward rescuing Ford than my one car purchase.

What to do?

5 comments:

Jon said...

Heres my 2 cents worth. I've owned several Ford trucks over the years, and for the most, have had good results. Thats one plus for Ford. Kyles has owned several Subarus over the years and also has had no problems. Thats one for the imports. As far as the "buy American" it does'nt mean squat anymore. Kyles Subaru...Japanese owned but built in the states. Her previous Ford Escort, built in Mexico. My John Deere Tractor, an American symbol, built in India. Even baseball, no longer the American pastime, is full of players that can't even speak the language. Buy the Honda. It has proven itself many times over and will continue to do so into the future. Ford is the only one, to this point that has not asked for any large sum of money. Although thats speaks good of them, I am convinced that they still cannot keep up with the Honda, Toyotas and Subarus in the reliability column. You , yourself have also said that before. In time, the Flex may indeed prove itself worthy of the others. Baileys Accord is still running after 14 years and has no doubt lasted much longer than 75% of the American cars that were built the same years as hers. One more thing, I also was looking at new trucks and as always I look at Ford. A replacement 3/4 ton like mine with a sticker of 35,000, has ben knocked down to 26,000! How much are they making on us? Is it any wonder they can't make ends meet? My own personel bias is when you need a truck, you buy a Ford. When you need a car, you buy an import.Good God I'm long winded.

wunelle said...

No, but it's good advice. I think everything in my experience echoes what you say: buy a Honda. Hondas are awesome. Kudos to Ford for building the Flex, and I hope it sells like hotcakes (as Cadillac has had real success with their excellent CTS sedan).

Ask me again tomorrow, but yeah, I think it's the Honda.

Jeffy said...

I think Jon is right on. Get the Honda, unless you like the Ford better (is this a car or a truck purchase? - it depends on whether you ask a truck guy or not). There is no sense in buying a Ford based on sympathy or a desire to support 'local' businesses or workers, as either choice will be supporting a whole bunch of American workers and suppliers. The main difference being how many retired workers you'll be supporting with your dollars.

You won't own it long enough for any reliability difference to matter much, so you can comfortably get whichever appeals more to you. The difference in how they hold their value is also probably minimized by the likelihood that you'll be trading it before too long. The worst thing for the resale of either of these will be if gas prices shoot up again by the time you are ready to unload it.

Anonymous said...

Jon says: "A replacement 3/4 ton like mine with a sticker of 35,000, has ben knocked down to 26,000! How much are they making on us?"

The answer is: not much. In fact, they're losing their collective asses right now. My assumption is the car companies are selling vehicles for well below cost.

And a note to Wunelle: Remember, this isn't the last car you will ever own, so much hand-wringing on your part is not required. You may try a Ford just for the heck of it. Since you'll probably trade it within a matter of a couple of years, you'll probably never notice any issues. And, you may be pleasantly surprised!

A. Random

wunelle said...

It's true that I'm unlikely to keep the car long enough for reliability issues to come much into play. And with my local Ford dealer's supplemental warranty coverage, I'd be covered for the duration (well, minus any deductibles, which might negate the warranty for the likely nickel-and-dime stuff).

I suppose when I get right down to purchase day, I ought to take another back-to-back couple of drives and see what each dealer will do for me. Then again, I know the Honda dealer's numbers already, and I think the Ford people are bound by larger deals--no "sales manager magic" should be involved: through my work I qualify for Ford's X-Plan program, which basically gives me the car @ invoice, no questions asked; then I get whatever rebates are on offer atop that. The Ford is a bit more expensive at sticker value, and Honda will basically offer me invoice pricing as well. But the incentives on the Honda are less, so I suspect it will come down to that: the difference in sticker price will be compensated by the added incentives from Ford, and the two cars will be about the same price.

I think at least a little of my hand-wringing stems from my agreement with Susan to reign in my car-buying just a bit. The old me wouldn't sweat because if I didn't like my choice I'd just make a different one and take my pounding accordingly. But now I've agreed to keep what I get for three years. That's not a long time, but it's a long time for me.