The AM Forum

This is NOT a political post, just an cogent observation from someone on the front lines.
Forewarned is forearmed, so please keep it nonpolitical fellows.

Enjoy the car sales data attachment, be sure to check your favorite brand, courtesy of one of my vendors.
We've all heard about it on TV, but it is truly shocking to see in black and white the horrific sales decline from 2008 to 2009, especially so with the "Big Three". Many off 30-50% from last February. Even the golden ones, Honda and Toyota, have stumbled terribly.

With the Euro cars, seems that only Mini and VW have come through with a modest loss, Volvo down 59%!
The Chinese are rumored to be circling Volvo if/when Ford spins it off, of course Saab has already entered bankruptcy.
Chinese ownership of Volvo will be the kiss of death, knowing the average Volvo owner (I am one myself), I doubt they feel warm and fuzzy with Chinese ownership.

The rumor mill has the Swedish government backing a purchase of Saab, with the idea of taking it back to what it once was, a very quirky brand, with a very loyal following. The GM standard operating procedure of "rebadge", using another GM platform with a Saab badge stuck on the hood, witness the Saab 92, actually a Subaru Outback, and the Saab 97, a GM Trailblazer, has done wonders in killing the marque.

On the other hand, Hyundai with its "lose your job, give us back the car" offer seems to be doing well. We'll see if that marketing ploy gets adopted throughout the industry. Perhaps the government will get into the biz of "insuring" auto loans, like they are now doing with home loans.

Thankfully service sales are strong, people are keeping what they already own, and hunkering down. I imagine that is true with any product which can be repaired, rather than trashed. But don't think we'll see too many TV repair shops popping up anytime soon. Of course the stats are on new car sales, which take 3 years to hit the aftermarket anyway, the time for the car to get out of warranty. But those unlucky enough to be in the new car biz, selling the iron, and the dealerships, are really feeling the pain right now. That goes double for the companies which supply the auto manufacturers, hurting big time.

It's going to be an interesting year, history is being written here, perhaps even an epilogue, or dare I say an epitaph for some old line American companies?


-Bruce

I have a 2006 Subaru Tribeca and it appears that Subaru has faired better than most.

Hi Dave,
Yes, Subaru composite sales are ok, but only because the truck sales are up something like 63%, car sales down 21%.
I did not know that Subaru made trucks, unless your Tribeca counts as a truck? I've thoguht the new Tribecas look cool, but
they seem more a car to me than a light truck. I do recall that they made a small pickup, Subaru Brat?, a few years back.

What it has done is drive the used car market crazy, people would rather plunk down $8-10K than $20-30K when old Betsy needs replacing. But only certain segments, mostly the smaller, less expensive imports.

What ISN'T sliding over the edge these days?

I have a little bit of stock invested in a retirement account, and it had been holding its own throughout all this mess over the past 18 months.  At one time it actually peaked out at an all time high even while the overall market was in free fall.  But this latest plunge the past couple of weeks has pulled it down over 30%.

Now they are even talking about state pensions in some states not being able to make payroll.  I just read somewhere that a total of over $3 trillion in retirement funds is estimated to have evaporated since September.

Consider yourself lucky.  Only a handful of stocks are hanging in there.  (McDonald's, Dollar Tree, Amazon.com & gold come to mind.)

People's behavior at work during bad times also changes for the worse:

As things get tighter and many companies are expecting a 30% average reduction in sales, the incidence of two faced and backstabbing behavior is increasing in the sales and marketing departments, maybe among people who consider themselves redundant. No other explanation for the actions. I am experiencing one individual (a veeblefester) doing a combination of:

- grandstanding while highly visible
- trying to make others look incompetent one moment and kissing their butts the next.
- operating from stark backwhipped terror rather than logic
- obfuscating to his management about the status of others' actions and the process of the actions.
- trying to make himself look more important and powerful by "going around" "point of contact responsibles" during high-urgency, high-visibility actions. This is also called "trying to prove a point", when done to step on/over others.
- using a speakerphone unethically, trying to trap others into saying things

The last one is the worst because for example instead of one e-mail exchange per day from me (the CP or contact point) to the CP for the team responsible for the action overseas, that CP person would get tens of e-mails on the same subject from every bozo in the sales org, but yet the CP & team has already done all they can each day, and the matter is already elevated (by me) to the VP level, and my boss and above are already talking to the big shots overseas.

The sick part is that this redundant timewsting is very transparent to everyone else. So this jackfool is going to step in it, and drag his boss into an embarrassment also. I have tried to correct it by tellling him to have his boss call my boss to discuss the management actions. He seemed afraid to have his boss call mine. He wanted to call my boss himself instead. OK fine.

Of course I did not give the veeblefester the name of the CP colleague overseas.
The colleage does not need 10-15 more people breathing down his neck. The BS is really getting deep.

I wonder if similar scenarios are playing out eslewhere. I don't know about others but I can't operate from fear. I don't know how to be driven by fear in the workplace (much to the consternation of more than one manager over the years).

Patrick, hang in there, the S.A's only effect those for so long...just avoid them fools...they show themselves true when they first open their mouths...


Towards the Fall it's gona pick up..it's an Election Year with a New kid on the block and the remnants of W's hitten the road..guard changing hands and the balance sheets are getting cleared out.. that's my feelings on this and it will change...

Good time to buy though...real good time...

As far as Detroit...They just want out of the contracts..it's all business, it has to change up there and it's going to.


73
Jack.

And Walmart.

Steve, I swear that your dream job is to be a greeter...

I think you've got a point there Jack with the idea of GM's threatened/rumored bankruptcy, it is the best way to break the back of the labor unions, which is the only way to get these companies viable again. Not sure the current powers that be, who are deeply beholden to big labor, are going to let that happen. On the other hand, I don't think they'd let GM go away either. Most likely more cash gets pumped in, the inevitable is delayed for a few years, and we have to deal with it down the road.

Of course Honda and Toyota have taken big hits as well, but they are not as hamstrung as the Big Three with union costs and benefits. In any case, I'm not sure how long things can stay idle, if the manufacturers are in trouble, that means all of their smaller contractors, most of which have not and will not get government money, will be strung out as well.

Once these smaller shops, who previously supplied the Big Three, close, chances are they are going to be gone for good, which means more and more production is going to be shifted overseas, if things begin subcontractors to pick up. I say that because in this country, very few see old line manufacturing a good return on investment nowadays. With the smaller and suppliers closes, their employees are going to be looking for work, and will not have the means to buy cars, TVs, SUVs, houses, which is really what starts the economy going again. I see it as vicious circle, and a hard landing.

Toss in the death spiral of the traditional newspaper business, deflation of the housing market, the rise of the powers from the East, and it's going to be an interesting year.

Bruce said:
I don't think they will go completely under either Bruce. Necessity to US commerce or some other economic description. This happened in the '70's with Potter Electronics. Apparently they had too many government contracts for them to go Tango Uniform. They re-emerged as MILTOPE, Military Take Over Of Potter Electronics, (so I'm told). We had quite a few of their mag-tape drives on ship. Look at what GM has in the way of military contracts. Same goes for Chrysler and Ford, (who is eschewing government funding as opposed to its contemporaries). The unions got fat on the coffers of their workers. To the point it would be just as devastating to the union if just one would fall. As a blue collar worker, I can say that after having my union 'hijacked' by USW, (PM me for details). Its a shame that neither side can come together for the greater good in order to save both from self eradication. Just my spin.

Hi Bruce, some random thoughts I think about

 Well, there are reasons why certain persons Fly around in Lear Jets, and these are the same people that Run the Game...the media has everyone misinformed (given)... You an I and most everyone that reads this Know why Stock is offered, and the game it is...and what are the risks..an the level of play that these same so called over payed and over indulged operators are on is not even close to my wife an I, an I  have no right to complain about their success and I won't, But I understand why things happen, and what the outcome is... don't sit back and complain when we let others control our future...and the whole thing about mortgage, is when I sign those papers It's my responsibility to read the fine print..... you understand this and i think alot of us do there's so many that don't..or living in a dream some folks do.....

Example they Busted Martha for pulling out some years ago... this latest ponsi fella was supposedly mentioned to the SEC what two times...and then he turns himself in...smart move on the under side he made moves that will secure his future after the trail, an he never made a trade.....they Hung Martha out to dry...insider trading...Ponsi Scheme...come on when the birds are singing and the sun is shining...hey the world is great...it werks the same way when money is changing hands and that fella made some bundles, and others lost oh well...I never even heard of him till the money started drying up..imagine if it didn't...there was no investigation on going...and Martha was smart she knew when to pull the plug, somebody cryed the blues and the gang fell in line...why should she get the gains out...like leaving a street poker game when you hit big and it's only 9:00 o'clock and the game is still new...nobody likes that......same same..

So my strategy is Tom Vu framework with street smarts...never bet your pile, use someone elses money...what gains are made is scraped off and put in the reserves, pay the user fee monthly...it's a game with real rules and one is you will lose money....come on...

As with work and the environment Nothing is guaranteed...I don't have the education needed to compete but I do know that Knowledge is real Power, and you have to Learn before you earn...Don't hand over life savings to hands that speculate, you wana play a little, bet a little.. it works for me...I never did buy into that mortgage rap..we bought a farm we could afford, even if I get taken outta action...we got married to think together me an the XYL...

Have a nice Day up there OM, best to the Family...

73
Jack.



 

 

I'm friggen sick of the excuse "it's just business" as an excuse for being a crook and screwing everyone in your path to better yourself. Pretty sad excuse= bum in my book

As a general rule, those who cheat and abuse their clients/customers are not usually around for a very long time. It is only governments, with their police powers, who can do so with relative impunity. But even that system will fail with time, as productivity falls as a natural consequence of repression, so does the quality of life, eventually leading to revolt. Witness the former Soviet Union.

The only way to oppress a large number of people for a very long time is through a false religion. With the right false religion, you can keep them in the stone age for centuries. Look around the world, those countries with the highest levels of scientific achievement, the strongest economies, and the greatest personal liberty, have one common denominator, a faith which serves to liberate man's intellect, spirit and drive. Now contrast that with the countries which routinely practice genocide, oppression of women, the suppression of scientific knowledge and higher education. True faith liberates, false faiths serve to oppress. And this all I can say about that at this point.

No, what GM and the empire's are doing is what needs to be done, and it will be done to other organizations Teacher Union as One example...State unions..if we're gona Socialize Industry, medical etc, there can't be no, any private labor agreements outside the socialized model, now I know that's a Bad word here it's not my idea...

But look down the road 20 years, stop looking at today and your own personal existence, Folks are Screaming for socialized medicine here...medical reform, and with Business competing on a Global scale now the thinking is on a global realm...in house privatized contracting is on the outs Dad...it has nothing to do with third world substrate, why is the thinking "contracting overseas"..to begin with OK...again it's not my idea, but understand it and learn from it and you'll compete much better for jobs..

An the order of the Day is downturn, Blast all ballooned models back...to reality and wake the country up to Change and it's coming Folks..Daily...Wake Up....I don't like it but there it is...

Bruce said:
Quite true on both statements, Bruce. ;)

very ture Bruce...the prime example Middle East

Well, the current system is clearly breaking down.  The people who can most afford it, pay the lowest cost for medical care, and the working people who can least afford it pay the most.

This is because, under the current system:
*  Large companies have the power to negotiate big discounts from the insurer.
*  Large insurers have the power to negotiate big discounts from doctors and hospitals
*  The government has the power to set whatever fee schedule it wants for doctors and hospitals for medicaid, often considerably below actual cost.
*  Small mom & pop companies don't have any negotiating power and their employees often earn lower wages which don't include benefits.
*  The burden of charity care is mostly born by hospitals, with a disproportionate burden in cities.

Where does this leave the low wage or self-employed individual who doesn't qualify for charity?
* He has no power to negotiate the kind of discounts on insurance large companies get.  In fact, IMHO, he is charged EXTRA to compensate for all the discounted corporate insurance.
* He has no power to negotiate a discounted fee schedules from hospitals or doctors.  In fact, the entire shortfall from ALL the discount users and charity users is shifted to the "retail" user. (The $20 asprin syndrome.)
* So if insurance is unaffordable, and medical care is unaffordable, the poor working slob that doesn't get all the discounts or free care, eventually loses his life savings and files for bankruptcy.

A sad state of affairs.

OK, I'll go one more round and then I'm going outside...

Well I'll just be blunt here..I'm lower middle class.. a Cancer patient.. and i drive a truck for a living...I'm a realist, I'm one of those poor slobs that doesn't complain about something i don't have. ( I do Need a Modulation Transformer thought I'd sneek that in here)...Seriously Broke with Kids in college. and we Pay our own medical...:D

What it means is each of us is in charge of our own life, and responsible for our own actions and bills...Stay in school get an Education, or a better one husstle one ..whatever you have to do because Now we the free have to prove why we our needed at our employer.

Again it's not my Idea, it's what's real, stop blaming others and reaching for things that don't exist, be upbeat man and look for answers.

73
Jack.

 I agree.  Some people can easily afford insurance but because their priorities are messed up, and they think they can get away without having it, they get themselves into trouble. They get what they deserve. 

That said, I don't think everyone can afford medical insurance by simply shifting priorities.

I'm not even assigning blame...it's just the way things have evolved.  I think (hope?) we can do better.

How did you know? I'd do a hell of a job too!   ;D

If your making $8 an hour good chance you can't afford insurance.

Steve's "Employee of the Month" winning greeting:

"Hello and welcome to Walmart, sir! ... Now hit the frickin road you cheap made-in-China Walfart bastard !!"

Or, hey, buy some friggin teeth!

Ok, you brought it up, can't resist....

I refuse to be driven by fear in my workplace.  I was written up last week over a BS complaint regarding telephone usage, of all things.  I bluntly told the HR generalist and my supervisor [who wasn't the one initiating the complaint, fortunately], that with two diabetic siblings at home who may contact me in an emergency, my response to them is paramount.  Otherwise, if the company delays me in getting to them and anything bad happens, I WILL hold the company legally liable.

I simply don't care at this point.  I was looking for a job when I found this one, and I'll be looking for another when I'm out the door. >:(

Good thing Steve can speak Spanish, Hindi, Mandarin, and ebonics.  ;D

Fo shizzle!

Walmart Bingo..LOL... ;D

Frank said:
That seemed to happen over night. Hospitals used to be run by health care professional, (read as doctors, nurses, etc). Now they are run by bean counters. These people, who went to our universities and obtained a business degree, found a product that people can't live without and would pay top dollar for it. Toss in hugh malpractice suits and voila', health care you can't afford. Now we are going to socialize it? The last thing in the world we need is OUR government, regardless whether they are donkeys or elephants, deciding what health care is best for me! Everything that requires government involvement is generally over-buraeucratic, and a money losing proposition, (that means more of our tax dollars going down the toilet!).

Nope. They're run by the insurance companies.



The insurance companies are already determining the nature of your health care, what drugs you can have, whether you get a procedure like a transplant, which hospital you can go to, or whether you have a pre-existing condition that disqualifies you for any treatment whatsoever.


Just like how the insurance companies currently decide our courses of medical treatment.

I certainly wouldn't want anyone to screw this wonderful arrangement up.

I have to agree.  About once a year, I get a notice from my insurance company that some hospital is being removed from the list of approved hospitals.  After about 2 months, the notice is rescinded.  The insurance company and the hospital are playing a game of chicken until the hospital gets pressured into a settlement.  No hospital wants to lose 1/3 of their patients if one of the big guys pulls out.

One possibility is that government can require coverage without getting involved directly in healthcare.  This is how auto insurance works. Everyone is required to have a minimum level of coverage, but people are free to choose their provider and level of coverage in a competitive market.  The trick is, how do you get everyone to comply with mandatory health insurance?  With auto insurance, either you have it or you don't drive.  I don't know what kind of carrot and stick they could use for for health insurance.  I think Taxachusetts has a program like this.  As much as I don't think insurance companies need any more power, it's better than government medicine.  Perhaps monster insurance companies should be broken up into smaller companies.  IMHO, there are too many "too big to fail" corporations in this country.

I'm thinking that one's medical insurance shouldn't be tied to their employment any more.

That might have made sense in the past, where people worked for places a long time, but not in today's hi tech world where people change jobs as often as their socks.

Agreed.  This also solves the problem where big corporations get discounts while everyone else pays extra.

While we're at it lets also put an end to businesses collecting taxes for state and local governments through payroll. Let the folks write the BIG checks every quarter like the self employed do and watch the outrage toward government spending. Same with property tax - no more rolling it into the mortgage payment. Make 'em write the BIG checks. 

 

 

Several points:

I have owned a small business for many, many years.  We get no perks, no breaks, pay the most taxes and have the highest costs (like health care).  We are the enemy of government (because we are independent), the enemy of big business (because we are their competition) and the enemy of the so-called "working man" because, since we generally work much harder and make greater sacrifices, we sometimes end up with more.

Health Care

One way to correct the disparity in health care costs for the same coverage between large and small businesses is to enact community rating.  With this, the entire "community" of subscribers for a particular health plan is used to determine the rates and the same rates apply to everyone. 

Here is Massachusetts, everyone is required to have health coverage by law.  If you can't afford it, there are a number very low cost or free plans (free: read - taxpayer funded plans).  The costs work on a sliding scale.  All of these plans are run by private insurers, and there are quite a number of them.  I was not a fan of the law when it was enacted, but I must say, since it has been in place, you can go to the emergency room and it is not filled with people who use the ER for the primary treatment.  Pretty much everone has a primary care physican.  Maybe this is the way to go... probably a bit more time is needed to see how it all works out cost-wise.

The Economy

If we really want to help the economy, we have to stop being adicted to the notion of class warfare - and taxing the "rich".  The real rich don't pay much in taxes !!!!!  The highest taxes are paid by small businesses, who create most of the jobs in this country.

If we want things to be fair, vote for people who want a flat rate tax.  Does this ever happen?  No.  The socialist lamestream media will see to that.  When I say flat, I mean flat.  No deductions for anything except money given away (taken from you and given to someone else like charities, etc.).  That means no deductions for ANYTHING.  And, no "special" taxes like FICA, Medicare, etc.  One tax.  One rate.  You make X dollars, you pay X dollars times the rate to uncle sam.  Period.  All income regardless of its source would be taxed at the same rate.  No more "tax code".

Standard accounting practices for business activities.  Carry forward losses, etc.  You have your expenses (equipment, labor, energy, etc. etc. etc.) just like always.  Since everything is on a flat rate, in theory, you would not need deprecation.  If you buy a piece of equipment, you carry forward the loss (if there is one).  I suppose one could opt for depreciation but it wouldn't change the overall taxes paid over time.

But, I don't think we'll ever see it.  The super rich control the congress and therefore the tax code, and the so-called "middle class" is so clueless about business, economics and money,  they will believe whatever the socialists (media) tells them.

We got the closest under Reagan with an almost flat tax, but there was still FICA/Medicare (the middle class screw tax)....

Steve, all I can say is "Amen" brother.
Right on point.

Universally available affordable health insurance would have some public advantages.   It would encourage small business start ups and entrepreneur activity.    You would not be tied to a job for the insurance and be more willing to leave employment to start up a business especially if you have a "preexisting condition".    It would help keep U.S. business competitive by not having health insurance as a cost of labor.

I'm not sure this would be so. The cost would just be shifted to the tax column. The ultimate cost of running the business would be the same. TANSTAAFL.

I guess what I meant is that it would not be a business cost at all.    Isn't that one of the advantages for car makers in countries that have universal health care?   Is that an advantage for the car manufacturers having some factories in Canada?   Just asking, I don't really know.

That's one of the problems with the present medical insurance system in the US.  The  risk pool is fragmented amongst thousands of independent plans.  The  larger the risk pool, the more closely the cost of a premium per person would tend towards the theoretical average actual cost per individual for medical care.  That's why a large company can offer lower cost premiums than what it would  cost a small business or an individual for identical coverage.  The small business has a smaller risk pool, while the individual has a pool of one.

If we had a single-payer health system, or if all the multiple insurers shared a common risk pool, the premiums could be lower, just the average cost of medical care per individual per time period, plus administrative costs.  Of course, someone with a costly medical problem like an organ transplant would most likely receive far more in benefits than he could have ever paid into the system, but that's the way all insurance works.  All the Joe Bloes out there who paid into the system but didn't need to use it that year would have subsidised that $800,000 illness.  But the benefit for Joe Bloe is that he wouldn't have to worry about being forced into bankruptcy and losing everything he owns just because of an unfortunate accident or unforseen medical condition.

The US employer-provided medical care system appears deceptively low in cost because usually, the employer pays the majority of the premium and the worker is responsible for only a small fraction of the total.  When I was working, my premium was under $200 a month, while the actual cost of the total was almost $1000 a month.  If I hadn't had that insurance through my employer, he could have added the extra $1000 a month to my salary at no extra cost to the employer, but I would have still been responsible for the total cost of the premium, either through premium payments to a private insurer, or taxes paid to a government sponsored insurance plan.  In any case, that $1000/month might have been only $800 a month if the pool included every working person in the country.  But not everyone in the country has a job to pay into the system, so we would all be subsidising the non-working (just as I subsidised my non-working children under my family plan).  That might push the monthly premium back up to $975 a month.  BTW, those figures are used only for illustration, and are not based on any real statistics of what the actual costs might have been.

So with a universal care plan and universal risk pool, my total expenditure for medical care per month might not have changed much, but there is no reason why it should have been any more than what I was already really paying, including my employer's share which still ultimately came out of my pocket.  But this way, we wouldn't have 80 million uninsured people in the country, with no medical coverage at all, or who resort to overpriced, taxpayer funded, emergency-room treatment, and drive everyone's expenses up.

One of the reasons the US system evolved as it did, was due to a loophole in the law during WW2.  When wartime price and wage controls were in effect, employers could not legally give workers significant rises in salary, so they offered "free" medical insurance as a fringe benefit.  This in effect did give the worker what would have been an unlawful rise in salary, but because technically it was a fringe benefit and not salary, it didn't fall under the wage control laws in effect at the time.  The employer's incentive to offer a rise in pay was to hold onto quality workers during the labor shortage that existed during that time of emergency. Once that wartime emergency had ended, the structure already was set in place, to became entrenched, and it has been all but impossible ever since to replace it with something that might work better.

Then why is Medicare the largest cost growth amongst plans? Single payer plans aren't necessarily all that.

Question,...one I'm not sure of, like Don said the employer pays the partial, now can the employer Deduct that as an operating expense..?

I don't know..

73
Jack.

The Medicare "risk pool" is all high-cost elderly, and as the boomers retire, this population increases.  Meanwhile the population of young workers paying into the Medicare system is going down.

I am fortunate in that my work picks up my health insurance cost but the cost I pay out of pocket to add my YL is just under $5,000/year. On top of that, to keep the cost down, all the co-pays went up.  My Lipitor prescription used to cost me $15 (3 months) but now costs $115.  The YL takes about 6 different prescriptions.  It's getting to the point where the co-pays are going to cost more than the premium. >:(

Yes, but that doesn't make it easier.  Everything an employer spends on an employee (within reason, that is) such as salary (or pay of any kind), health care, taxes, training, equipment, etc. etc. etc. is deducted from the business' gross, so taxes are not paid on that money.

The business pays tax on its "profit", which is does not mean there was actually any profit made.  The government has capped actual expenses that can be taken for certain items such as equipment, and other items such as large ticket items and real estate, which must be depreciated over many years, despite the fact that the money is gone NOW.

If a business pays a dividend, it first pays taxes on the "profit" which is distributed as a dividend, and then the stockholder pays taxes AGAIN on the SAME MONEY when it is received as the dividend.  Double taxation.  That sure encourages business - yeah, right !

If a business is organized as a sub-chapter S corporation, the owner, if part of the business in any way, is required to receive a "reasonable" salary for his/her services (on which employment taxes are paid, along with FICA/Medicare)... any remaining profit can be distributed via schedule K to the owner(s).  Taxes are paid on this income as "ordinary income", but FICA/Medicare taxes are not assessed on schedule K income.  That is an advantage of sub-S corps and many LLCs, but there are restrictions on how many shareholders can hold stock, classes of stock, and who and what sort of entities can hold the shares.

Anyway, I could go on and on  8)

Regards,

Steve

That has nothing to do with the cost growth. Sounds like SSI all over again.

All I know is I'm paying a lot into the system. hope it is there if I need it.
I'm sure members of congress will be fine as the royal class.

A person shouldnt have to have insurance just to cover routine procedures. But, break a leg or have a baby and if you have no insurance, you might as well file for bankruptcy.

The medical establishment, insurance companies, and Unka Scam are all working in harmonious whoredom to hold health care hostage for those of us who may need it,  which are usually the ones who have contributed to the system and kept it running.

Someone lives in these multi million dollar homes I see around here, and they get to do that by sinking mitts into our social security funds.

Yeah, so sales of cars are down, but a new car is at the top of the list when it comes to expenses that can be cut.  Most people can make their cars last a lot longer than they do.  It's just that new cars are status and pleasure, not required for survival.  A brand-spankin' new car doesn't rate nearly as high when you are in fear of losing your job.

Warren Buffet says, Americans have a new attitude about spending and debt.  I don't believe it.  A spending diet is like a weight loss diet.  You go in with the best of intentions but eventually, you can't stand being deprived any longer and go back to old habits.

Add to that the fact that the overall cost of medical care, not considering the source of payment whether 3rd party or by the patient, is increasing at about double the average rate of inflation.

Insurance companies negotiate with doctors and hospitals for a deep discount.  If you are uninsured and have to pay fully out of your own pocket, you pay the full price.  You get to bend over and touch your ankles twice.

Not really. Usually the no insurance cost is less than the insurance cost. The docs know just how much they can charge the insurance and they charge exactly that much, whether it costs that much or not. Been there. Paid both ways.

This study seems to indicate that you can't make generalizations.  Sometimes the patient is required to pay list, sometimes not.  In most cases the cost was far greater than Medicare pays.  The insurance company price was probably not available to the researcher.

The Uninsured Patient Experiment
http://www.ucomparehealthcare.com/blog/20061127/the-uninsured-patient-experiment/

Did the study include all the uninsured patients who paid zero?

Steve.  People who have no income or net worth, or qualify for medicaid, automatically pay zero.  You can't get blood from a stone.  What's to study?

If I have a job and can make payments over time, the hospital is not likely to give me a freebie.  They are in business to stay in business.

I have faith in the American consumers capacity to spend.  They will just go back to getting regular car loans just like the old days.  :)

Besides...my home equity credit line hasn't changed one bit, except the interest rate is a LOT lower.  I can't be the only one.

Cars are now much more reliable and don't rust out like they did in earlier years.  There is less of a new car culture than in the 50's.    I remember when I was a kid,  it was a special event when the new models came out every year.    Now I find it hard to believe that my first new car is 14 years old, still works like new and just got its first rust spot.

On the insurance topic,  I am retired without dental insurance, not such a big deal as compared to being without medical insurance.    Having had some dental surgery and implants, I negotiated with the doctor the price before hand.   This works for both parties.   The doctor gets a good check for the procedure before anything happens,  I get to pay about 50% of what would normally be charged if I had the insurance.    When I had insurance I was hit with a big bill because the dental insurance was "post max", i.e. it had already paid out all the yearly benefits.   If I had known what PM meant on my statement, I would have not paid for the next quarter for insurance that covered nothing.   

That's my point. The study is flawed.

Right, just like any purchase, car sales are driven by either "Need" or "Want".
This a lesson that car manufacturers, and some large retail stores, seem to have forgotten.
Of course, customers often confuse the two, but most buying right now is occurring from the "Need" folks.
Folks "Need" a replacement car because they current model crapped out, was damaged in an accident, the cost of repair exceeds cost of a replacement car, etc.

The "Want" sales, driven by the desire to have the latest and greatest, vanity, keeping us with the Jones, has largely dried up.
Think of the guy trading in his perfectly functional CRT TV (or old tube radio) for the a spiffy new HD unit.
Sure its nice, but does he really "need" it?
This is why the new car manufactures and dealers are choking, both domestic and foreign.
Unfortunately they are also taking a double blow because many folks are choosing to buy in the used market, after someone else has already taken the deprecation hit.

With that said, once one looks at the true cost to buy a new car, the costs of repairing sudden look very attractive.
We have a list of items we mention to clients considering getting rid of "Old Faithful", some of which include:

1) Deprecation of the car, cars are not an investment, new cars take the biggest hit
2) Financing/interest costs on the auto loan
3) Increased insurance costs
4) Increased excise tax/registration costs
5) More complex technology, often costlier to service
6) Uncertain resale value/future of company

I agree, cars are indeed built much better today, rust is largely a thing of the past, and in the Euro car lines, engine and transmission replacement are nearly unheard of. Our bread and butter has shifted from the "repair" to the "service" business, with scheduled maintenance now the largest revenue stream into the business. Of course there is a double pay off for the customer, scheduled service prevents "surprises" keeps the car going strong for hundreds of thousands of miles, and in the end, improves resale value.

For example, we routinely use Volvos as service loaners, most of which are at the 200,000 and one at the 330,000 mile mark.
It is a great tool to illuminate the value of maintenance to new customers. Quite frequently, when giving out a service loaner, many folks come back in an ask if the car really has 200,000 miles on it? We're always happy to answer yes, and that's low milage, when you get to 300,000, then we'll talk.

Of course some folks are still following the "Crisis Maintenance" mode, calling and bringing in the car only when it breaks down.
These repairs are almost always more costly, along with being more inconvenient to both the customer and shop. You can spot these cars and owners right off, they usually have a long laundry list of problems with the car, and the driving decision is just to fix what is needed to get it back on the road. The list never gets attended to, and grows longer each year. I find these folks generally make poor customers, they follow the same practice with other areas of their life, and are usually behind on other bills, don't keep appointments, and are generally not happy people, always being tossed about by life.

We have a little exercise we use with these folks as well, we figure the annual comprehensive service costs for most cars is about 3-5% of the new car cost. For most folks if you set aside just $100 per month for auto maintenance, which is considerably less than a new car payment, you'll do just fine. Sometimes we save a few, sometimes not.

What I've found in this economy, and directed our marketing toward, is the value of keeping what you already own, and have already paid for. Value, rather than style and trends, seem to be the new watchword now, and I imagine will be for some time to come.

Maybe TODAY is the beginning of the big short covering rally UP we've been waiting for?

I liked the price action over the last few days where the market made a new low, then rallied, then slowly settled back to form a double bottom. Those type formations often lead to a big move up, like today.

Time will tell how far this goes, but if could be a big one, though later on in the month(s) ahead it will probably turn back and break down to new lows again as the bear mkt continues down.

The thing with these bear market rallies is that they are AGAINST the main trend. Corrections against the trend are MUCH harder to forecast than with the trend.   For example, when the market was in a bull market for all these past years, the corrections down were swift and fleeting as the market then moved to new highs. Now, the corrections UP are swift and sometimes fleeting.

Though, this particular correction up, if it pans out, is due to be of sizeable magnitude to correct the major damage done in the past 6 months.

Expect to see the talking heads jumping up and down and coming up with all kinds of specific NEWS reasons for the rally. Mostly BS. In reality, the reason for the rally is cuz the intermidiate bear time cycle has ended for now and the wave pattern has completed. Time for the correction up to unfold for a while and take a breather.  Just like an army that moves forward then retrenches for a while... :D

T

I sure hope so Tom, wish it was a real rally!
There is no one more than I that wants to see things change around, but I keep thinking of, and chuckling about, your "dead cat bounce" theory.  ;)

During the Great Depression, new lows were hit in the 36/37 timeframe. This was often referred to as the depression in the depression. Many think it was the result of flawed government action.

Heheheh... I see you've been reading my articles, Bruce...

Yes, the "dead cat bounce" would be the very weak rallies UP we've seen along the way this last 6 months. Because the main trend was down, these rallies are weak and instead of springing up strong, they hit the floor and bounce like a dead cat instead... ;)

However, it's all matter of degree and where the market is in a cycle. If this is an intermidiate rally of a larger degree, this will not be a dead cat bounce but rather a sharper one up. The dead cat bounces will now start to occur on the downside in the form of shallow corrections down as the market trends higher for a while.  Everything reverses in pattern and magnitude for a while. (Assuming the rally is real.

BTW, hat's off to Eric/CAU who posted the other day that he thought the bottom was here.  (We're sounding like the talking heads now applauding and setting ourselves up for disappointment, right? )  ;)


Steve, from memory, I think the actual Dow bottomed in July, 1932 at about 40.5   -  It was about the time the banks were closed.  This was the lowest low in the Dow Index for the depression era.  Though, as you said, the bad economic conditions still persisted into the Panic of 1938, which didn't make a new low in the Dow Jones average itself.  That small sign of strength in the Dow didn't help the average citizen, however.  But it did signal a major double bottom over a five year period - a subtle, but major  signal of what was to come in good times.

T

People are finally wising up to the "Invention is the mother of necessity" mentality.  That is what got us into this mess in the first place.

I remember thinking, during the contrived energy crisis back in 1974, whenever I would hear the dire warnings about how much trouble we were in because we were "running out" of energy, about how much more trouble we will be in if we don't run short of energy.  It took 35 years for that prediction to reach fruition.

http://www.citizensugar.com/1754626

I would be sorely pissed if I had to spend $100 a month to maintain my cars.

Example:  94 Chevy K1500, owned 6 years, now has about 250,000.  I've put about 125,000 miles on it.

Clutch, linkage, and slave cylinder (thanks to my sister-in-law): $1200, fuel pump, $300, tires, $300, starter $30, alternator $50, front brakes, $50; plugs and wires, $100; total $ 2030 div 72 months = about $30/month fixing busted stuff.  Oil changes, etc., let's add another $10/month... and that's for a 15 year old vehicle that I paid $4000 to begin with.

The 04 Chrysler Sebring convert had 78,000 on it when my wife got broadsided.  Total busted stuff repairs in that time: $0 (only warranty repair was a leaking convertible top seal).  oil changes only in over 50,000 miles.  Would have needed tires and perhaps brakes in another 25,000.  So let's call that $500, plus 2 dealer checkups ($100 each), plus oil changes, let's say $1000 total over about 4 years, $21/month.  30 MPG, too  ;D

$100 a month for car repair. Man I average less on payments over the life.
Are there people out there who pay that much. I wonder how I could get them to pay me to cut their lawns.

These are just my observations responding to your observations YMMV:
1) New cars need repair less often.  Time and aggravation have a value.
2) I pay cash, no finance cost
3) My insurance only goes up about 10% or so for a new car (assuming same coverage level).
4) Registration cost for a new car is the same as an old car in NJ.  I consider sales tax part of the purchase price.
5) I have never noticed an increase in cost for newer technology.  In fact, I see the opposite.  They still charge as much or more for a "tune up" and "lube" when there are no longer any points to adjust and grease fittings are sealed.
6) I typically run my cars till they have no resale value or I give them to relatives in need.

The other thing I notice is that as I track the running TCO/mile, I always get to a point of equilibrium.  The original cost/mile goes down when amortised over more miles, but at the same time the cost and frequency of repairs goes up and they end up canceling out.

So I have a choice.  I can keep riding in an old car indefinitely, or buy a new car and eventually get back to the same point of equilibrium.  IMHO, there is no advantage to keeping the old car if the cost/mile doesn't keep decreasing.

Unfortunately, my biggest expense is to take the car to the dealer for the 15K, 30K and 60K.  That alone can come out to $2000 or $44/month over 4 years.  The other two dealers are even more expensive. :(

Yep, toss in occasional tires, brakes, exhaust and other items not on the 15/30/60K list, and you are at that magic $100 figure.

Can it be lower? You bet! It can also be higher.
Like most stats, it is a bell shaped curve, where most fall in the middle, and a smaller number on either side.
Which reminds me of a great book by Herrnstein and Murray.

Don't these services actually amount to little more than very expensive oil changes and a lot of checking?    I think Click and Clack were saying recently that the best thing to do with these is find an independent shop that can perform the checks at a fraction of the cost without messing up your warranty.   

Bruce,  In my mind the best savings thing you can do with a car is to buy an inexpensive model to begin with.   Buying the Scandanavian stuff is more for status or feel than overall cost as althought they do last forever, they cost a lot to begin with and the little white jacket service isn't cheap either.   I know that Crown Vics are capable of all the mileage that the Scandanavian and German stuff racks up, I'm reminded of this on my monthly trips to NY where the taxi fleet is mostly extremely high mileage Fords.   

Ed

A little more than just oil changes Ed, although there is a good amount of checking involved, some of the services do take several hours to complete. I'll post the service schedule for run of the mill Volvo below. I'm sure that you understand that this is not just a Volvo thing, Ford, GM, and other brands are similar, they all have a maintenance schedules, and require adherence to such while the car is in warranty.

As for service, yes, "Click and Clack" largely have it right, however, most qualified independent shops, those who have invested in both the training and proper diagnostic equipment, are not "cheap", let us use the more accurate term "inexpensive", either.
Comes into the old "cost vs value" discussion.

New car dealers are saddled with a huge set of stranded costs, and the margin on new car sales has gotten paper thin.
Some have sought to recover the aforementioned costs via the service department, once viewed as a necessary evil, now as a profit center.  Trouble is, service can not entirely subsidize the costs of the sales and other departments alone, hence the higher inherent service costs at dealership level. Most dealer service departments are staffed with pretty good folks nowadays, they have factory training, tooling, and have stepped up efforts to be more personable. I advise my folks when traveling, should they have a car problem and don't know a qualified, competent independent shop, to default to the dealer.

As for what car is best, that is the great thing about America, we have free choice to spend our money as we see fit.
Some folks like Burger King, some like Ruth Chris, neither choice is wrong. It's that old cost vs value discussion again.

When it comes down to to it, it really is like anything else, owning a car, or owning a home, both require regular attention and maintenance, and it is up to you what, when, where and even if you have it done.
Given the current market, looks like this analogy is even more accurate, as both are unfortunately now depreciating assets!  ;)

Cheers,
Bruce

In the mid 70's a knowledgeable mechanic who had earned my 100% confidence, told me that I could expect to spend $300 a year for car repairs.  I entered that figure into the Westegg Inflation Calculator (http://www.westegg.com/inflation/) for 1976, and it spat out $1081.50 for 2007.  That jibes closely with the $100/month figure.

A little more?  My 60K includes replacing:
Air Filter
Fuel Filter
Spark Plugs
Coolant
Timing Belt

Answer again is...yep, you guessed it, "it depends".

Volvo
Timing belt service is not until 105K miles.
Same with the fuel filter.
Coolant, we like to flush as 60K, cheap insurance.
Trans fluid, synthetic, supposed to be lifetime
Spark plugs, on Volvo, generally 60K.

BMW
Trans fluid, lifetime on the automatics
Oil services about 10-15K miles

Mercedes, different story.
No timing belt, just chain, keep the oil clean, lasts the life of the car.
Spark plugs, 100K miles.
Fuel filter, newer cars, esp C class, don't have one, just a "screen" on the pump.
Trans fluid, synthetic, considered lifetime

Remember all of those "check and inspect" items, well sometimes it turns out that checking shows the part/fluid actually needs replacing.

Yep, its a brave new world.  ;)

I was looking at the New Challenger, I had a 1970 once upon a time and just really miss the ride of that Cage, anyhow after looking at the MSRP and out the door cost i guess I'll be looking for another used one in up an coming days..LOL

73
Jack.

Bruce said:
Yeah about 5~10K miles after that, you can usually count on replacing the main seals since they are under a little more tension then they are accustomed to with the new timing belt.

2001 Silverado. 110K miles, Mobile 1 every 5K, 1 set of tires. 1 battery, 1 wheel bearing and 1 brake job. Let's see that was about $800 total not counting the oil. So that is $100 a year plus oil and a couple filters. Changed the air filter once but it was still clean.  OH yea, I did add a couple oz. of oil to the rear end once.
Exhaust solid. runs like new still gets around 20 MPG on a trip. used to get 21 before alki was added to gas NTBE bad stuff glad it is gone.

Those crappy American cars.....

Oh yeah my 2004 silverado is horrible. In the 97000 miles I put on it so far I "had to" replace a light bulb behind a button in the radio and one behind a button on the steering wheel, and grease the steering column, and change the rear brake pads.

The maintenance comparison should be dollars per 100K miles, not necessarily per years.

I do not count, against reliability, the set of tires I wore out or the oil changes every 3Kmiles or the dealer-recommended service intervals for other things. Those are preventive maintenance consumables. The light bulbs really are as well.

Having to grease the steering colum and replace the rear brake pads after 97000 miles. what a horrible American car!

My point was not whether certain cars were good or bad or whether or not people in good ole USA have the right to choose, but rather, if you are trying to stretch your transportation dollars, the most obvious place to start is the payment.  You're not going to get the best bang for your buck for the Swede and German cars no matter how long they last (that extra $300 a month payment would pay for a lot of repairs).   Also, I either change the oil myself or go to a quick change place, mostly going to a shop when something is truly broken that I think I would mess up (call that the crisis mode of maintenance, I call it thrift).   Of course I do make sure that the recommended maint. is covered during the warranty period but I'll be damned if I'm going to pay a fortune for somebody to check fluids and replace plugs cuz the book says so when its over.   Ed

As I'm off with the last remnants of the latest flu flying around..YUK.. I have a question for all you maintenance calculators.. ;D how do you guys feel and how much time is spent on undercoating...there's alot to be said about prohibitive maintaince...

To be honest i go back and have mine refreshed every year...I don't care it's worth it..

73
Jack.

TCO, that's the bottom line. You have it nailed.

On most newer cars it's a waste. But if you don't care, why ask?

Well everybody is bitching about cost per paid maintenance mile here, It's not my idea I live in Pa. around here you will undercoat your vehicle if you want some lasting body effect.. ;D

Hi Steve..



73
Jack.

Yep. I grew up there. Lots of salt. If possible, high pressure washing the underside of your car often can pay big dividends. Water is cheaper than undercoating.  ;D

One other factor to consider is how long you plan to keep the vehicle. The longer the time, the more "valuable" undercoating could become. However, you must consider the rest of the vehicle too. It doesn't do you much good if you have a rust free car with a crapped out motor/tranny, etc.

It's back to that TCO thing.

Right Steve, washing is really important in the areas which use road salt. I try to wash my car once a week in the winter, and always have it detailed and waxed before winter and right before summer. Here on the coast road salt is forbidden and we use "sand", but not the white beach sand, this is nasty brown stuff, it looks like mud on your car. It gets onto the rims and causes tire imbalance and shaking, messy stuff, but not as corrosive as NaCL, and better for the environment.

As for undercoating, I imagine that the same is true for domestics, most of the newer European cars don't need undercoating, the rubberized factory stuff far exceeds any garden variety spray on product. This rubberized material usually lasts the life of the car, and is notoriously difficult to remove. In my opinion, undercoating a car already in service, unless the area is surgically clean, is a bad idea as it usually traps any dirt and moisture, causing rust to form. Touching up damaged undercoating, with the right product, does need to be done from time to time. Generally when you see rust on these cars, other than than from in stone chips in the paint, it is a result of an poor quality collision repair, where the body shop did not properly apply new rustproofing.

There is a neat spray on oil product, called sold under a variety of trade names, "Rustop" is one example.
See -->> http://www.rustop.net/products/envirors100/
This is a very waxy oil, that seems to be effective on early cars, but needs to be renewed annually.
Despite the "Enviro" name, it seems to drive the greenies crazy, but I think this is a very good product, especially for early cars which lacked good factory rustproofing. Take at look at this if you have an older, classic car, or a very early car with the old asphalt undercoating.


In other news, I see that both Saab and Volvo are working with the Swedish government for a loan/line of credit.
Saab in particular looks like it might be bought back by the Swedes from GM.
Reuters has the story here -->> http://www.reuters.com/article/innovationNews/idUSTRE52B25920090312
And it looks like the ChiComs have wisely lost interest in Volvo, can't imagine the average Volvo owner driving a "Chinese car". http://money.cnn.com/news/newsfeeds/articles/djf500/200903050802DOWJONESDJONLINE000621_FORTUNE5.htm

And that's the way it is.  ;)

Agreed Steve,

 See that's my thing, always was, I keep my choice of vehicles for the Long run..All my trucks that I had, and I undercoat the devil out of them, of course the little side deals I've played with here an there used cars the girls banged up..no dice, they get tossed when they wore them out...maintenance was just oil, tires and consumables..Safety for the Girls..

But I'm just a big fan treating the exposed metal parts as I feel warranted, the underneath takes all the brunt..

Here's a novel idea to boost new car sales from the Germans!
You know the Germans, those friendly, innovative folks who brought you blood sausage, lederhosen, the Reinheitsgebot, and the Autobahn.

http://www.time.com/time/business/article/0,8599,1884711,00.html

(http://img.timeinc.net/time/daily/2009/0903/germany_car_0311.jpg)



Germany's Auto Woes Fix: Scrap That Clunker!
By ADAM SMITH / LONDON Thursday, Mar. 12, 2009
A sign announces the so-called Abwrackpraemie, or scrap-car-incentive, at a car dealership in Berlin, Germany.

Amid the gruesome headlines generated by the world's auto industry these days, it almost read like a typo: new car registrations in Germany rose 21% year-on-year in February, the country's Association of the Automotive Industry (VDA) announced March 3. This, though, was no error. The 278,000 cars put on the road, crowed Matthias Wissmann, VDA's president, amounted to "the highest level of sales in the month of February for ten years."

Why the splurge? German drivers have latched onto a juicy new deal. Under a scheme started in January, car owners who trade in a vehicle more than nine years old for a new, greener model can expect $3,172 from the German government as well as a break from paying road tax for at least a year. Similar "scrapping schemes" have been launched in recent months in France, Italy and Spain. Now motor manufacturers in Britain are pleading with its government to follow suit.

Bruce said:
And don't forget Farfegnugen  ;)

(http://images5.cafepress.com/product/104314075v1_350x350_Front.jpg)