A few months back we covered a very good reason to lease, rather than buy, an EV - the tax credits in the Inflation Reduction Act extend to more vehicles when leasing than when purchasing (assuming the lessor passes along the value of the tax credit). But recent price reductions, led by Tesla, provide another great reason for consumers to consider leasing, instead of buying, an EV: when you lease you offload the market risk of the vehicle value being surprisingly reduced to the lessor. And when an OEM decides to reduce the price of their new models, as Tesla has done, that is going to lead to an unexpected, but significant, decline in the value of the models currently on the road, because it reduces demand for these used vehicles, that will maintain the usual gap between new car and used car prices for any given model. Furthermore, even if your EV isn't a Tesla, it's value may very...
When the Inflation Reduction Act ("IRA") became law in 2022 it provided the automotive industry with a boost by allowing some consumers to get a tax credit up to $7,500 for purchasing some electric vehicles. There were many qualifications:
A maximum adjusted gross income, depending on tax filing status
A maximum MSRP for the vehicle
Vehicle must have final assembly in North America
A minimum amount of the critical minerals sourced from the US or free trade partner nations for half the credit ($3,750)
A minimum amount of battery component sourced from the US or free trade partner nations for the other half of the credit ($3,750)
However, it was recently announced that other electric vehicles that do not meet these requirements, specifically on final assembly and minerals / component content sourcing, could be eligible for up to $7,500 tax credit if leased because of the incentives for clean commercial vehicles. These would need to be a "bona fide" lease, which...
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You may see a lease referred to an "open-ended" or "closed-ended", if you do it's likely to be in the fine print, legalese, or wherever the dealer/manufacturer/lessor has put some important but confusing details they hope you won't read. Even worse, maybe the advertiser won't put it in the fine print but puts "open-ended lease" or "closed-ended lease" in big print next to some out of this world offer - how do you know whether it's a good deal or not?
What's the Difference Between Open-ended and Closed-ended leases?
In short, in an open-ended lease the lessee is the one on the hook if the actual value at the end of the lease is below the residual value set at lease inception, and in a closed-ended lease it is the lessor. Usually, your contract will be a close-ended lease, but it’s still...
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Several months ago I was in market for a new car - I tend to buy new but also tend to own the car for 5-6 years, so not exactly running it into the ground, but also I do enjoy owning it for 1 or 2 years with no payments at all. I had owned my car for just about six years at that point, and while it still runs great it was also getting to a mileage and age point where it will get a little harder to sell, because it will get a little tougher to finance. So it was time to go car shopping!
I was looking for a vehicle with the MSRP in the $35-40k range, potentially a coupe, but also open to a sporty/performance-focused sedan. In time I had narrowed my list to the Cadillac ATS,...
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It is once again the unofficial start of summer upon us: Memorial Day Weekend! As we discussed in the article about holiday weekend shopping last year, holiday weekends tend to be a great time to buy a car for a variety of reasons. Of course, if you're going to go car shopping over a holiday weekend you don't want to spend your extra day off at the dealership. So get prepared in advance.
Among the holiday weekends Memorial Day weekend is one of the best ones for car buyers for a couple of reasons:
The model year traditionally starts in the fall, so dealers use the summer to clear inventory of the outgoing model year. Memorial Day weekend is a great time to promote the clearance deals that will make room for the new models coming in from the factories.
Memorial...
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On April 24 the Ford Motor Company (Stock Info:[stock_quote symbol = "F"]) announced that it will be ending production of all its existing cars (so not including its trucks, SUVs, or crossovers) in North America with the exception of the Mustang by 2020. Armchair strategists and analysts can talk all day about whether this is the right move for Ford and how other automakers will react (and many have), but we'll use this opportunity to focus on whether it makes sense to consider leasing a vehicle that won't have a new version for sale by the time your lease expires.
First Things First: Follow the Money
It's important to consider the most basic reason why Ford made this decision to do away with making and selling sedans in the North American market - they weren't generating sufficient profit on these vehicles. This...
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With the spring thaw finally upon us (more or less), the automotive world is gearing up for another summer sales season. While everyone assumes that direct mail is out as a marketing strategy, there are still a lot of mailers sent out, both by dealers and by manufacturers, as a way to present and promote vehicles. And again, as we described in our first article on auto ads (which focused on online ads), presenting a lease deal is particularly advantageous in the small space available, because lease deals require relatively few numbers and text to present the offer to the largest audience.
Recap: What the ad will and won't show
Any lease ad, regardless of the medium used (online, mail, newspaper/magazine, television, radio, billboard, etc.) will always show a few things to define what is being offered:
The monthly payment
The term
The amount...
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As we come to the last few weeks of the year the automotive industry's sales and marketing engine is revving close to the red line. Obviously, anyone trying to get attention in the retail business in December needs to do a lot of marketing, and also needs to be ready to make a deal - and car dealers are definitely ready to make a deal this month.
A lot of the manufacturers build off a recurring theme that they pull out of storage as the weather cools and the days get short the way people go find the wreath and holiday lights for a month or so of display. That's why people know "A December to Remember", "Season's Best Event", "The Winter Event", and of course, "Toyotathon" - which didn't even start as a year-end event (the first one was in...
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The Los Angeles Auto Show is going on now (through December 10th), and despite it being one of the last of the calendar year, it is considered the kick-off event among the major auto shows worldwide, mainly because the model year for vehicles starts in the last few months of the calendar year. For the second time the organizers hosted an event in the days before the auto show opened to the general public called AutoMobility LA, which I mentioned briefly in the wrap-up to the innovation series, and will cover a bit below. But the focus today will be on what benefit you can get from going to the auto show in your metropolitan area, even if you don't plan to be in market for a vehicle for 2-3 years.
You Can Kick the Tires (But Please Don't)
First and foremost,...
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The auto buying experience has come along way; although it is still way behind other retail transactions of any size, and also slower and less convenient than other sizable transactions - in a lot of places the process of buying real estate, with a mortgage, still takes less time than a trip to the dealership where you show up knowing the vehicle you want and are paying cash. The most amazing thing is that while there's been substantial improvement in much of the process, the reputation of car dealers/car salespeople is still among the lowest of any profession in the United States, as well as similar nations like Canada, the United Kingdom, and Australia.*
It is baffling that people would be willing to do business with people they think are going to trick them. However, the results never seem to change:...
