State of the state of the collectible car market

I'm not a real car buff (wouldn't even be able to change the oil in my car), but I do have this fantasy about owning a classic American muscle car. So, I followed with some interest the Arizona auto auctions that recently took place, and found they were far from disasters.

What are the Arizona auto auctions?

First, a little background. Barrett-Jackson, Russo and Steele, Gooding & Co. and RM are four automobile auction houses that each run their own auction in January in the Phoenix/Scotsdale area. Barrett-Jackson's auction seems to be the biggest in terms of dollar sales made. Their auction is also the only one not to set reserve prices. Russo and Steele was founded by a former Barrett-Jackson employee. Gooding is relatively new to the Arizona auctions, but was the only one of the four to have a sales increase this year. RM is the leader at the high end of the market. The auctions attract an over 55 moneyed crowd.

This year's auctions results

From the Barron's article:

At the auctions, the top prices generally were fetched by prewar U.S. and European classics; the bottom, by 1960s American muscle cars without adequate provenance. Entry-level cars priced at less than $100,000 -- veteran collectors call them "drivers" -- did well, especially with first-time buyers. Among sports cars, vintage Ferraris did fine. Newer ones didn't.

Overall, prices are below the high-water marks of the past two years. But the bulls contend the 20%-to-30% drops simply reflect the cooling-off of an overheated market, rather than a long-term slump like those that have devastated stocks and home prices.

I like to see that the muscle cars I want to buy are coming down in price. Good for me, but bad for the sellers

The Times take on things:

Given the economic circumstances, there was great interest in cars priced under $100,000 that would also serve as summer weekend drivers. Cars that are easy to find parts for, and eligible for events like vintage rallies and tours, did well.

Do you remember hearing about GM selling some of its historic car collection to raise capital? Well, they used these Arizona auctions too, although the articles imply the reasons for the sale were not for GM to raise capital.

One of the notable aspects of the Barrett-Jackson sale was the sale of 214 cars from the General Motors Heritage Collection. Most were prototypes or concept cars and included the striking 1996 Buick Blackhawk. Built to celebrate Buick’s 100th anniversary in 2003, it recalled the granddaddy of all design studies, the striking 1938 Buick Y-Job; the Blackhawk sold for $522,500.

Nearly all the cars in the G.M. offering were sold on either a bill of sale or a scrap title, according to Barrett-Jackson. The former, Mr. Jackson said, can never be legally registered for road use. Fortunately, the Blackhawk was sold on a scrap title so it can be registered and driven on public roads. It would be a shame for it to spend its life behind a velvet rope.

(This bill of sale vs. scrap title bears further research. I spent a few minutes on Google to little avail. Comments on what this are welcome.)

The car auction houses

Name	URL	Other Auctions
Barrett-Jackson	www.barrett-jackson.com	Florida in April and Las Vegas in October
Russo and Steele	www.russoandsteele.com	Florida and California
Gooding & Co	www.goodingco.com	California in August
RM	www.rmauctions.com	Numerous. Check out www.rmauctions.com/Directions.cfm for more details.

Insuring the 70s Dodge Challenger

So you've got a classic American muscle car and you want to insure it. Insurance options should be getting better.

Earlier this year, Chubb ended its exclusive arrangement with Grundy Worldwide, the oldest insurance agency specializing in classic and antique cars, and now sells policies directly to collectors as well. To attract business, Chubb lifted a previous mileage restriction on coverage, provides free towing after a breakdown to the garage of your choice and has increased liability limits up to $50 million. Fireman's Fund Insurance Co., a unit of Allianz SE, and American International Group's Inc. Private Client Group are two other high-end property insurers expanding into the market. Added to the longtime players in the market, these new insurers -- which are trying tactics like dropping mileage limits or adding extra coverage -- give consumers more coverage choices.

Cars, cars, cars

SmartMoney's feed published numerous car stories at the end of the week. Here are a couple I picked up on.

Buying a new car, get 0% financing

I won't buy a new car. It's a waste of money because of the rapid depreciation of new cars, and I don't have the psychological need to drive a new car. For argument's sake, let's say I was going to buy a new car. I'd want 0% financing on it.

Currently, six major auto makers — including Chrysler, General Motors and Mazda — offer 0% financing, according to Edmunds.com. Most of the models that qualify, however, are gas-guzzling trucks and SUVs that dealers desperately want to clear from their lots. Try to find 0% deals on more popular European luxury models or Japanese compact cars and it will be an exercise in futility. "You won't find a single fuel-efficient vehicle [with 0% APR] unless it's struggling in terms of sales," says Wahl.

OK, I don't really want a gas guzzler, so I'd have to look high and low for a fuel sipper that is struggling in sales.

To qualify for the coveted 0% APR, you'll need a score of at least 680 and, in some cases, 700, says Terry Jackson, an automotive writer with Bankrate.com. [...]

As mentioned earlier, even if your credit score passes muster, you'll still need to afford a down payment of at least 10% in order to lock in that magical 0% rate. If your score is below 680, then forking over a 20% down payment can increase your chances of getting 0% APR, says Jesse Toprak, executive director of industry analysis at Edmunds.com.

Another piece of good advice in the story is to get pre-approved for a car loan from a bank, and then to use that pre-approval as leverage in your negotiations. It's always good to have leverage against the car salesman and to be able to walk away from their offer.

Buying a new car, cash back

There may be a choice between 0% financing and cash back. SmartMoney has this handy dandy online calculator to help in that decision.

Buying a new car, manufacturer to dealer deals

Admittedly, I'm a novice in car buying, but I hadn't heard much about manufacturer to dealer deals:

Often times, auto makers offer dealers financial incentives to sell specific models. In turn, the dealerships don't have to offer this money to the consumer. "It's the type of incentive that most dealerships won't even tell you exists," says Jackson. "The dealer can determine to pass it on to the consumer," or keep it for themselves. More often than not, dealerships will offer this incentive on a vehicle that's not selling well and that they're eager to move off the lot, rather than try to sweeten a deal on a popular car for a hesitant buyer, says Wahl.

[...]

The problem for car buyers is that manufacturer-to-dealer incentives often go unadvertised. Edmunds.com tracks and lists such deals.

Here is the direct link to the rebates and incentives page on Edmunds. I had to provide my zip code so it could look up specific deals in my area. Then I had to click through a couple pages for specific vehicles. As an example, there is $1500 in dealer cash through 9/2/2008 on the Honda Element. That's good information to have in negotiations. Edmunds.com is real blessing for car buyers.

Buying preowned

The next article that caught my eye was on buying a preowned vehicle. I'm planning to buy a certified preowned vehicle with my next car purchase.

Some certified preowned programs are much more comprehensive than others. Chrysler, for example, offers an eight-year or 80,000-mile warranty, roadside assistance and loaner car reimbursement, whereas Jaguar's warranty covers just six months or 10,000 miles and doesn't offer loaner car coverage, according to Edmunds.com. For a complete listing of programs, see Edmunds.com.

(There's another plug for Edmunds.com) Other salient points in the story: you'll pay up for a certified preowned car over a used car; and make sure the certification is a manufacturer's certification, not a dealer's certification.

Selling a used car

So what do I do when I want to unload a used car? Well, I plan on driving my cars into the ground, but for argument's sake, let's assume I want to get rid of a car before it's only useful for the scrap yard.

But here's a way to improve your odds considerably when doing it alone: Move your listing online. Millions of consumers are trolling auto web sites looking for competitively priced used vehicles. According to J.D. Power and Associates, 61% of people who buy used cars and trucks surf the Web during the shopping process. If you want to sell your car quickly and for a good price, it's time to park it on some of the most popular sites.

According to the article, the best sites are AutoTrader.com, CarsDirect.com and eBay Motors. The article also gives the tips of thoroughly cleaning the car before selling it, gathering all the car's service records and getting a vehicle history report.

Big Brother device lets drivers cut auto insurance bill

Progressive Corp. and GMAC Insurance are testing devices that track driving habits, and offering discounts on auto insurance for measured good driving.

Drivers who participate in these plans have devices installed in their cars that, depending on the technology used, can track the number of miles driven, the speed at which cars are driven and even how often and how hard the brakes are used. By allowing their habits behind the wheel to be monitored, drivers get lower insurance rates -- or pay higher premiums if they're lead-footed road hogs.

Usage-based insurance pricing would mean an estimated two-thirds of households would pay less in premiums than they do now, according to a report by the Hamilton Project at the Brookings Institution, a think tank. Researchers Jason Bordoff and Pascal Noel calculated average savings at about $270 per car, per year. Some analysts and insurers believe that after a slow start, usage-based insurance could take off now that higher gas prices are forcing consumers to drive less anyway.

So, there's a chance that using the device can backfire on a driver, increasing his or her premiums. I can imagine the arguments among family members using a shared car when the insurance company reports bad driving based on the device and ups the insurance premiums.

How to sell hybrid cars to America

Prius hybrid
Originally uploaded by Leonid Mamchenkov

Toyota has rolled out (literally, the exhibit is in trailer) a traveling show aimed at educating America about hybrid cars. Despite their popularity, hybrids remain small sellers.

Still, hybrid vehicles overall remain a niche product, mainly purchased by affluent consumers on the coasts. Hybrids of all kinds made up just 1.5% of all new vehicle sales in 2006, with the Washington, D.C., area, Oregon and California ranking in the top three for the highest percentage of hybrids sold among new cars, according to R.L. Polk & Co.

In Indiana, where Toyota made a stop in July, hybrids made up about 1% of new car sales last year. Mississippi, Louisiana and Oklahoma ranked in the bottom three, with hybrids making up a maximum of 0.6% of new car sales, according to R.L. Polk.

What I really need is a truck that gets 50 mpg, but that can still haul all my cargo.