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Why The Cost Of New Cars Has Not Decreased Over The Year

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In the business world, the rearview mirror is always clearer than the windshield. –Warren Buffett

If anyone can be said to understand business, it would be billionaire Warren Buffett. His statement is apt, especially when discussing the reasons for car prices over the years not really falling as would be assumed in an industry with economies of scale, an ever growing demand, and decades of experience. Those three reasons alone should tell the average businessman that over time, the cost to produce a product should decrease, and the cost for the consumer should fall as well. However, in the automotive industry, that is not really the case.

When you look back to the Model-T being sold in 1908, the cost was $850, and when that is adjusted for inflation, the cost today would come to about $22,000. Over the course of 12 years, the Model-T fell to an overall price of $260 by 1920, which when adjusted for inflation would cost around $3,500 in today’s dollars. Now an average low-cost vehicle nowadays will generally run anywhere from $16,000 – $22,000, however, that asking price has been at that level for many years, with no real sign of change. Conversely, there are vehicles for sale under $3,500, the Tata Nano sells for $1,800 new in India. But these cars are very few and far in between, and are certainly not common in America. So why then, over the course of a century, are we paying nearly the same price for new vehicles?

Associated Costs for Production

Back in 1908, Ford only had a handful of things to worry about, mainly that being to make an automobile. Sure you could have it in any color you want, so long as it’s black. But what would the color matter if you were one of only a handful of people that owned one. Ford originally didn’t have to worry about much about their automobiles being unique, innovative, or stylish because they were really the only manufacturers in America. Their costs, due to this, were drastically less. However, they were trailblazers, and it always takes more effort, energy, and time when you’re the one creating the trail rather than following it. As such, their costs reduced drastically over the course of 12 years because they no longer had to forge ahead, but merely follow the path they created.

But since then, the numbers of costs have grown as well as the associated costs. Nowadys you have to consider labor unions, the multitude of materials required, the design phase, the countless funds that go into research and development, additional features to be offered, marketing, manufacturing plants, transportation, and the list goes on. All of this costs money, and those costs have to transfer into a vehicles asking price otherwise no money could be made. Imagine if the original Ford Model-T had color options, interior material choices, different engines, sun roofs, fancy rims, and anything else your mind could imagine. The cost would be drastically higher than it originally was, and that is because what was being offered was, with no insults intended, basic.

In order for all the add-ons and bonus features we have optional for new vehicles we purchase nowadays, there are a lot of costs associated with that. And the costs are not simply for the material, time to install, etc. Many of the vehicles produced never get sold, or in the least, take a long time to finally sell. Once a vehicle has a sun roof and leather interior installed, that car has a sunroof and leather interior. This means that in order for it to sell, there needs to be a person who wants exactly that, and is willing to pay a little bit more to get it. When you produce a lot of one thing, you have to hope that people are going to want that one thing; otherwise you have just wasted a whole lot of money. As insurance against this, as car manufacturers know not every car will be sold for their asking price, they need to bump the price a bit on all of them up to cover the gamble they are taking. Sometimes they win big, and other times, they lose the house.

Competition

Finally, we have to consider the number of competitors in the market. In the time when the first Model-T rolled off the line, there were very few other automobiles in the world. They quite literally had a very tight grasp on their market. Now generally, competition drives prices down because a lower cost usually drives more sales so long as everything else is equal for a product. However, competition in the automotive industry does nothing more than increase the total number of costs, as this is based on those few listed above, as well as many others.

With competition, options are now required to drive attention toward your product to differentiate it from everyone else. There are certainly manufacturers whose business model is to keep their automobiles cheaper, but even those have competitors and generally, car sales in this area don’t do so great. Though the number of them have been increasing over the year. Hyundai, Scion, and many others now compete in the affordable automobile market, and are making traction. But how long until the price of those go up as well?

These questions won’t be known until the future has occurred. But one thing is for certain, the overall cost of an automobile may not have decreased, comparatively, over the last 100 years. But the value of what is offered has increased more than any measurable amount. Before you got a steel carriage, 4 wheels, a seat and an engine. Nowadays… well, let’s just say we have cars that can drive themselves. So the cost may have indeed not gone down, but we’re sure getting a lot more bang for our buck.

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The author of this article is Damien S. Wilhelmi. If you enjoyed this piece you can follow me on Twitter @CustParadigm. If you are in need of a Transmission Repair and live in Colorado, please be sure to check out AAMCOColorado.com for available locations.

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The Magnitude of Small Things What I’ve learned From Dogs, Part Two

By Antsy McLain 

It had been a rough couple of weeks.

I had just buried my father, and began joylessly exploring the prospects of life as an orphan. Mom had passed away the year before. I recalled Dad’s last days and the final, numb march of his funeral as if looking through thick, gray gauze. Pieces of that day still hung around me like stale air freshener. I could hear the voice of the pastor from the little country church Dad called home, his words blank and void of passion until the eulogy turned abruptly to an alter call. My blood still rises a good twenty degrees hotter when I think about it, especially after he mispronounced Dad’s name. Twice.

“How long do you have to be a sheep around here before the shepherd remembers your name,” I whispered to my wife as he plowed carelessly through my father’s identity.

I can still hear the three distinct gun blasts of his military send off, the triggers pulled by two middle aged reservists in uniforms three sizes past snug. The blasts rang in the air, followed by a flutter of birds and a burst of sobs from my uncle Sonny. He had held up well until then, laying to rest the brother with whom he had climbed these trees, plowed this farmland, chased girls, raced cars, and buried loved ones of their own together. When a person dies, they take a part of you with them, a part of you no one else on earth knows. Sonny was letting it go with all that gunpowder.

All of this kept flooding into my heart and washing back out, taking grains of me with the tide, and bringing back untold questions from the mysterious deep. I was caught up in a tide of discovery, of new and old being swept away and washed back up on my empty shores until I didn’t know what was me, what was God, what was real or what was counterfeit.

As they say in times like this, when it rains it pours. Life had decided, for whatever reason, to make me its student in an intense crash course that would change me forever.

When I had come home late from work around 10 PM one night, the last thing I needed to see was the lifeless body of our family pet, Moo Moo, in the cul de sac in front of our house.

I knew it was her immediately. I stopped the car in the middle of the road with the lights on, and ran to her. As perfect a dog as she was — and she was a gem — she had one fatal flaw: she chased cars. She had apparently caught one.

Moo Moo was named by our kids because she had spots akin to a Holstein cow. Black and white, part Jack Russell, part Blue Heeler, Moo Moo was a herding dog. If you’ve had a herder, you’ll know that often equates to the dangerous practice of chasing things, including cars. Two years of training did nothing to curtail the deep, innate urgings of her DNA. This was who she was.

Moo Moo and I were soul mates. She swooned when she saw me. When I would come home from work, no one else existed. She would hop up on the back of our sofa, where she could be closer to eye level, and she would wag and whine until I acknowledged her shameless treatise for attention. When we hugged, all was well with the world. Every shirt I owned at the time was speckled with short, wiry white dog hair. I did nothing special to woo her. One day as a wiggly puppy, she just looked me in the eye and latched on, as if to say, “I choose you.” We were buddies from that day forth. The kids had picked her out, had fed her, even named her, but it was clear to everyone, Moo Moo was Dad’s dog.

So, there I was, awash in the white, hot light of my car’s headlamps, sobbing over Moo Moo’s lifeless body. “No, no, no, no, no,” I said, over and over, wanting to turn back time, not only 30 minutes or an hour where she could be on the back of the sofa to greet me, but a year, or two years before when I had parents, when I had a tangible guiding force in my life, a voice on the other end of the phone that could tell me I was doing the right thing, or that I was screwing up – anything at all. This was just too hard to endure on my own, without those familiar, comforting voices. And now, it would be harder without the unconditional hug of this beautiful dog.

I carried her past the flower garden behind the house, past the swing set, past the tall elm tree where I had built a crude but functional fort with my kids. I set her gently down on the ground behind the shed. And then I went inside to tell the family. Their moans and cries broke my heart, and made me cry even harder. We held each other, pulled ourselves together and buried her together under the moonlight.

My wife took the kids inside and tucked them in, and stayed with them until they fell off to sleep. I finished the burial duties, cleaned up, and went to move my neglected car. It had shined its lights as long as it could, and now sat dark and still in the cul de sac out front. I groaned a “now what,” and went to the garage where I had a new battery. Rather than deal with it in the morning, I decided to do it then, before I went to bed. Sleep probably wasn’t going to come for hours anyway.

I took a flashlight, the battery, and the tools I’d need, and walked back to the car. I took the old battery out and installed the new one, making sure all the connections were tight. I tried to start it. Nothing. Not even a spark. I checked the connections. Nothing. I went into the house, got the keys to my wife’s car, and drove it to the front, and hooked up jumper cables. Still nothing. I checked the connections a third time. It was now around midnight, and my patience, historically short anyway, was wearing very thin.

After checking the connections a fourth and fifth time, I got in the driver’s seat, shut the door, made sure the windows were rolled up tight, and I turned the key over.

Nothing.

The sounds that came out of my mouth over the next 5 minutes were unlike anything I have ever heard before or since, and I’ve seen a lot of Martin Scorsese movies. I cussed myself out, calling me every name in the book; I cussed God, telling him where he could shove this life, and this earth and everything on it; I cussed out my father for leaving, and my mother for dying, and anyone else I could think of who had a hand in my immediate misery. I pounded the dashboard, slammed the steering wheel, and screamed until my voice was a raspy whisper.

Then, as the last echo of my screaming faded away, I quietly, resolutely shut the door of my car, and drove my wife’s car back into the driveway. I left the hood up to my car with the cables still attached, and went inside. I checked on the kids, who were fitful but sleeping. I collapsed next to my wife and whispered a gravelly “Goodnight,” as we held each other under a blanket still speckled with Moo Moo’s hair.

I called a tow truck to haul my car to the garage, telling them “It’s a brand new battery, and it wasn’t turning over at all, so it must be the alternator.” I expected to hear from them later that day with an invoice I couldn’t afford.

I was barely at work 20 minutes when the garage called. “Your car’s ready.”

I was dumfounded. “Already?” I asked.

“Yep. You can pick it up anytime.”

“But, I mean, I – what was wrong?”

“Who installed your battery?” the mechanic asked drily.

I weighed my options. I could blame this on someone else. I could tell this was not going to put me in a good light. “Me,” I said, flinching, waiting.

“Well, you know those little plastic caps that come on the posts of new batteries?”

“Yeah,” I lied.

Well, you have to take those off before you hook up the cables or you won’t get a charge.”

“Oh.”

“We won’t charge you for anything,” said the mechanic, fighting a chuckle, “We found it right away. Just come by the office before 6 to get your keys.”

I thanked him numbly, and gently set the phone down on its cradle. I leaned forward and placed my head in my hands. I sat that way for a long time before I moved again.

How often I do this: blame the world around me – anything else around me – for what I have done to myself out of ignorance or pride, or simply by just being in the dark. We’re all in the dark sometimes, trying with whatever tools we have to fix something better left for the light of another day.

I picked up my keys, and the mechanic showed me the little black plastic cover, like a top hat for a little bird, and I took it from his grease-creased hands. I held the little culprit – this source of my great and horrible frustration the night before – and couldn’t believe how such a small, lightweight thing could cause so much trouble. But then again, I knew it wasn’t the cap. It was me. I put the cap in my pocket, and drove home. It sat on my dashboard for months, an amulet of sorts to remind me of the magnitude of little things. It now sits on some bookshelves in my studio at just about eye level. Beside it is a little jewelry box holding a black and white collar once worn by a herder who chose me to be her soul mate.

I apologized to God by the way, for all the things I called him. I haven’t heard back, necessarily, but I reckon he had a good laugh over it.

 

 

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Does your Small Business need a Fleet?

Small businesses need things like ingenuity, hard work, and drive. Sometimes, they also need drive in a literal sense. Cars, utes and other vehicles are the lifeblood of a lot of small businesses, from plumbing and electrical contractors to private IT and customer service consultants. And if you don’t have access to those vehicles, you may be doing your business a disservice – either in the short or long term.

When we talk about a fleet for small businesses, we mean a set of cars which you and your employees can use to get around and get things done. Of course, not every business needs a fleet, so ask yourself the following questions first:

  • Do I do a lot of driving as part of my business?
  • Do I need specific things from my vehicle, other than just getting me from A to B?
  • Am I thinking of hiring more people to help me do my job in the future?

If you’ve answered yes to those three questions, you should consider the benefits of a fleet. Motor dealers offer significant discounts on fleet car purchases (it’s like buying in bulk at your supermarket) and you’ll also get a fair number of other perks including tax deductions for repairs and fuel. Having a fleet also acts as an incentive for new employees, since they won’t have to use their own car to do their job. And it means you can standardise what model your employees use, which not only helps the professional image but also cuts back on management and maintenance costs.

If you do need a fleet, what next? First, decide what model you want to go with. That’ll depend on everything from what your business does to where you and your employees live. A business doing consulting in the Melbourne CBD would probably not want a fleet of SUVs, for example. Things to keep in mind include fuel efficiency, size, and capacity.

Next is financing the fleet. That entails a pretty significant expense, so you may want to consider taking a loan on some or all of the vehicles. You can use the interest on this loan to claim back on your business tax return, so it’s not as risky as taking a loan on your personal vehicle. If you want car loans, WA and NSW are going to be pretty much the same, although interstate businesses may be able to “shop around” for slightly more competitive deals.

Finally, make sure your fleet has a solid insurance policy and maintenance options to back it up. Chances are you’ll need them at some point or another, and you don’t want your fleet going offline due to a lack of paperwork. That way, business as usual can stay on the road.

Sarah Paige is a car enthusiast and a self-proclaimed expert in the motoring field. If you’re in the market for vehicles for your small business, consider shopping around for car loans. WA has plenty of experts to help finance your new vehicle.

 

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Gone in 60 Seconds No More

In the year 2000, Nicholas Cage made a film about a master car thief trying to save his brother by stealing 50 cars in three days. The implication is that Cage’s character is such an excellent car thief that, if he sets his eyes on your vehicle, it will be be “gone in 60 seconds.” While the film’s premise strained credibility even when it was released, a decade later the idea that any car thief, no matter how skilled, could have such an easy time making off with a car would not only be unlikely, it would be very nearly impossible.

In the decade since that movie came out, car theft is down by over 60%. This is due in large part to advances in technology meant to make it more difficult for thieves to have their way with a car unless they have a degree in automotive engineering or computer science.

The first obstacle is that modern cars are basically impossible to start unless you have the key. A car’s key is now electronically encoded so that its computer will not start the vehicle until it confirms that they key is in the ignition and has been properly turned. In fact, many thieves are now resorting to home break-ins simply to steal car key. Indeed, statistics suggest that this is the motivation for as many as 1/5 of such break-ins.

Furthermore, old methods of hot-wiring cars are now untenable. With cars made earlier than the 90’s, a thief could simply remove the dash and fiddle with the various parts down there until something fired up – it was actually laughably easy, even for someone who didn’t know how to do it beforehand. This problem was solved by putting those components in a place where they could not be so readily accessed by someone who should not be touching them. Of course, since these components may need to be looked at for purposes of repair, they are accessible by some means. But getting to them without proper knowledge is extremely difficult, and even then there are other safeguards in place.

There have also been advances in the less electronically-oriented areas of preventing auto theft. Cars made in the last decade have locks with harder steel than those of previous models, and as such are harder break open with a simple tool like a screwdriver. The glass in contemporary cars is also considerably harder to break, and many cars are now programmed not to unlock from the inside when the owner is away. This means the thief has to actually climb in over the glass he has broken in order to get to the steering wheel, which is often enough to make a would-be thief simply move on.

With all the safety measures in place, petty criminals are have much less incentive to even try stealing cars. Organized crime may be able to amass the resources to steal some modern cars, but since they are much more likely to target very high-end luxury cars, the average car owner need not give them much worry.

Are you looking for the cheapest rates on Alberta auto insurance for your vehicle? If you fill out a quote at Kanetix, you will be able to see which insurance providers offer the most competitive rates in just a matter of minutes after filling out some basic information.

 

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