Moving to Mexico/anada didn't make cars cheaper????

http://www.forbes.com/2007/12/27/cars-overpriced-autos-forbeslife-cx_bh_0102cars.html


Most Overpriced Vehicles
Bengt Halvorson 01.02.08, 6:00 AM ET

Go shopping for a Dodge Ram, and you may find a $4,500 factory incentive
awaits. On top of that, it's likely a dealer will give you an all-smiles,
deep-discount price that's lower by thousands more.

Despite these inducements, Rams are languishing on lots. Nationwide dealers
reported a 117-day inventory as of Nov. 1, according to Automotive News.
Jonathan Banks, senior director of the Automotive Leasing Guide-affiliated
ALG Consulting Group, says that excess dealer inventory is a leading
indicator that it's time not just for more incentives but possibly a price
cut.

Good thing, because the Dodge Ram is among the most egregiously overpriced
cars in the U.S. Rounding out the top five: the Mercury Grand Marquis,
Ford's F-150, the Dodge Durango and the GMC Envoy.

In Pictures: 15 Most Overpriced Cars
Behind The Numbers
In order to find the market's currently most overpriced vehicles, we first
looked at market price figures supplied by Vincentric, a firm that tracks
vehicle ownership costs for the auto industry. These are updated monthly to
reflect marketplace inventory, demand, rebates and incentives, and represent
the price that a buyer typically pays. We ruled out any vehicles where the
market price was discounted less than 5% from the MSRP.

Next, we looked at J.D. Power's 2007 Automotive Performance, Execution and
Layout (APEAL) survey results and ruled out vehicles with average or better
satisfaction or better than two and a half stars. We consulted Consumer
Reports' Owner Satisfaction results, data from a survey that asks owners,
considering a wide range of factors including price, "Would you get this car
again?" Cars with better than average scores were dropped. Then we looked at
one-year residual value data from ALG, which help quantify the rapid
depreciation of an overpriced vehicle directly after the sale. Finally, we
reordered the remaining vehicles by the amount overpriced (difference
between market price and MSRP) and ranked the top 15.

On The Chopping Block
We looked at price cuts because, while alluring, they may indicate a
carmaker's desire to jump-start sluggish sales, which may in turn indicate a
less than accurate initial sticker price. Though a number of external
forces--such as those related to the economy--can suddenly precipitate a
short-term price cut, typically automakers eager to unload their vehicles
will keep adjusting the transaction price through incentives in an attempt
to make the vehicle more appealing.

"Short-term incentives won't have much of an effect on residuals," says
David Wurster, president of Vincentric, "but a continuous pattern of using
them begins to reflect a longer-term lack of appeal for a vehicle."

Some might argue this is true of the Ram 1500 pickup. The market is in the
midst of a long-term change in product preference, says Wurster, toward
so-called crossover SUVs that are less trucklike. The demand for pickups is
currently down, so there needs to be a serious adjustment in production and
pricing. There have already been some lowered MSRPs on trucks, and Toyota
(nyse: TM - news - people ) has brought out a lower-priced "EGrade"
work-truck model of its Tundra full-size pickup.

The price adjustments are painful to corporate egos and bean counters, but
ultimately better for the industry and for buyers. Banks says that between
two vehicles, one priced at $25,000 and the other priced at $28,000 with a
$3,000 incentive, the $25,000 vehicle is going to have a better residual
value and be worth more three or five years down the line.

Declining Desire
Some of our overpriced vehicles--including the Chevrolet Trailblazer and
Envoy--are simply suffering from a lack of demand and sales that are losing
steam.

"You also have a lot of products that are old, like the Ford Ranger," says
Christopher Li, a research specialist at J.D. Power and Associates, who
added that the Chevrolet Colorado--another pickup with lagging
appeal--hasn't been competing well either in a segment that's become
dominated by the Toyota Tacoma. Fuel prices, meanwhile, are putting the
squeeze on mid-size sport-utility vehicles. The result? Price cuts.

Vehicles may also be overpriced because the automaker didn't follow the
right pricing strategy in the first place. For instance, some domestic
brands have been pricing not to the market but where they aspire to be,
which results in deep incentives and poor residuals, says Banks, who cites
the $36,195 Chrysler Pacifica, which was originally priced as competitive
with the Lexus RX, as a prime example.

Automakers run into further trouble when they bring out a model that strays
too far from the image of the brand.

"Companies should produce products that enhance their brands but still are
true to the heritage," says Wurster, who points out that Volkswagen's
(other-otc: VLKAF - news - people ) Phaeton, and its high price (one model
had an MSRP exceeding $100,000 in 2006), was a blunder while the $104,000
Lexus LS600h hybrid flagship is a natural extension.

Price dissatisfaction is also represented in other metrics, namely
satisfaction. No one wants to pay for a product he or she isn't happy with.
J.D. Power, which measures how gratifying a vehicle is to own and drive in
the first 90 days of ownership with its annual APEAL survey, says that a
higher score corresponds to lower model incentives. Consumer Reports also
has an Annual Car Owners Satisfaction Survey in which it asks, considering a
wide range of factors including price, whether respondents would buy their
vehicle again.

One final metric that warrants mention: length of ownership. Robert Smith,
manager of car information products at Consumer Reports, says that even if
the automaker's piling on the incentives and the residuals are
embarrassingly low, it's actually not overpriced if you plan to keep the
vehicle for a long time.

"Are you planning to keep the vehicle for six, seven, eight years?" he asks.
"Then you aren¹t so concerned with resale."

In

--
It's so quiet in here you could hear a mouse pissing on a
cottonball" ---JAPW


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