Hyundai is taking advantage of the economic downturn and competitor struggles by marketing a one-year, no hassle Hyundai Assurance.  If you buy or lease a new Hyundai and lose your job within the next 12 months, they’ll allow you to return the car where they’ll cover most or all of the difference.


It’s a brilliant marketing move that, along with their “America’s Best Warranty”, differentiates Hyundai from competitors.


Digging more into the details of the assurance, they only cover up to $7500. So assuming that people in danger of getting laid off don’t buy cars, this assurance won’t be too financially detrimental in the long run. Question is, will this work and will all the competitors follow?

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Congress announced this week they are inching closer to making a deal with the Ford, GM and Chrysler companies to provide financial aid to keep them afloat until early 2009. I bet if they made good cars and consistently kept their expenses below their earnings, they might actually be able to survive on their own. Whatever happened to good old-fashioned capitalism and having to make money to stay in business? Did Ford, GM, and Chrysler just now figure out that they haven’t been turning a profit in years?

Here are some numbers I pulled directly from Google finance which show the stark contrast between failing companies and healthy ones. Even though the numbers are in Japanese Yen, Dollars and Indian Rupees, the important factor is the obvious negative net income vs. positive net income. (Numbers are in Millions)

And this doesn’t even show the 2008 numbers, which undoubtably will be even worse. Unfortunately jobs will be lost, but why reward a business that is failing? Why waist money on a business that has operated at a consistent loss for 3-4 years.

Their claim is that too many jobs would be lost, and the after shock of that would be “catastrophic” for the US economy. But what about this:

• Honda reports it’s plant in Anna Ohio is doing fine, it even underwent a $75,000, 135,000 square foot expansion.
• Toyota opened its second R&D campus in October 2008, in York Township, Michigan.
• BMW has over 200 suppliers in North America. Toyota has roughly 500 major suppliers in North America.

The U.S. is really good at a lot of stuff: technology, innovation, entertainment, and design to name a few – but sorry, currently they just can’t make cars. Yes, I did say currently. Who knows what a stiff kick in the butt (going out of business and massive job loss) might do?

Here’s some simple yet hard advise: if you want to stay in business you have to make money, otherwise you have no business being in business. Take it from someone who knows a little about making money:

 “Sales minus costs equals profit. Is there more?” – Bill Gates

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The national average price of a gallon of gas has dropped below $2.00 for the first time since 2005. This is great news, and shows that people are actually starting to drive less, and think conservative when it comes to driving and gasoline consumption. But if you’re like me, the falling prices aren’t good enough, and you want even more savings. I recently did some research on gas saving tips, and here’s what I found:

1. Gasbuddy.com. This is a great resource. It has 2 main features that I really enjoy. First the ability to plug in your zip, and find the gas prices around you. But the second, and even better tool this site offers is the Temperature map. With this tool you can zoom in on your area and find out what stations have the lowest prices near and around you – very nice.

2. Metro/Vanpool/Carpool. Using this method cuts the amount of gas you use drastically, because you split the cost of the gas by the amount of people in the car. How many times have you driven on a crowded freeway, only to see a virtual “parking lot” of 4 passenger cars with 1 person in them?

3. Lose the excess weight. The more pressure your car has against the road, the more gas it will use to move it. So the lighter you can make your car the better. This doesn’t mean throwing out essentials like the jack and spare tire. But if you use your trunk and backseat as a storage space, this could save you a lot.

4. Use traffic tools on google, msn or traffic.com: using these you can find out where there might be traffic alerts such as accidents which you can go around. They aren’t always accurate, and properly updated. But if you know there might be an accident, or something else clogging up the free way, it’s worth it to check it out before hand and find an alternate route. This keeps you from sitting in idle traffic, wasting gas.

5. Proper maintenance and keeping it clean: Making sure your tires have the correct air pressure, making sure you change your air filter, oil filter, and oil on schedule, and keeping your car clean, and waxed can save a lot on drag, and air friction. Doing as much as you can reduce the friction your car has with the air the better. If your car is clean and smooth, there’s less air friction.

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Some disturbing happenings in Washington today as the CEO’s of GM, Ford and Chrysler made their appearances after flying to the capital in their posh luxury private jets to beg for $25 billion of our taxpayer money to avoid going into bankruptcy.

According to ABCNews, GM’s Wagoner’s flight cost an estimated $20,000 roundtrip from Detroit to DC. When asked during the testimony by a Congressman whether they considered downgrading to first class, or would be willing to sell their jets, the three of them just sat motionless.

“This is a slap in the face of taxpayers,” said Tom Schatz, President of Citizens Against Government Waste. “To come to Washington on a corporate jet, and asking for a hand out is outrageous.”

Looking at the video clip, I think a bigger slap is Ford’s CEO Mulally getting off the plane and into a Lexus LS!

Ford CEO Mulally arrives at Dulles and gets into a Lexus!

Personally, I think the government should let the three try to survive on their own. If they had built good quality cars that Americans want to buy, and not overpromised by negotiating absurd deals with the unions (who’d rather see the companies go bankrupt than give any concessions – another story in itself), then they might not be in as deep a hole as they are now. Bankruptcy may be a good thing – giving them a chance to get out of some these legacy costs. Heck, it worked for the airline industry, it can work for auto as well.

What do you think about the bailout for the auto industry?

Read the article and see the video

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Photo by bobbigmac

Ever wonder what would really happen if GM or Ford went out of business? All the talk recently of the government bailing out the American auto industry has just gotten me more frustrated with our government and it’s bailouts. What happened to good ol’ fashioned business? Where you had to make money to succeed, and if you didn’t you failed, and had to do something else. Lately, as the government has rescued business after business, it just makes me wonder how free is our market? I’ve thought, wow, I should work for Ford, or Fannie Mae or AIG, because apparently those jobs are government backed – pretty sweet.

So I decided to do a little research, and figure out what would really be the repercussions of a failed auto industry, to find out if it was really that bad. Let’s look at hypothetical scenario in which GM (the largest automaker at risk) declared bankruptcy and went out of business.

1. Job Loss: First, GM would have to layoff almost all of their work force. In addition to those lost jobs, all the smaller companies that feed off the car manufacturer would also be in jeopardy. The Center for Automotive Research estimates that combined, this could be a loss of 2.5 million jobs.
2. Unemployment Rate Rises: Last month, the unemployment rate rose to 6.5% adding 240,000 lost jobs to the U.S. Census, which was the highest it’s been since 1991. Compare that with a potential 2.5 million jobs lost if just GM where to go out of business.
3. Economy Shrinks: The trickle down effect of having so many jobs lost is pretty large. Almost every facet of American economy would feel the hit. Because less people have jobs, and hence money to spend, there would be:
   • Increased closings of small and mid-sized business. Pretty much all the small auto repair shops, car dealerships, and car part stores would feel a massive hit, and probably if not completely go out of business, have to cut down drastically.
   • Increased Foreclosures, because more people would have lost their jobs, and their ability to pay their mortgage, there would be even more foreclosures and bank owned properties, which would drive the already dwindling real estate market down.
   • Less money collected on income taxes, and property taxes. With less money going back into the economy, there would be less money going towards taxes. That means less revenue for the government, increased national and state debt, and less money for public services like police, firemen, teachers, etc.

So whether you’re for or against the auto industry bailout, one thing is for sure, the effects would be dire.  What’s your opinion? Should the government step in and save the auto industry, or let the free market have it’s way?  Let us know in the comments.

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