Best way to ride out the NAFTA storm? Buy used or keep your car longer.
Whether tariffs come in or not, new car prices are sure to rise in the next year or two
Quick: which is scarier? Being told there is a shark in the water, or being told there “might” be a shark in the water?
Doesn’t matter, does it? They’ll both keep you out of the water. It’s a similar issue when the White House threatens to place huge tariffs on Canadian vehicles; nobody has ever seen even the threat of such a thing bring about lower prices. Which means it’s time to consider your next car purchase in earnest.
Manufacturers are going to keep their powder dry, trying to figure out what will happen next. Cliffhangers are fun for television shows, less so for a corporation trying to plan its future. The rest of us are finally being faced with something we’ve been able to dodge for a long time: what if replacing my current car isn’t going to be as simple as it’s always been?
Record sales, year over year, couldn’t continue forever and are now levelling off. But cheap fuel costs, low interest rates and extended loan periods mean many of us have forgotten that treating a vehicle like a disposable razor was only ever good for the people making and selling them. Consumers have been spoiled and lazy and willing to have a car payment in their budget seemingly forever.
So, with the possibility of huge increases in prices, and the certainty of disruption with the government that runs our biggest trading partner, what should you do?
If you already know you’re in the market for a car and pushing the sale up a month or two won’t matter, fill your boots. If you’re a gambling sort, know that if proposed tariffs hit (and some affecting the industry already have, because content percentages and steel tariffs will also impact price), the cost of many new vehicles will jack, but the cost of used ones might return to earth.
How so? Right now, many of our used vehicles are shipped to the U.S. That has led to fewer used here, so prices have held high. If tariffs are slapped on those used vehicles, most will stay here, driving down prices. Those buying used might be the only winners in this scenario.
It took years for the leasing business to return to form after the collapse in 2008. People love leasing because too many of us buy a car a month at a time, and leasing makes it seem cheaper. Same with 84-month loans (and longer), which are the work of the devil. If used car prices plunge, leasing rates will head up to counter that lost value at the end of the lease. And that car with the long-term loan, that you’re totally sick of, that is out of warranty and you’re still paying on, will be worth less still.
So what do you do? You start thinking differently when you look at your car. Cars have never been better built and safer than they are now. If you’re currently in a lease, take a look at your agreement and rethink casting if off when the term is up. Start thinking of it as your car, not a long-term rental you can scratch or put off replacing tires. Think of it as something you’re going to keep.
When I wrote a story on auto tariffs recently, it seemed insane to think we could see some new car prices go up between $5,000 to $15,000, but insane seems to be the flavour of the month. If you own a car and want to wait and see what’s going to happen, here’s how to ride it out.
Get it detailed. Seems silly, but get it professionally cleaned. You’ll be amazed at the difference, and you’ll have that new-car nostalgia.
Read your owner’s manual. Get out your service records and make sure you’re up to date for maintenance. Depending on the age/mileage of your car, things like timing belts come into play. If you don’t have a file, start keeping one.
Plan ongoing maintenance. If you have a good relationship with your dealer, that’s great. If you’re less than thrilled, find a good mechanic. Ask your friends and neighbours. Go look at the shop. The industry has loved having you buy a new car every few years, but they know better than anyone it’s not required. Take care of the one you have.
Start investing in annual rust protecting. I like drip oil.
Prepare yourself for larger repairs. Most cars are trouble- and repair cost-free, apart from oil changes, for a few years. Keeping a car that’s out of warranty needn’t be terrifying. If a repair is quoted at $1,000, and that happens once a year, it’s not outrageous. You can get extended warranties on older cars, but don’t use thirdparty companies, and make sure to read what isn’t covered as well as what is.
Don’t skimp on tires. You’ll be amazed at the difference great tires make. Consider making the investment.
There’s a joke among my colleagues whenever we get track time. Somebody will always yell, “Drive it like you stole it.” In this case, however, be smart, and drive it like you own it.
New Ford Edges sit on a production line as Ford Motor Company celebrates the global production start of the 2015 Ford Edge at the Ford Assembly Plant in Oakville, Ont., on Thursday, February 26, 2015. New NAFTA rules could increase the cost of a car by hundreds or even thousands of dollars, act as a multibillion-dollar tax, and ultimately hurt sales as consumers keep their wallets shut, a new study predicts.