Have you ever jumped the gun at a stoplight -- rolling into the intersection before the red light turns green? You might get away with it. Then again, you also risk getting a ticket.

Something similar can happen to car shoppers, too. Only the risk isn't getting caught in a moving violation -- it's getting entangled in a money violation.

It's called "yo-yo financing," and it's what happens to car buyers (particularly ones with so-so credit histories) who take possession of an automobile before their financing arrangements are complete. If their financing falls through, dealers can pressure the buyer into a revised deal with extra costs or fees -- or move to repossess the car.

The consequences of this dubious dealer practice are no fun: Either you pay more to keep the new car you thought you'd already bought -- or you lose it. It's an embarrassing, and potentially expensive, problem.

How Dealers Catch You in the Trap

The "yo-yo" is a byproduct of a dealer practice called spot delivery, in which a shopper is sent home in a new car on the same day without having to wait for formal financing approval.

Philip Reed, of industry-watcher Edmunds.com, recently noted that dealers like spot deliveries because they quickly turn shoppers into buyers. It's an effective sales tactic, and often a harmless one.

But, Reed says, consumer protection advocates have long tried to regulate the practice because it leaves buyers, particularly those with less-than-perfect credit, vulnerable to abuses.

What kinds of abuses? Typically, something like this happens: You're at a dealer and you decide to buy a car. You sign some paperwork and maybe leave a down payment, and then drive the car home the same day. You think you're done: Happy new car!

But then, a few days later, the dealer calls with sad news: Your financing application was turned down. If you want to keep the car, you'll need to arrange other financing at a higher rate. You might even need to increase your down payment. If you don't, the dealer might tell you they'll repossess the car -- or maybe even report it stolen.

State laws vary: In some states, you can simply give the car back and get a refund. But in others, you might be liable for the complete balance due on the sale -- which leaves you open to the yo-yo problem.

Dealers say that this situation is a byproduct of the fact that many cars are sold at night and on weekends, when financing offices are closed, and not usually a scam. But dealers see an awful lot of financing applications. They should know before you leave the dealership whether yours is likely to be approved.

Simple Steps to Keep from Getting Snared

It's not hard to protect yourself from a yo-yo financing mess -- if you know what to do in advance. Reed's Edmunds.com colleague Carroll Lachnit says that the keys to staying clear of the yo-yo trap are simple:

• Get financing before you shop. With pre-approved financing, you know what you'll be paying every month, and what the fees will be. It takes the whole financing question right out of the dealer's hands. This is especially important if your credit report has a few dings -- if you're in "subprime" financing territory, you're particularly vulnerable to the "yo-yo" problem. Your bank or credit union will be happy to help you arrange a car loan, so make this your first stop. Even if the dealer offers you better terms later on, you'll still have a financing plan to fall back on.
• Always read the contract. "Car buyers should always get every element of their deal in writing," Lachnit says. Then, read carefully: Buyers should be especially wary, she notes, of any conditions in the contract that might allow the dealer to rewrite the deal or add extra charges after the sale.

Either way, the easy way out is to arrange your own financing before you shop. That way, you know what you can afford, and you know your loan options in advance. Ultimately, this will keep you free and clear of the yo-yo financing trap.

Permalink | Email this | Comments

Thanks to strong new products, hard work around the world, and the American taxpayer, General Motors (GM) continued its profitable ways in the first quarter.

The world's largest automaker reported a profit of $1 billion on the strength of its operations in the U.S. and China, even as other overseas losses weighed.

Excluding some one-time items, GM's profit of $0.93 a share handily beat Wall Street's predictions, which called for an $0.85 per-share gain.

After a record year in 2011, is the General finally on track?

Good Profits in Its Home Market

The answer is that GM is doing pretty well, but it's still -- despite the huge advantages it received from its taxpayer-funded bailout -- a work in progress. This isn't the company's fault: GM's current management team, led by no-nonsense CEO Dan Akerson, a former naval officer, is doing a very good job.

But the bailout and bankruptcy didn't come close to solving all of GM's old problems, and GM's current leaders still have much to do.

The good news for them is that GM's products have improved rapidly, and it's making more money for every car and truck it sells. That was evident in the company's North American region, where sales (in the U.S.) were down a bit, but -- like rival Ford (F) -- profits were up. GM's newest models, like the hot-selling Chevy Sonic subcompact, are big improvements over the vehicles they replaced. That means GM can ask -- and get -- more money for them, which helps GM turn a greater profit.

That will help GM's bottom line even more over the next year or so, as a slew of new GM products starts to arrive at dealers. Two new Cadillacs, including the stylish ATS sedan, a completely overhauled Chevy Impala, and all-new pickups (due early next year) should help drive further increases in GM's profits -- and with luck, its sales -- in its home market.

Bigger Challenges Overseas

GM's profitability at home is a good thing, because GM's overseas operations aren't all going so well. While GM's cars and trucks continue to sell well in China, where the company is the market leader, its profits in the country are split with its Chinese joint-venture partners, as required by Chinese law. That said, the region contributes roughly $500 million to GM's bottom line every quarter, so it's quite important -- and GM's sales in places like Russia and India are also growing.

Europe is also important to GM, but it's a different story there, where tough economic conditions have led to big declines in new-car sales. Losses in Europe took a $256 million bite out of GM's profits for the quarter, as the company is having trouble cutting costs in the region. GM is working hard to make Europe profitable, but a successful restructuring may still be a year or more away.

Meanwhile, the company's finances continue to look sound. Debt is low, profits continue to be solid, and GM has over $30 billion in cash, which it's holding as insurance against an economic rainy day.

Why doesn't GM use that money to pay back taxpayers for the cost of its bailout? It's possible that it will, eventually -- but it has to wait for the government to sell its stock first. Technically, GM has done everything it was asked to do to pay back the government, but the problem is that part of the payback was in GM stock. The stock is trading around $23 a share as I write this, but it needs to go up to a little more than $50 for the government to break even. That's not likely to happen soon, even though GM is doing pretty well.

President Obama is unlikely to tell the Treasury to sell the stock at a loss during election season. That means any sale of the stock, and thus any further action GM might take to pay back taxpayers, will have to wait a while longer. Meanwhile, GM's managers look to be doing all they can to finish the job of cleaning up the company's act -- and generating the strong profits that will add value to its stock in time.

At the time of publication, Motley Fool contributor John Rosevear owned shares of General Motors and Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors and have recommended creating a synthetic long position in Ford.

Permalink | Email this | Comments

Gallery: The 10 Cars That Lost the Most Value

Permalink | Email this | Comments

Do women really make better car choices? Mounting evidence suggests that they do.

Consider a recent study of used-car buying habits that suggested that women tend to do more research, ask tougher questions, and were more likely to have a mechanic inspect a used car before buying.

Now, a study on new-car buying preferences has found that women make more practical choices, while men are more likely to buy based on more visceral factors -- though that could depend on your perspective.

'Brawny' and 'Flashy' vs. Cute Little Imports

The new study, conducted by analysts at TrueCar.com, looked at more than 8 million new-car purchases made in 2011.

In the "we didn't really need a study to come to this conclusion" category, TrueCar found that there's a clear gender gap in automotive choices: Men tend to prefer "brawny" or "flashy" vehicles, the analysts say, while women prefer smaller vehicles and lean toward imported brands.

Other findings include:

• The brand more women favor? It's Mini, which has the highest percentage of retail sales to females at 46%, followed by Nissan (NSANY) and Kia. Fourteen brands in total have captured more than 40% of the female car-buying vote, including Fiat, whose sole U.S. offering is the Mini-like Fiat 500.
• Men, on the other hand, clearly want something different. The brand with the highest percentage of male buyers was Ferrari, the famous (and famously expensive) maker of super-fast sports cars. And 13 of the 20 brands favored by the largest percentages of men were luxury brands like BMW or "exotic" brands like Maserati.
• "Brawny" brands were also heavily favored by men, with truck-heavy makers GMC and Land Rover ranking high on the men's list. Classic American brands also tilted in a masculine direction, with Ford (F), Chevrolet, and Dodge all among the top 10.
• Women, meanwhile, favored imports: Honda (HMC), Nissan, and Subaru were all among the top 10 brands with the highest percentage of female buyers - and all are brands with a reputation for reliability and practicality.

While the study found that the genders play (mostly) to type, there is evidence that the gender divide in terms of car preferences is not as stark as one might believe.

Model Behavior

More trends came to light when TrueCar's analysts looked at the gender breakdowns on specific models. There, we see that men aren't the only ones who like fun automotive choices: More than 50% of buyers of the Volkswagen Eos, a stylish convertible, were female, and the Volkswagen Beetle was close behind.

But practicality dominated women's auto purchases: The Volvo S40, Honda CR-V, and Toyota RAV4 all ranked high, as did small, fuel-efficient cars like the Nissan Sentra and Toyota (TM) Corolla.

Meanwhile, men's preferences are dominated by pickups, sports cars, and luxury sedans: 87% of buyers of Ford's F-Series pickup -- America's best-selling vehicle -- were male, with General Motors (GM) pickups posting similar percentages.

"Female car buyers really gravitated toward smaller, more fuel-efficient cars," said TrueCar analyst Kristen Andersson in a statement. "It was the complete opposite for male buyers, who preferred either a fast, sporty vehicle or more heavy-duty vehicle, like a large truck or SUV."

It's no surprise to find men and women playing to type. But it's worth emphasizing that few of these divides were stark: More than half of Mini buyers are still male, for example, and plenty of women buy Land Rovers and Cadillacs. "While gender preferences amongst the buyers of various automotive brands still exist, the gap is narrowing," TrueCar vice president Jesse Toprak said in a statement.

But few will be surprised to hear that more than 88% of those who bought a new Porsche 911 last year were men.

At the time of publication, Motley Fool contributor John Rosevear owned shares of General Motors and Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors; and creating a synthetic long position in Ford.

Permalink | Email this | Comments

Once upon a time, selling your old car was pretty simple: You'd put a sign in the window, and maybe an ad in the local paper's classifieds. Eventually, you'd find a buyer.

Today, the used-car market is hot. But it's a lot different from days of yore. Shoppers can use online listings to find dozens of similar cars in a hurry, which means stiffer competition. At the same time, sites that offer free price data can help sellers make sure the asking price is in the right range. Plus, those trading in can see exactly how much the dealer should offer.

Whether you're trading in or selling, how you present your old car will have a big impact on the price you get for it. Here are three ways to make sure you get the best price for your old ride.

Step 1: Shine Up the Old Beast

The used cars that get the best prices are the ones that look like they were cared for and well maintained. While you can't completely hide a decade of neglect, you can make sure that the car you have shows itself as well as possible: Just an hour or two of work can yield hundreds of extra dollars at sale time.

Even if it's an old worn-out clunker, always -- always -- clean the car thoroughly before you put it up for sale or take it to the dealer. At the very least, wash it carefully and clean those smudges off the windows, inside and out.

Don't neglect the interior, either. Automakers have learned the hard way that skimping on a new car's interior hurts sales -- Ford (F) in particular has spent a fortune upgrading its cars' interiors, and that has been a key factor in its recent success. It's true when cleaning up your used ride, too: Vacuum the carpets, shake out the floor mats, and spend a little time wiping the dust off the top of the dashboard and other surfaces.

For newer cars, consider a professional detailing service, which can make a nice used car look nearly brand-new. For a moderate fee -- generally between $100 and $200 -- a detailing service will wash, buff, and wax your car's exterior, and thoroughly clean and shine the interior as well. Good detailers can even remove those old coffee stains from your console and all traces of that lollypop your toddler left stuck to the backseat several years ago. These little details can make a big difference to a buyer.

Step 2: Assemble the Service Records

Yes, it's time to dig out all of the receipts and invoices you can find. Having records of a car's service history -- ideally, everything from oil changes to major repairs -- helps show buyers that the car was cared for properly while you owned it.

A complete service history is especially important if you're selling your car privately -- but it can make a difference with a trade-in too, particularly if your car is one that might have some enthusiast or collector value. If you don't have all the records, put the ones you can find into a folder in chronological order and keep that folder with the car.

Step 3: Know Your Car's Real Value

It used to be that a used car's "Blue Book value" was a secret jealously guarded by dealers. Not so anymore. Nowadays, services like Edmunds and Kelley Blue Book have put pricing and other market information online, free of charge. Spend a few minutes on one or both of these sites to get estimates of your car's current market value, and look at local ads for vehicles similar to yours to make sure the price you have in mind is on the mark.

While many people think that selling a car is a stressful process, following the steps above will help you ensure that you have many buyers' questions answered before they arrive -- and will help you get top dollar for your old ride.

Motley Fool contributor John Rosevear owns shares of Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and have recommended creating a synthetic long position in the company's stock.

Permalink | Email this | Comments

Why hasn't Uncle Sam sold its shares of General Motors (GM)?

When GM went public again in late 2010, the federal government did sell some of the shares of GM it acquired as part of the 2009 auto industry bailout package. But the Treasury still owns 500 million shares -- a 32% stake in the world's largest automaker. Why not cash out?

Some have suggested that Washington is holding on to its remaining shares so that it can influence future car design. The theory goes that President Obama wants more hybrid and electric cars on the market, and what better way to get them than by holding a big stake in GM -- big enough to give him big leverage?

Here's the problem with that theory: It's not really happening.

It's true that GM -- like Ford (F) and just about every other automaker -- is working hard to create more fuel-efficient models. However, GM's leaders insist that the government hasn't used its ownership stake to push GM to change its product strategy.

Notwithstanding high-profile "green" models like the controversial Chevy Volt, GM still produces plenty of not-so-green trucks and SUVs -- brawny (and thirsty) sports cars like the V8-powered Chevy Camaro and Corvette. And it will continue to do so, because GM engineers are confident that they'll find ways to keep delivering products like these within the tough new U.S. fuel economy guidelines.

So, no, the Feds aren't holding on to their (our) GM stock for policy reasons. There's a much simpler explanation for why the government hasn't sold its shares yet. It's not a prudent investment move.

The Real Reason the Feds are Hanging On to GM

Remember that the government's big stake in GM is a result of the auto industry bailouts. Under President Bush, and later President Obama, the Troubled Asset Relief Program made a series of loans to GM amounting to $49.5 billion.

GM and the Feds agreed, as part of the automaker's bankruptcy and restructuring in 2009, that those loans would be paid back with a mix of cash and stock. So far, according to GM, about $23.1 billion of the total has been "repaid or returned to the U.S. Treasury." That leaves GM's IOU to the Treasury at roughly $26.4 billion.

But -- and this is important -- technically speaking, GM has already settled its cash loan with the government. As of April 2010, GM had paid back all the cash it was required to pay under the conditions of the TARP deal. GM also bought back some special preferred stock that it had issued to the government, and made payments of interest and dividends.

That's it. That's all the cash GM owed, and GM paid it back well ahead of schedule. The rest of the loan was paid in stock -- the 500 million shares we're talking about here.

The sale of some stock in 2010 is part of the $23.1 billion that has been returned to the Feds. The remaining shares are right now valued at $13 billion: 500 million shares at $26 each. But the government's breakeven point is around $53 a share.

Selling now would leave the Treasury with a $13.4 billion loss on its bailout of GM, and there's no way that the Obama administration is going to willingly take a loss like that -- especially not during an election year. So unless the stock goes way up, past the government's breakeven point, a sale isn't happening -- not before the election, and maybe not for a while after.

There you have it: The 32% stake in GM has nothing to do with pressuring GM to make more "green" cars. It's simple math, plus a smidgen of election-year politics.

Motley Fool contributor John Rosevear owns shares of General Motors and Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford.

Permalink | Email this | Comments

General Motors (GM) really wants you to love the Chevy Volt.

It's clear why: GM spent a fortune to develop the innovative electric car, and made it the symbol of the Detroit auto giant's comeback. It even got its own Super Bowl ad. And as the few who have driven one know, it's really a very nice car.

But the Volt has been a slow seller, thanks to everything from a high sticker price to election-year politics that have turned what should have been a symbol of American ingenuity into a "political punching bag," in the words of GM's CEO.

But is that really why the Volt isn't selling? After all, one of GM's biggest hit products is pretty much the Volt's polar opposite -- the fire-breathing Chevy Camaro.

This is Chevy's Hot-Selling, Gas-Guzzling Dynamo

If the Volt is what GM thinks of as the future, it's ironic that one of its biggest current hits is a car that represents some of the best (and worst) of GM's past: The Chevy Camaro, which in the popular SS trim packs a wicked 426-horsepower V8, and a fuel economy rating of just 16 miles per gallon.

The Camaro, first introduced in 1967, was a huge seller for GM in the 1970s and 1980s, but declining sales and worries about fuel economy led the General to discontinue the model after 2002. GM executives seemed convinced that the Camaro's day had passed, but the continued success of Ford's (F) similar Mustang persuaded the General to design a new Camaro and show it to gauge reaction.

The reaction was great; crowds loved it. And buyers have loved the production version, making it the top-selling car in its segment -- $4 gas notwithstanding. While the Volt failed to hit its (modest) sales target of 10,000, GM sold almost 90,000 Camaros in 2011.

The Camaro's sales success has been a much-needed bright spot for General Motors as it works to revamp its hit-or-miss product line. But with the no-longer-quite-so-new Camaro reaching the automotive equivalent of middle age, and with all automakers under pressure to improve fuel economy, GM now faces a big challenge: How do you redesign a car that has become an icon?

Keep the Mean, Add the Green

According to a recent report in the trade magazine Automotive News, GM engineers and designers are in the early stages of work on the next new Camaro, due in 2015. There's no question that the new car will reflect significant changes from the current one. It'll almost certainly be smaller and lighter. Reducing size and weight improves a car's performance, handling, and fuel economy, all at once.

Its engines will probably get smaller, too, at least in base models. The current entry-level Camaro uses a V6, but it's possible that the next one will use a four-cylinder -- maybe with a turbo, so that performance stays strong. And while the famous Chevy V8 isn't going away anytime soon, expect the next generation of that venerable engine to incorporate more fuel-saving technologies, and maybe, in time, a hybrid system.

A Hybrid Camaro?

GM hasn't hinted at the possibility yet, but I wouldn't be surprised to see a hybrid Camaro by the end of the decade. Plug-in hybrid technology, like that found on the upcoming Ford Fusion, could help engineers "square the circle" of offering a powerful V8 engine in a car that still gets great mileage.

Imagine a Camaro that ran on batteries, until you floored it, at which point the big V8 would instantly come to life. You'd get all the fun of a fast-accelerating sports car, with the economy of a hybrid.

If the Detroit automakers are serious about keeping their V8s around, hybrids like that are probably inevitable. Given all of the car-guy dislike of "green" cars like the Volt, won't that be ironic?

At the time of publication, Motley Fool contributor John Rosevear owned shares of GM and Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors and have also recommended creating a synthetic long position in Ford.

NEXT:

Gallery: The 10 Cars That Lost the Most Value

Permalink | Email this | Comments

• Ford (F) saw very strong sales of its acclaimed Focus compact for the second month in a row.
• Sales of the small Chevy Cruze and Sonic helped boost General Motors' (GM) otherwise lackluster results.
• Toyota (TM) saw a surge in sales of its popular Prius hybrid and strong results for its new Camry introduced late last year.
• And Honda's (HMC) Civic, always a steady seller when gas prices are rising, turned in a strong month despite fierce competition.

• You may have more financing options, as the improving economy has made lenders more willing to play.
• There are lots of good, fuel-efficient choices, as the automakers' efforts to "green up" their model lines and improve quality have resulted in some great cars and trucks.
• Trade-in values are still strong, as good used cars continue to be in high demand.

• Great deals may be harder to come by. Automakers have been under pressure to reduce incentives, those "cash back" or cheap financing offers you hear about in TV ads. And busy dealers may be less willing to cut prices now than they would have been when times were tougher. That could add up to a higher bottom-line price.
• Hot models are harder to find. Because sales of popular cars like the Toyota Prius and Ford Focus have been so strong, the choices available on your local dealer's lot may be limited. You may have to drive farther, or search longer, for the right car in the right color.

Permalink | Email this | Comments

Permalink | Email this | Comments

When you buy your next car, will you know if you're really getting the best deal?

Some of the winners might surprise you.

Topping the brand list was Korea's Kia Motors, a corporate cousin of Hyundai that is a relatively new presence on U.S. shores. But Kia's offerings have been catching on recently, thanks to dramatic designs and good-value pricing -- and apparently, says Kelley, that value continues to show up long after your purchase.

Permalink | Email this | Comments

• Steer clear of Toyotas and Hondas for now. Sure, they're steady, dependable choices. But key models are in especially short supply because of the struggles both automakers had in the wake of last year's tsunami in Japan. That means prices will be extra-high -- but improved reliability across the industry means that there are plenty of other good options to choose from nowadays.
• Consider buying American. General Motors (GM) and Ford (F) both got tarred with a bad quality rep after decades of sub-par products. That means that their cars still tend to depreciate faster than imports, even though both companies have made huge improvements in recent years. This is especially true of Ford, whose more recent products -- cars like the Fusion and Mustang -- are among the best used-car buys out there right now.
• Consider buying new. Buying new gives you more choices, a better warranty, and some peace of mind -- you don't have to worry about hidden damage or other lurking problems. You will pay more for a new car, but the white-hot used-car market means that you'll get more for your trade-in -- and you'll lose less to depreciation in the first year.

Permalink | Email this | Comments

Permalink | Email this | Comments

Not long ago, each time gas prices shot up and car buyers turned their attention to more fuel-efficient models, Ford (F) and the other Detroit automakers would get hammered.

Their strengths were in SUVs, big cars, and pickups -- in other words, gas-hogs. Buyers wanting good mpg numbers tended to look to the imports -- enough to make Toyota's (TM) Corolla and Honda's (HMC) Civic perennial best-sellers.

Meanwhile, the Detroit crew got by with small cars that weren't very good (or profitable). Although good enough to be sold cheap to rental-car companies, they didn't sell well to consumers -- and when they did, it was mostly because they were priced right.

Oh, how times have changed. And they've changed in a big way.

A Focus on Great Compact Cars

Sales figures back up the fact that drivers are shifting to smaller cars and SUVs. But this time, those sales figures don't come with horror stories about losses and layoffs in Detroit.

Instead, we're hearing stories like the one Ford's PR folks were proud to tell on Wednesday: Ford's sales in January were paced by a whopping 60% year-over-year gain for the automaker's compact Focus.

Now, to be fair, the current Focus was introduced last spring -- that comparison is with sales for the old car. And while the old car wasn't bad, exactly, the new one is superb. Engineered by Ford's small-car experts in Germany, and lavished with development resources and advanced technology, the latest Focus is a huge leap forward.

I can attest to this personally, as my wife and I bought one a few months back. It's a great car, quiet and tight, with a surprisingly luxurious interior. And it gets more than 30 miles to the gallon, week in and week out.

It's definitely not a typical Detroit compact of old - in fact, we liked it quite a bit better than the current contenders from the import brands. And given how the Focus's sales figures have shown, we aren't the only buyers who have noticed.

But It's Not Just the Focus (and It's Not Just Ford)

Ford's smallest SUV, the Escape, is also enjoying record sales -- up nearly 24% over (strong) year-ago totals, its best January ever. What's interesting is that unlike the new Focus, the Escape is an older model, set to be replaced in just a few months. But lots of buyers are still choosing it over Toyota's RAV4 and Honda's CR-V.

Ford isn't the only company that's onto something with its recent designs. General Motors (GM) is having success with its own compact, the Chevy Cruze. Introduced just over a year ago, the Cruze has found fans all over the world. For a while last year, it was the best-selling compact in the U.S.

Of course, that was while Toyota and Honda were having trouble producing their entries, as they struggled with parts shortages in the wake of the Japanese earthquake and tsunami last March. But Toyota has largely recovered, with sales up 7% in January -- and the Cruze still managed to post a sales gain of more than 10% on the month, while Corolla sales were actually down.

Detroit Is Back, and Its Small Cars Are Better Than Ever

Toyota's not going anywhere, of course. In most every corner of the market, it remains Detroit's fiercest competitor. Despite its troubles in recent years, Toyota still has a large and loyal following. But Ford has nearly caught up. With its wall-to-wall lineup of excellent cars and trucks, Ford is well-positioned for any shift in the market -- for the first time in a very long time. And more and more buyers are catching on.

And GM? GM's product revival is a few years behind Ford's, a legacy of its collapse and bankruptcy a few years back. And it still has some hard feelings to contend with, thanks to the government bailout that gave it a new lease on life. But its best new products are very good, and the company shows every sign of building on that momentum in coming months.

Long story short: if you're shopping for a new car, be sure to give Detroit's offerings a try. You might be very pleasantly surprised.

At the time of publication, Motley Fool contributor John Rosevear owned shares of Ford and General Motors. You can follow his auto-related musings on Twitter, where he goes by @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford.

Gallery: The 10 Cars That Lost the Most Value

Permalink | Email this | Comments

Toyota (TM) may have lost the U.S. sales lead, but it still leads in one key survey -- and that lead should give fans of the automaker hope as it gears up to retake lost ground.

Toyota retained its crown in the latest edition of Consumer Reports' annual survey of auto-brand perception, a sign that many consumers remain loyal to the company despite its struggles in recent years.

But the survey also showed that homegrown competitor Ford (F) is rapidly closing the gap. And other brands aren't far behind.

Not Your Father's Ford

Every year, Consumer Reports' National Research Center does a survey to understand how consumers perceive car brands in seven different categories: safety, quality, value, performance, environmental friendliness, design and style, and technology and innovation.

Toyota came out on top with a score of 131 in the latest edition, released last week. That's not much of a surprise -- Toyota has led the results for years. But what was somewhat of a surprise is that Ford was close behind with a score of 121, well ahead of Honda (HMC), the third-place finisher.

The dramatic improvements in Ford's products in recent years are old news for industry watchers, but the company has been challenged by consumer perceptions shaped by decades of quality problems from Detroit. Everybody had, or knows someone who had, a Ford (or Chevy or Dodge) from the bad old days that just didn't match up to the standards set by Toyota and Honda. Those memories linger.

Overcoming those perceptions has been a struggle for the Blue Oval brand, despite a whole lineup of fresh products that are on par with -- and in some cases, better than -- the offerings from overseas. Ford's close finish in this latest survey suggests the message might finally be getting through to consumers.

Ford actually led Toyota in safety and value, and tied it (along with Honda) in quality, something that would have been hard to believe just a few years ago. Still, it isn't the only challenger closing in on Toyota.

Other Brands Gathering Strength

Even though third-place Honda has had its own struggles lately, it's no surprise to see that the company is still held in high esteem in consumers' minds. But right on Honda's heels was Chevrolet, just a couple of points behind. That's a sign that the product renaissance at General Motors (GM) -- which is working hard to mirror Ford's rise -- is working.

Chevy's latest small car, the Cruze, topped the U.S. compact-car sales charts for several months in 2011. Other parts of the company's lineup are seeing steady improvements, though it'll be a couple more years before GM completes the product-line overhaul that was interrupted by its bankruptcy.

The premium European brands -- BMW, Mercedes-Benz, and Volvo -- had strong showings as well, as did Hyundai (HYMTF), which got high marks for value. And GM's Cadillac topped the style ratings, while posting an overall score that nestled it right between Volvo and Lexus, a good finish for the resurgent luxury brand.

Newcomer Tesla Motors (TSLA) also made the charts for the first time, scoring high in (no surprise) technology and environmental friendliness. Tesla isn't all that well-known yet, with its first "mass-produced" car still months away, but the magazine noted that its reputation scored well among consumers who were familiar with the brand.

Cars Are Getting Better All Around

As Consumer Reports said in its write-up, "The perceived difference between the top car brands and the challengers is shrinking." As once-dismissed companies from Hyundai to Chrysler continue to bring striking new products to market, and others like Ford go from strength to strength, it's increasingly clear that the gap in quality -- and value -- between the top players and the former laggards is closing fast.

Maybe that's what's most remarkable, after all the turmoil the auto industry has seen in recent years: If you're shopping for a car this year, you may have more good options to choose from than you ever have before.

At the time of publication, Motley Fool contributor John Rosevear owned shares of Ford and General Motors. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford, General Motors, and Tesla Motors. Motley Fool newsletter services have also recommended creating a synthetic long position in Ford.

Permalink | Email this | Comments

Permalink | Email this | Comments

Permalink | Email this | Comments

Are women actually better at buying used cars than men? A company called LeaseTrader, which runs a used-car marketplace for people who want to get in or out of a lease rather than buy, crunched some data and came to just that conclusion.

LeaseTrader found that women who use their service are significantly more likely than men to ask sellers tough questions, evaluate a car's safety features, and have vehicles inspected by mechanics before making a deal.

Men, on the other hand, tended to limit their questions to subjects like engine performance and technology -- and nearly half declined to arrange a pre-purchase inspection by a mechanic, even when buying long-distance.

'Fess up, folks: Are we really surprised?

The Right Way to Buy a Used Car

What women and men both have right is that buying a used car isn't a casual purchase -- it's a big deal, and you need lots of information in order to make the right choice.

It's no surprise that men and women would prioritize the information they need differently. It makes sense that moms who expect to spend a lot of time with kids in the car will ask hard questions about a car's safety. And guys... well, we guys tend to romanticize our cars a bit. We like horsepower and great stereos, so it's a no-brainer that many of us will pay close attention to those aspects of a car's feature list.

Of course, those are stereotypes, and plenty of purchasers on both sides of the gender gap fall outside of those descriptions. But no matter your gender, you'll do a lot better in your used-car hunt if you do your research the right way.

The Two Questions You Must Ask Before Buying

Impulse buys are fine at the mall, but not a good plan when you're spending thousands of dollars on a vehicle that will carry you and your family for several years. Before handing over that check, there are two big, critical questions that need to be answered about any new-to-you car:

1. Is this the right model for me? Do you fit comfortably in the driver's seat? Do your kids fit in back? Does the model have good reliability ratings from Consumer Reports? Are the controls laid out in a way that works for you? Does it have the features and specs -- safety, performance, fuel economy -- that you want and need? Does it feel good to you on the road? Do you like it? (Don't underestimate the importance of that last one. You're planning to live with this thing for several years.)

2. Is this particular car a good one? Does it look like the previous owner took good care of it? Are the door panels, the interior surfaces, the tires in good shape? Are there signs of accident damage? Test drive it: Does it drive well, with no vibrations, rattles or squeaks? Does it accelerate smoothly and stop briskly? Can you live with the color? What does your mechanic think of it?

Answering the first question -- deciding on the kind of car you want to buy -- will require some research to narrow down the possibilities, and probably a few test drives. Don't be afraid to cast your net widely -- while the mainstays from Toyota (TM) and Honda (HMC) mostly deserve their top-drawer reputation for reliability, the best offerings from Ford (F) and General Motors (GM) have been just as good lately -- and can often be had at a better price used.

And the second question? It's always best to check out each car in person -- but nowadays, when so many folks buy cars over the Internet, that's not always possible. But what is possible is to arrange for a pre-purchase inspection by a competent mechanic, something that should always be done whether the car is local to you or far away.

Don't Skimp on This Last Step

Most good mechanics will be happy to do a pre-purchase inspection. If you're buying long-distance and you're an AAA member, the club can help you find a reputable shop that's local to the seller.

Typically, pre-purchase inspections will include basic engine diagnostics, a survey of wear and tear on things like suspension parts, and a check for rust or accident damage; in short, the things you want to know about a used car, but often cannot easily determine yourself.

Expect to spend about $120 or so for an inspection like this. That's not cheap, but it's money well-spent if you're ready to buy, and it's money that both men and women should be ready to lay out to make sure that your new-to-you ride is as good a deal as you hope.

At the time of publication, Motley Fool contributor John Rosevear owned shares of Ford and General Motors. The Motley Fool owns shares of Ford, and Motley Fool newsletter services have recommended buying shares of General Motors and Ford. Motley Fool newsletter services have also recommended creating a synthetic long position in Ford.

Permalink | Email this | Comments

Permalink | Email this | Comments

Permalink | Email this | Comments

Dollar for dollar, what's the best new car in the world?

Opinions vary widely, but if you got 10 professional auto reviewers together -- people who test-drive new cars for a living -- I bet at least seven or eight of them would name BMW's widely-acclaimed 3 Series. And for good reason: It's a stylish, comfortable, practical sedan that drives like a sports car and is built well enough to last a long time.

In its segment (which we might call "entry-level luxury sedans"), the 3 Series is the undisputed global king, both in sales and in reputation. Mercedes-Benz, Audi, Lexus... they've all tried, but none have managed to dethrone the king.

So why does General Motors (GM), of all companies, think it has a chance?

A Car That Covers All the Bases

That question was on a lot of people's minds when GM pulled the wraps off its new Cadillac ATS at the North American International Auto Show in Detroit earlier this week. Sure, the ATS looks like an attractive, well-detailed luxury sedan. It's got great lines with well-done touches of chrome, and the interior looks Cadillac-lush and well made. (That's important: Interiors are something GM had trouble with for a while.) And the ATS is smallish without being small -- it's almost exactly the same size, in every dimension, as the BMW, something that is surely no coincidence.

But does General Motors -- General Motors! -- really think it can compete with BMW?

It's certainly making a serious attempt. GM's PR and marketing folks have been touting the new car's extensive testing on Germany's Nurburgring, one of the most challenging racetracks in the world. The ATS has a sophisticated BMW-like "five-link" rear suspension design, a first for GM, and its engineers have emphasized their careful attention to the car's weight distribution and driving dynamics.



It won't lack for power, either, with three engine choices, including a new two-liter turbo four-banger that puts out 270 horsepower -- better than BMW's equivalent -- while giving over 30 miles per gallon fuel efficiency on the highway.

Simply put, the ATS manages to look stylish and luxurious while hitting all of the car-geek hot buttons that matter when you're trying to compete with the almighty BMW. And I'm willing to bet that when the reviewers finally get their hands on the ATS, they'll declare that it handles quite well -- a lot like the BMW, in fact.

There's just one thing missing...


What Makes This Car a Cadillac?

Think about this: When Ford (F) unveiled its stylish new Fusion sedan on Monday, it became clear that the Blue Oval wasn't just trying to "compete" with Toyota (TM), whose Camry rules that particular class of cars. Plain and simple, Ford was aiming to blow the Camry out of the water, to leapfrog it, to make it look like yesterday's news. And they did it with a car that is clearly a Ford, not an imitation Toyota.

When GM showed its daring, opulent Cadillac Ciel concept last summer, it wasn't just aiming to "compete" with the big, expensive cars that top the product ranges at Mercedes-Benz and BMW. It was aiming to set a new standard. The Ciel isn't a me-too wannabe-German car, it's a Cadillac, grand and imposing and lavish, the kind of Cadillac we haven't seen in ages, right down to its (yes, really) discreet little tailfins.

The Ciel is a very modern-looking car, and it likely represents the future direction of the brand -- long-term. But as modern as it is, a time-traveling car enthusiast could arrive today from 1962, take one look at the Ciel, and know instantly that he was looking at a Cadillac. There's no mistaking its identity.

But what would our time-traveler say about the ATS? It's got German-style proportions, German-style handling, German-style engines, and it's styled to look a lot like its bigger-brother CTS, just as BMW and Audi and Mercedes make their small sedans look like their larger entries.

It's probably going to turn out to be a fine car. But what makes it a Cadillac?

BMW knows what makes the 3 Series a BMW. But until GM knows what makes the ATS a Cadillac, and bakes that into the product, its new little sedan could have a hard road ahead.

At the time of publication, Motley Fool contributor John Rosevear owned shares of General Motors and Ford -- and a Cadillac. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of General Motors and Ford Motor, as well as creating a synthetic long position in Ford Motor.

Permalink | Email this | Comments