Behind The Desk - The Big "R" Word

Mom told me about the four letter words I should not use, but I know a word that is even worse than any four letter word I could come up with, RECESSION. No one wants to talk about it, everyone knows what it means and yes everyone is feeling it.

I did some research to see how bad it really is... in July of 2007 the price for a gallon of gasoline was $2.87, today it’s $3.37 that’s a 50 cent increase in less than a year equal to about a 15% increase. The average price for a gallon of milk was $2.64 last year and now it’s $3.50, that’s a 96 cent increase which is over a 27% increase.

Did you know… my good friend Ed Wallace tells me the that the cost of living index excludes fuel cost and food from the index that measures inflation…no wonder the numbers we hear about don’t support reality.

Here’s the good news… car manufacturers have held the line on pricing. The average annual price increase is about 5%, however if we look at one of the most popular vehicles, the Honda Accord LX 4 cyl automatic, we see that in 2007 its MSRP was $21,560, the 2008 Window Sticker is $21,795 and that's only a $235 increase which is less than a 2% increase. Domestics have (as they have in the past ) added substantial incentives making their 2008 vehicles equal to or lower than 2007 prices. Remember GM’s rollback on pricing to remove rebates… didn’t work did it.

A very good thing to keep in mind is that leasing removes the risk of loss at the end of the lease, owning a vehicle getting less than 20 miles per gallon doesn’t look so good now. I’m driving a diesel getting 14 miles per gallon at $4.00 a gallon, however I lease and know I won’t take the risk of loss at the end of my term. Check out leasing, it will most likely save you money and some pretty big headaches.

Ray Stafin
President
Manufacturers Auto Leasing