Car thoughts for a change

Saving Money on Your Car
Walking isn't the only way to make your car cost you less.
By Motley Fool Staff, Motley Fool, Updated: 8:56 a.m. ET July 20, 2005

Your car can cost you less than it currently does. Here are some money-saving tips:
Minimize your speeding, and follow parking rules. Tickets are costly, and if you end up getting your insurance premiums increased, you'll suffer a double financial whammy. (Speeding also consumes more gas.)

Be insurance-smart. Shop around and make sure you're paying as little for your desired level of coverage as possible. Look into discounts for alarms, short commutes, or safety features. (Check our Insurance Center.)

Spend some time comparing local gas stations and use the ones that offer the lowest prices. Take advantage of special deals that offer you a few cents off your gasoline on certain days. If your car doesn't need premium gas, don't use it. Check out GasPriceWatch, which can help you find low prices. You can also save gas by keeping your RPMs at lower levels. (Below 3,000 is a good target.)

Spend some time finding a good and honest mechanic. Ask friends for referrals. Using a mechanic who inflates his rates -- or worse, recommends unnecessary work -- will cost you.

Keep tires properly inflated, and rotate them on schedule.

Take public transportation when you can. Or walk, when that's practical. Or carpool.

Follow your car's recommended maintenance plan. Skipping oil changes and the like might save you a few dollars now, but it might cost you many more later.

Before you rent a car, verify from your insurance agent whether your policy covers rental cars. If it does, you can say "no thanks" when the car rental agent asks whether you want to buy insurance coverage.

Look into getting new tires at a discount store, such as Costco. The prices are often lower than elsewhere.

Many of these tips come from our Living Below Your Means discussion board, where you can drop by and find thousands of other tips, not to mention good conversation. If you're in the market for a new (or used) car, check out the Fool's how-to area on buying a car, or ask some questions on our Buying and Maintaining a Car discussion board.

Here are two more suggestions, from Fool readers.

From Craig Glaser: "You mentioned changing your oil as recommended. Changing your type of oil could have a much greater impact. I've used synthetic oil for the past 10 years. I change my oil only once a year or every 25,000 miles. Synthetic makes your car more efficient, you produce less waste (since you're not throwing out oil every 3,000 miles), and it saves you a lot of money. My first car in which I used synthetic lasted 156,000 miles. I would probably still have it, but it was totaled in an accident eight years ago. My current car has 136,000 miles, and I plan on keeping it the rest of my life -- hopefully 30 or 40 years!"

From Paul Wyles: "Regularly check your gas mileage -- how many miles you're getting per gallon of gas. If the gas mileage drops, it often indicates that something needs to be repaired. Example(s): The gas mileage dropped on my Dodge Grand Caravan, and I didn't pay attention to it. The engine had allowed a lot of unburned fuel into the exhaust system, which destroyed the catalytic converter, muffler, and resonator. Had I picked up on this earlier, the $600 repair would have been unnecessary, and I would have saved some gas, to boot. The second example involves the same vehicle. This time I paid attention to the reduction in gas mileage. I started to do a tune-up and found a bad spark plug wire. This time it was a $20 repair instead of replacing the entire exhaust system again. Also, I know that summer gas mileage is higher than winter mileage for my vehicles. I use a program to track all vehicle expenses and gas mileage. It tells me when scheduled maintenance is due, and I will notice when gas mileage drops. The program I use is Vehicle Record System, a shareware program that can be used free for up to three or so vehicles and for a registration fee can be used to track additional vehicles."

© 2005 MSNBC.com
URL: http://www.msnbc.msn.com/id/8642375/

Renault's manual overdrive
Anatomy of one of the world's least-expensive cars
By Gail Edmondson, Business Week, Updated: 1:32 p.m. ET July 20, 2005

Step inside Renault's Romanian factory and check out the anatomy of one of the world's least-expensive cars. French automaker Renault has taken a revolutionary approach to building its new $6,000 Logan, combining a simple design with an unorthodox approach to manufacturing.

To get a quantum reduction in costs, Renault went back to basics and tapped Eastern Europe's low labor costs. Instead of a glittering temple of modern manufacturing, the Logan is build in a renovated, 40-year-old factory of formerly state-owned Romanian auto maker Dacia, which the French carmaker bought in 1998.

Lonely robot
At first glance, the body shop and assembly hall appear to be, well, more than a bit dated. Most modern car plants have hundreds of robots, and production lines are nearly silent.

By contrast, there's only one robot in Dacia's vast, noisy assembly hall. Its giant orange arm gracefully applies glue to windshields moving down the production line -- a task that requires absolute precision in the amount squirted on the rubber rim around the glass.

The rest of the work in the factory, which produces some 175,000 cars a year, is handled by 1,060 employees. A visitor walking around the factory nearly bumps elbows with the many workers on the production floor, and fork-lifts beep constantly to clear the aisles.

Pigs, potatoes, passengers
Yet on closer inspection the Dacia plant, where Renault began producing its $6,000 Logan sedan last year, is a symbol of the the global auto industry's changing dynamics. From China to India, new markets beckon, and the concept of a car that can be sold around the world is ever more alluring.

Renault bought the nearly bankrupt Dacia with the goal of designing and building a simple, affordable car for emerging markets, one without the technology-in-overdrive that has pushed prices too high for much of the world's population.

The Logan was conceived with an emphasis on space -- designed to comfortably accomodate "four adults, a pig, 220 pounds of potatoes and a kitchen sink," according to one Logan manager.
Renault originally had no intention of selling the no-frills Logan in the West, but reports of the $6,000 car had consumers demanding it from dealers.

Tried before
Renault finally relented and introduced the Logan to Western Europe in June, where it retails with an extra airbag and a three-year warranty for $9,200. In France, the wait now runs six months.

Renault is hardly the first auto maker to build a car for the world's masses. Other companies such as Fiat have tried. But world-car models have never really caught on. Renault may finally have found the right approach, however.

Renault's designers say the concept wasn't the problem. Rather, it was the approach of trying to strip features off a Western car to make it cheap and attractive in emerging markets. Trouble is, removing passenger-seat airbags and the like doesn't significantly cut costs.

Higher complexity and higher costs are designed into most cars: Consider the number parts used to form a dashboard, electronic controls, and the curvature of the windshield. Redesigning such parts isn't easy or cheap.

Back to the future
Renault set to work designing a model with a $6,000 price tag from scratch. The key was a simple design that reduced manufacturing to basics and allowed for much of the work to be done easily by humans instead of robots.

Design engineers cut the number of welding points from 4,300 to 3,750, for example. The outfit spent $600 million upgrading the 40-year-old plant, which runs 24 hours. Compare that to the investment needed for a highly automated Western factory, which can easily run to $2 billion.

Of course, low labor costs are also crucial. In developing economies like Romania, cheap labor lets auto makers build modern models for prices that haven't been seen for 30 years.

Human touch
The average worker gets paid $240 a month, plus some meal tickets. A June 17 Deutsche Bank report pegged production cost for the Logan at $1,089 per car, less than half the estimated $2,468 for an equivalent Western vehicle like a Volkswagen Golf.

"Humans sometimes offer an advantage when it comes to quality," says Simon Valin, a Spanish-born industrial manager at Dacia, who arrived from Renault's Argentina operations in 2002 to help ramp up the Romanian plant for the Logan. Valin insists that welding quality at Dacia is among the best at Renault. The engines and transmissions are produced on site in Pitesti, and they'll be exported to other Logan sites all over the world. Some 50% of components are produced locally, which is vital to keeping down overall costs.

Getting suppliers to move to Romania and produce in or near Pitesti was key to making the Romanian venture pay off. In the early months after Renault took over Dacia, suppliers were hesitant to come to Romania," says Renault Chairman Louis Schweitzer. But the French automaker's huge investment finally lured companies such as Continental, Valeo, and others.

World car
Valin picked up the pace in 2002, buffing engineering, quality, manufacturing, and safety processes for the Logan launch. Renault also invested heavily in technology where it was needed, especially in state-of-the-art quality-control and testing machinery.

There is one problem with the low-cost, high-quality Logan that no one anticipated. Runaway demand for the Logan in Western Europe has Renault managers scrambling to find a way to produce more of the cut-rate model quickly.

The company is now cloning its Romanian approach at low-cost Logan production sites around the world. A plant in Russia started operations in June, and Morocco and Colombia ramp up later this year, followed by Iran, India, Brazil, and China in 2006 or beyond.

Cheap rides
"You could call it 'viral manufacturing,'" says Christoph Sturmer, senior analyst at market researcher Global Insight in Frankfurt. "The cost and technology are so simple, and the car is easy to put together, you don't need robots. And the investment in manufacturing is relatively low, so you can have factories all over that don't have to produce huge volumes to finance themselves."

Renault's idea to blend ingenuity with simple manufacturing is an innovation that is already forcing rivals to change gears. Volkswagen is studying a concept to produce a small car in China for $3,600, and Indian automaker Tata Motor has said it may try to conceive a $2,400 car.
Those models are years away from hitting the market, though. When it comes to pioneering no-frill cars, Renault is setting the pace.

Copyright © 2005 The McGraw-Hill Companies Inc. All rights reserved.

URL: http://www.msnbc.msn.com/id/8644818/

Is smaller better for U.S. car consumers?
ZAP betting on Smart Car’s success, but some observers skeptical
By Roland Jones, Reporter, MSNBC, Updated: 6:52 p.m. ET July 21, 2005

In America everything, they say, is bigger. But when it comes to automobiles, is the smaller, more fuel-efficient car about to become the next big thing in motoring?
ZAP certainly hopes so.

The Santa Rosa, Calif.,-based manufacturer of electric motor powered bicycles and power-assisted kit cars plans to sell DaimlerChrysler’s Smart Cars — first launched in Europe and now seen on the roads of most European nations and also in Africa, Asia, Canada and Mexico — in the United States, seeing a big niche market for very small cars.

The thinking is, with gasoline prices hitting record highs and traffic in the nation’s major cities becoming increasingly congested, Americans are likely to buy fewer gas-guzzling SUVs and trucks and gravitate toward smaller, more efficient vehicles like the Smart Car — a mere 8 feet, 2 inches long and just over 5 feet tall — according to ZAP’s CEO Steve Schneider.

“The market timing for what we are doing couldn’t be better,” Schneider said. “Fuel prices are at all time highs, and social responsibility about global warming is something that’s more in the mainstream and not a left-wing thing,” he added. “And there’s the issue of our dependency on foreign oil too — all this makes our business plan very timely.”

ZAP’s plan is to sell 15,000 Smart Cars updated to American road standards through its U.S. distribution network of dealers. Schneider said he already has some $2 billion in orders, far exceeding his initial goal of $300 million, and is preparing the 2005 model year Smart Cars — the first it intends to Americanize and offer through its dealer network by September.

DaimlerChrysler halted its plan to bring the tiny car stateside, and so ZAP has worked instead to buy the vehicles from a network of independent European suppliers, updating them for U.S. use to meet American safety and pollution standards. ZAP plans to sell the coupe version of the car for around $21,000 and the convertible for $25,000. In Europe, the Smart Car coupe sells for about $15,000 and the convertible for $18,000.

At about half the size of most mid-size cars, the two-seater, ForTwo Smart Car is powered by a three-cylinder engine and big enough to hold two adult passengers. It does 50 miles to the gallon and has a cruising speed of about 85 miles per hour.

But the question of whether your average American is ready to swap an SUV for a dinky smart car remains uncertain, according to industry experts.

“Not many people are scared into buying a fuel efficient vehicle just yet,” said Tom Appel, editor of Consumer Guide Automotive, an auto buyer’s guide. “Americans are avoiding cars and trucks that get very bad fuel efficiency, like GM’s Tahoe and Yukon, but they are not really going for cars that give very good fuel efficiency,” he added. “Fuel economy is not the foremost consideration for American buyers — we’re getting used to the price of gas.”

Scott Miller, CEO of Detroit-based Synovate Motoresearch, a division of Chicago-based market research firm Synovate, says his research shows fuel efficiency is not a primary concern for U.S. consumers, who are more concerned with style and space. However, if energy prices spike they could quickly warm up to vehicles like the Smart Car, he said.

“In the U.S., we have not hit that threshold yet, but we don’t know where that point is, and one thing people don’t know for sure is what will happen with energy prices,” said Miller. “There is a tipping point, and if people see oil prices move up to $100 a barrel, or the price of gasoline at $4 a gallon, I think their priorities will start to change.”

At the moment there is no sign of a desire for a trade-off, he added.

“Everyone wants a fuel-efficient vehicle, but very few people want to give up styling, or cargo space, or acceleration to get it, so you’re seeing manufacturers putting fuel-efficient hybrid technologies into their existing vehicles” Miller said. “It’s all about trade-offs, and right now you don’t have the market dynamics to push more fuel efficient vehicles.”

While there is no overall U.S. trend toward smaller cars, they might find a market in large U.S. cities, where consumers make short trips and struggle to find parking spaces, or among more environmentally-conscious younger consumers said Phil Reed, consumer advice editor at car buyer's guide Edmunds.com.

“The Toyota Prius is a good example of a car that is both fuel efficient and very popular,” Reed said. “It has gone beyond the environmentalist and it’s now selling to people who want to be seen to be green; people who want to be prepared for an uncertain future with higher gas prices.”

One challenge for the Smart Car is sex appeal, said David Thomas, online editor at MPH Car Magazine. While the chic, retro Mini Cooper has successfully bucked the American trend toward big, powerful cars, like trucks and SUVs, the Smart Car lacks the same image, he said, and so is unlikely to garner the same broad U.S. appeal.

“If you drive a Smart Car you are making a statement, but is it the right statement?” he said.

“The Mini has a sporty feel to it; there’s a performance aspect. It’s done really well here in the U.S. and it’s selling at a premium price. For Americans, status is a big deal and the Smart Car doesn’t have the same connotation to it. That’s the European-American divide right there.”

© 2005 MSNBC Interactive
URL: http://www.msnbc.msn.com/id/8645488/