Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, September 3, 1995 TAG: 9509010038
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: S.D. HARRINGTON STAFF WRITER
DATELINE: LENGTH: Medium
Already, Ford Motor Co. has been a target for its competitors by raising the price of its new Taurus, a model previously praised for its affordability. The GL model, for instance, will cost $19,390, about $620 more than 1995 models.
Saturn also raised prices by an average of 2.9 percent ranging from $10,885 to $12,685 for base prices on its more round and roomier design.
Bill Johnson, owner of Magic City Ford in Roanoke, says the price increases are inevitable in an industry where safety is demanded by consumers and adds costly new equipment.
"Prices will go up this year as they go up every year," he said, with safety being a major factor. "Public demand is for more safety."
One way consumers have dealt with price increases in recent years is through leasing instead of buying.
When a consumer leases a car for two to three years, he is paying for the use of that car for a specific amount of time, said Mike Cox, new-car sales manager at Hart Motor Co., a Salem Oldsmobile and GMC Truck dealer.
The monthly payments for lease contracts generally are lower than monthly payments toward purchasing a car.
"If you decide you're going to have a car payment for the rest of your life, I think it's a good way to go," said Fred McElmurray, general manager of Saturn of the Roanoke Valley in Salem.
Johnson said that as automobile prices escalate, so does the length of time a consumer can finance a car.
"When someone goes out on 72-month financing, they're not really doing themselves, or the banks, a favor," he said.
If an automobile that has been financed over a long period is traded in after a few years, Cox said, the owner sometimes doesn't have enough equity to trade for a comparable car.
"Leasing is a way to get the car they used to get," he said.
But Bob Kaplan, vice president of Dominion Dodge, said leasing does have its downside.
Government regulations do not require full disclosure of all financial details, such as a clear overall price of the car, on a leasing contract as it does on sales documents, he said.
That means there's opportunity for dealers who aren't reputable to use unfair practices, Kaplan said. He believes government regulations should require leases to be clearer to the consumer.
Kaplan said he sees other alternatives to financing becoming popular, such as Chrysler Corp.'s new Gold Key Plus.
"It differs from leasing in that you still own the car," he said. When the contracted time of ownership for the car expires, Kaplan said, the owner has an option to buy the car or he can turn it in.
It's "an alternative, creative way" to finance, he said. "It has benefits of ownership and some benefits of leasing."
Unlike a lease, the consumer can trade the automobile in for another any time during the contract, he said. "You can't trade a lease vehicle in during a lease term."
by CNB