Buying A Car in America - the Online Way

Michael will graduate from Trinity College May 23rd, which is next week, and will be home this summer before he starts graduate school at UC Irvine in the fall. We need a car soon. I need it to commute. We don't need it to haul the whole family around any more. We are in a different period of our family life. The result is a humble Honda Civic LX with automatic transmission. Its impressive 36 miles/gallon high way mileage is definitely key in choosing this car. Actually Joseph bought the same model two years ago. Our general impression is not bad so far.

We have been a Toyota and Honda family for a long time. We have been un-American since 1980. With the historical context of World War II, we have been un-Chinese as well. The reliability of these Japanese cars and their design for small-frame drivers like me in the early 80's made me a loyal customer to Toyota and Honda.

Toyota's unintended acceleration fiasco in 2010 affected this purchasing decision. The most disappointing aspect of this incident is the alleged management coverup. Our foundation of the trust and loyalty was seriously shaken. The so-called defect was actually statistically not a big issue to me.

We have never been a big fan of showroom shopping. We never liked the car salesmen/saleswomen and their pitches. We bought cars through online/Internet portals for the last 10 years. This time, we did more than just research and comparison shop online. We even closed the deal through emails by responding to one of the email quotes. The basic information and options are available directly from Honda as well as from Edmunds.com, an Internet portal. Jeanet spec'ed out the model, including features such as manual transmission and color, then the portal did the rest by sending out emails to nearby dealers for quotes. We liked Larry Hopkins Honda best as they responded quickly with a few models from its Internet manager. There were no phone calls like others who really wanted to "talk" and haggle with you in person. We were surprised to see the so-called "manufacturer's rebate" of $1000, and that made their deal super attractive. We could not find the manual transmission (stick shift) we liked, but automatic transmission would do since the price was right. Once Jeanet confirmed the deal from Davis (west of Sacramento), I called the manager to see the car since I was in the Bay Area. Actually I had a chance to drive the "exact" car from the overflow lot a few miles away back to the dealership. This was the test drive we needed, and that was all. The rest was paperwork. Like always, the finance department tried to sell us something. Years ago, they used to sell extra under-coating, an alarm system, an extended warranty, and so on. These days they like to be in the insurance business, e.g., in this case, $2100 for 8 years or 120,000 miles, whichever comes first, for a full warranty of all defects and repairs. Jeanet turned that down in no time over the phone :-) Here is the cost information.

Honda web site data for 2010 Civic LX model
Manufacturer's suggested retail price: manual transmission $17605.00 and automatic transmission $18405.00

For the car I got, the sticker has the manufacturer's suggested retail price of $18405.00
Destination and handling: $710.00
Total Vehicle Price: $19115.00

Final cost breakdown data for us
Internet manager's offer: base price $15966.00 (it is $3149 off sticker)
Document Preparation Fee: $55.00
Sales Tax: $1481.94
DMV Electronic Filing Fee: $29.00
Subtotal: $17531.94
Amount Paid to Public Officials: $278.75
a) License Fees: $183.00
b) Registration/Transfer/Titling Fees $87.00
c) California Tire Fees: $8.75
Grand Total (for my check): $17810.69

What about auto insurance? It sure took another bite out of the family budget. My Farmers insurance agent was quick to provide all necessary paperwork while I drove the new car around with a temporary sticker for the license plate. Here is the auto insurance coverage for the new car:
1) comprehensive coverage with $1000 deductible,
2) collision coverage with $1000 deductible,
3) liability, each person bodily injury $500,000, each occurrence bodily injury $500,000, each occurrence property damage $100,000,
4) uninsured motorist, each person bodily injury $500,000, each occurrence bodily injury $500,000,
the half-year insurance premium is $294.20. It is about $1.60 each day.

The cost for a similar car in China is slightly higher. The 2009 Civic LXi automatic transmission is about $20,200 (137,800 RMB). This one is actually "made in China" with a Japanese design. This is not an apple-to-apple comparison since the exact details of what the LXi model entails can be different from that of US LX model. There is no 2010 model on the Chinese market, which I attribute to cultural differences. The US market sells 2010 cars from September 2009 to about August 2010. It focuses on the year it gets sold and used, a forward-looking attitude with a spin of "newness". The Chinese consumers seem to focus on the year the car is manufactured, a realistic attitude with a spin of "truthfulness".

Buying a car in America is easy and efficient, and it is a good experience for me. When I get more money, I'll treat myself nice next time with a slightly more luxurious model :-)