How To Tell If You Should Buy an American Car

Look for deals, but beware the best bargains.


America's bankrupt automakers have an unusual pitchman: President Obama. "If you are considering buying a car, I hope it will be an American car," Obama said earlier this year. That might sound patriotic, but Obama has an ulterior motive. The government now owns a big chunk of General Motors and Chrysler, so it wants to make sure the struggling automakers move the metal.

It's not a desperate plea. Even as GM has tumbled into bankruptcy, its products have improved and now include a few of the industry's top-rated vehicles. Chrysler's product lineup is still weak, but all-American designs like the Dodge Charger and Jeep Wrangler have a kind of timeless appeal--and might suddenly be cheap. Ford's cars are getting better, too, and as the only American automaker that's not on the government dole, it may be the obvious choice for buyers who want to buy from a U.S. company without risking trouble. Some Americans who have shunned domestic cars may even want to help out the home team. Here's how to decide whether to go domestic:

Evaluate the model, not the manufacturer. While quality has improved in Detroit, it's still spotty. Some newer models, such as the Chevrolet Malibu, GMC Acadia, and Ford Fusion, get high marks from reviewers. And a few vehicles--the new Chevy Camaro and the Jeep Wrangler, for example--offer classic American attributes that seem downright silly when importers try to copy them.

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But other domestic models, like the aging Chevy Cobalt and the middling Chrysler Sebring, are also-rans. And highly regarded carmakers like Toyota and Honda produce a few duds, too. Resources like U.S. News's Best Car rankings and Consumer Reports will help you gauge the appeal and reliability of individual models, regardless of the parent company.

Beware the best bargains. With sales down 40 percent from their peak, it's a buyer's market. And there are bound to be some fire sales through the summer as GM and Chrysler, in particular, shutter dealers and reduce bloated inventories. But a car that's cheap now will still be cheap if you try to sell it in a few years, when lots of other people who got similar deals will also be selling. And a bargain today could end up costing you more in repairs and aggravation if its quality isn't up to snuff. Instead of chasing "cash on the hood," it's better to identify a few models you truly want, price them out, and then bargain hard with the dealer. There are a number of great vehicles in virtually every category, so if the price for one seems too high, try another.

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Discount discontinued models. The best deals will likely be on models the automakers plan to stop building. And there are going to be a lot more of those than usual. GM, for instance, plans to close its Pontiac division and sell Saturn, Saab, and Hummer. Chrysler will probably stop making a number of its slow-selling sedans. There are rumors that Ford plans to wind down its Mercury division. Some discontinued models might be a good deal at the right price, since they're similar to other models and dealers ought to be able to service them easily. But if Pontiac doesn't exist in five years, you might have a hard time selling that '09 G6 you thought was a steal. Carmakers and dealers don't always want you to know when a vehicle has been discontinued, since that makes the car seem less desirable. So ask the dealer--two or three times--then do a Web search to double-check.

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Think about service and warranties. More than 3,000 GM, Chrysler, and Ford dealers will disappear over the next year or so. That's not as tragic as some headlines suggest, since each of those automakers will still have more dealers than Toyota or Honda. But ask about the dealer's future. If it's closing, find out the location of the closest surviving dealership so you know where you'll have to go for service. The government has pledged to back GM and Chrysler warranties if either company should completely liquidate. That seems unlikely at this point, but the government hasn't explained how a federal warranty program would work. Some buyers may not want to risk dealing with government bureaucracy to get their cars fixed. Keep in mind, too, that while many mechanics can service your car, warranty and recall repairs usually need to be done at a dealership.

 [See how buying a car is going to change.]

Don't forget about gas prices. They're fairly low now, especially compared with last summer's dispiriting $4-a-gallon pump prices. But many energy analysts think gas prices will spike again as the recession winds down and demand for oil goes back up. Even if that's two or three years from now, you're still likely to be driving a car you buy or lease this year. The Detroit Three offer some of the best big SUVs on the market, but their smaller cars remain a step behind. Anybody determined to buy a top-shelf American economy car might want to wait until next year, when promising new thrift-mobiles like the Chevy Cruze and Ford Fiesta are due.

[See why foreign automakers are more “domestic” than Detroit.]

Make sure you know which cars are truly "American." The Ford Fusion and Chevy HHR are assembled in Mexico. The Buick Lacrosse, Chevy Impala, and new Camaro--supposedly a quintessential American muscle car--are built in Canada. About one third of all "American" cars are actually built in Canada or Mexico. Meanwhile, the Honda Accord, Toyota Camry, Mazda 6, and a lot of other "foreign" cars are assembled in the United States. In fact, the forecasting firm CSM Worldwide predicts that by 2010, foreign-based automakers will build more cars at U.S. auto plants than GM, Ford, and Chrysler. To find out where a car was assembled and where the major components come from, check out the fine print on the window sticker. It may change your idea of what, exactly, constitutes the home team.

General Motors
  • Rick Newman

    Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success and the co-author of two other books. Follow him on Twitter or e-mail him at

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