My Last Honda

I’ve owned a 2001 Honda Odyssey minivan for about eight years now. Recently the transmission has been kicking when you accelerate and yesterday I went up to Honesdale, PA to visit my son at camp when the check engine light turned on just inside the Pennsylvania state line. I nursed the minivan up to Honesdale and back not knowing what exactly the problem was. I took it to my mechanic this morning and he quickly checked. Turned out the code is P0740 – Torque Converter Control Solenoid. He suggested that I contact Honda and find out, based on the vehicle ID (the VIN) number as to whether it’s under a recall that was announced back in 2002 for the Odyssey minivan. I went onto Honda’s website and logged into the Owner Link and checked. To my delight, it appears that my minivan is covered.

Immediately I called Sport Honda here in Silver Spring and spoke to a service representative. He told me that the extended warranty that Honda issued under that recall (which, by the way, they never notified me about in the past seven years even though I had taken it to them several times for service) was only valid for 7 years and 9 months past the date of purchase. The original owner of the vehicle bought it in October of 2000 (I bought it from them in May of 2001) and that would make the warranty valid until June of 2008 (about the time that this problem started). I was stunned. I had thought that I was going to be able to get this problem solved under this recall warranty only to be told “sorry – your warranty expired a little over a year ago). I had no idea that my vehicle was covered under this warranty nor had I even known about this issue until just now. In fact, Honda never bothered to contact me (although I don’t know if they contacted the original owner who didn’t forward me the information). As it stands the cost of the transmission could well be around $3000 to repair.

As it now appears that I need a new mini-van I am exploring other options. Unfortunately, I cannot seem to be able to get a new minivan under the “cash for clunkers” program. But one thing’s for sure, this has certainly soured me on Honda’s business practices and it has certainly convinced me that I am not getting another Honda ever again. I’ve been happy with my Toyota Prius and I will be looking into getting another Toyota soon.

A Bad Idea Whose Time Hasn’t Come

I recently came across an MSN article that was published recently on how a bill is currently winding its way through the halls of Congress that is essentially a “cash for clunkers” concept to encourage Americans to trade in their old vehicles and buy new ones. The general concept, on the whole, is not bad — American car buyers will get rid of their old, gas-guzzling vehicles and buy more fuel efficient (and hopefully less polluting) cars to replace them. The upshot is that theoretically America’s car fleet will, on the whole, go up in fuel efficiency which means that our gas consumption should, theoretically, go down and therefore our reliance on oil will, theoretically, go down.

On pure face value this is absolutely a “good thing”. However, the way the government is approaching this (and how the interests in Congress are shaping this bill) worries me. The government will offer consumers a $4500 voucher if the vehicle that they purchase gets 10 miles per gallon (mpg) more than the vehicle they are scrapping. If the new vehicle only gets 4 to 9 mpg more then the old one then the voucher is only worth $3500. And that’s just for cars. For light trucks the mileage gain would only have to be 5 mpg and 2 mpg for the respective vouchers.

Ok, yes, it’s an incentive (just like the incentive that sales tax on new vehicles purchased this year between February 17, 2009 and the end of the year will be deductible on your income taxes next year). The idea is to spur the American consumer to go out and “shop” (sound familiar?) and spend money they may not even have on a big ticket item (i.e. durable goods). In theory, Americans buy vehicles, old gas guzzlers are scrapped, car sales — which are about as anemic as they come — are boosted, and the automakers get a bit of a reprieve from the recession.

The problem is that this is money that the American government doesn’t have. Yes, we could just print more money and, voila!, we’ll have the money for this program. But to do so we must tread carefully. We are already seeing the effects of printing more money as the value of the U.S. dollar is declining with respect to other currencies. Other governments are becoming increasingly concerned about their investments (i.e. U.S. Treasury Notes) in the United States and may slow down or stop buying them altogether. With increased dollar circulation we are diluting the value of the dollar and driving inflation. This is what happened in the mid- to late-late 70s and early 80s and it took the Fed quite a bit of time to take enough dollars out of circulation to help stem the tide.

Now, don’t get me wrong, I understand the concept of deficit spending in order to help pull us out of this economic deep dive but I tend to be a fiscal conservative in my overall outlook. Yes, in my opinion, we need to spend on health care and on infrastructure but I see this bill as another congressional way of throwing a lifeline to the auto industry when already two out of the “Big 3” (i.e. G.M. and Chrysler) have already received a huge amount of bailout money and have both declared bankruptcy. The difference here is that this is something that Washington doesn’t have to do. Already the auto makers are doing an enormous amount to try and spur sagging sales. I recently traded in my 1997 Nissan Maxima for a 2009 Toyota Prius because Toyota was offering 0% financing on 2009 Toyota Prius models (the car that just 8 months ago dealers couldn’t even keep on the lots because they were such a hot item). I did it without a government voucher and got a great deal.

There were many other great offers from Toyota as well…I just happened to be in the market for a Prius. And that’s where this bill won’t do much. In the article “Cash in on your gas guzzler” on MSN Catherine Holahan notes

Even if it passes as now written, the bill might not affect sales much. In a recent Kelley Blue Book survey, nearly 40% of car buyers said that the bill wouldn’t spur them to purchase a new vehicle. Only 13% of survey respondents said that they would be “highly motivated” to buy a new car, if the bill passed.

(Holahan, Catherine, “Cash for your gas guzzler“, MSN, May 19, 2009)

And as for environmental impact — in the current form of this bill (it was originally calling for vouchers for new vehicles that “got at least 28 mpg and new SUVs that saw 23 mpg or more.” (Holahan, Catherine, “Cash for your gas guzzler“, MSN, May 19, 2009)) this bill will do little since it has been watered down.

“This will not benefit the environment, but it will help sell a new pickup truck,” said Ann Mesnikoff, the director of green transportation with the Sierra Club, the nation’s largest environmental protection group. “They are trying to make it possible to sell anything under this bill.”

(Holahan, Catherine, “Cash for your gas guzzler“, MSN, May 19, 2009)

The clear winners in this bill are the auto dealers and the auto manufacturers (which is not a bad thing for the auto dealers given the way that G.M. and Chrysler will be cutting thousands of them off in their bankruptcy proceedings). Even the aftermarket parts industry will lose (and so will many Americans who cannot or choose not to buy a new car at this time) as the parts from older vehicles that typically get refurbished and reconditioned for replacement parts are destined for the scrap heap under this bill. Repairing older cars will become more expensive as parts become scarce. The clear losers in this bill are the American taxpayers — both present and future who will have to pay back this additional debt.