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Wheels and Deals

The 2006 vehicles hit the road with more power, better options . . . and lower prices.
December 1, 2005
URL: http://www.entrepreneur.com/article/81114

With 2006 on the doorstep, it could be one of the best years to buy light commercial vehicles for your business. Ford and General Motors are lowering prices on some of their new models, and there are plenty of incentive programs available if you're in the market for a fleet. But before you put your money on the table, let's take a look at the trends and changes in store for commercial vehicles in 2006.

Dodge, Ford and GM dominate the light trucks/commercial vehicles market this year, with Toyota leading the imports and Honda debuting its new half-ton Ridgeline. Honda's first pickup, the four-door Ridgeline, has already earned the best rollover resistance rating from the National Highway Traffic Safety Administration. Ford's F-150 garnered a five-star frontal crash rating from the NHTSA, and the company's bestselling compact pickup, the Ranger, has more choices of packages and powertrains. Another new import is Mitsubishi's midsize Raider pickup, in extended and double-cab versions. And GM's top-selling Silverado is updated with a new extended cab/short box model, more towing power and a two-wheel drive model.

For 2006, Nissan adds an optional vehicle dynamic control system with locking differential and a tow package to its Titan, and a power package is offered on the Frontier King Cab XE. A unique crew cab is a perk from Chevrolet, whose Avalanche bed and cab are integrated.

There's also more room for passengers in pickups. Dodge's massive six-seater Megacab boasts the biggest cab ever built, while Honda's five-seater Ridgeline boasts an integrated cab and bed. GMC's Sierra adds an extended cab/short box and a two-wheel drive/four-wheel drive SL crew cab to its 2006 lineup, and its Duramax 6600 V-8 turbo-diesel engine is now available on the Savana and Sierra. Dodge's Dakota Club Cab has full-swing access doors and a best-in-class tow rating. All these factors point to vehicles that can handle extra cargo and additional crews, which could preclude having to buy two trucks instead of one.

Fuel economy savings in 2006 come from Dodge's eight-passenger Durango SUV and Ram 1500 pickup, which shut off four cylinders in their V-8 engines when not needed. Dodge's Dakota pickup line expands with four new high-performance models, and diesels are showing up as options in Ford's E-150 Wagon, E-350 Wagon and E-350 Super Duty Extended Wagon. Jeep reports that demand for its diesel-powered Liberty SUV is outstripping supply.

Manufacturers consider conversion vans an untapped market segment and they're pursuing it with more welcoming and luxurious interiors with leather seats, front and rear air conditioning, and sedan-like driver compartments. Ford's E-Series and Dodge's Sprinter vans offer a greater variety of interior furnishings and upfits, easier access and low step-in heights. GM's full-size Uplander Passenger and Cargo crossover sport vans are ideal for fleet and commercial buyers who are looking for smaller, more nimble vehicles. Some work-vehicle manufacturers are replacing carpeting with hard rubber flooring that can be hosed down. Dodge's Caravan cargo van has commercial suspension, so carrying heavier loads won't mean sacrificing a comfortable ride, and Chevrolet Express and GMC Savana buyers can even add a slide-out sofa and reading lights for long hauls.

GM made major changes to its minivan group in 2005, retiring the Chevrolet Astro and the GMC Safari. However, GM plans three new minivans by 2009 and is already selling the mid-van crossovers Buick Terraza, Chevrolet Uplander and Pontiac Montana SV6. Chrysler and Dodge have made a few changes to the Town & Country and Grand Caravan, including better access to storage bins.

Toyota has a boxy new SUV, the FJ Cruiser, and Mazda steps up with a six-seat microvan, the Mazda5. Hummer adds a more affordable, smaller H3. Want a less commercial-looking delivery vehicle? Check out the Jaguar X-Type Superwagon, Mercedes-Benz's gigantic new R-Class SUV/ wagon, and Chevrolet's HHR SUV. Upscale SUVs include Buick's Rainier and Rendezvous, and Land Rover's Freelander.

Federal tax credits are on the menu for hybrids, reaching as much as $2,000 per vehicle. Eligible choices include the Ford Escape, the GMC Sierra, the Lexus RX 400h, the Mercury Mariner and the Toyota Highlander. An even higher credit, up to $3,400, is available beginning next month if you buy newer diesel-powered vehicles. Credits are based on the vehicle's weight, fuel efficiency rating and emissions level. Another benefit: Hybrid vehicle drivers with no passengers can now use carpool lanes.

In the power department, 46 percent of Dodge buyers are opting for HEMI engines that are available in several light-duty trucks, including the Ram 1500. The Dodge Ram SRT has a Viper-powered V-10 engine. With all these changes--and choices--you're sure to find the best vehicle for your business in 2006.

Get on Your Fleet
Commercial fleet management programs are friendlier in 2006, especially to small businesses. Over 14 million companies, from florists to giant re-tailers, own business vehicles, and auto-makers are eager to match up your light-duty truck needs and manage their operations for you. Saving busy business owners time and effort, these programs take over the day-to-day running of your fleet vehicles. Whether a van needs scheduled brake testing, a pickup needs an oil change, or it's the end of the month and you need to figure out the financial costs of keeping your fleet up and running, the management program kicks in and reports to you. Once you've signed up, you can manage your transactions online and receive copies of your vehicles' travel, financial and repair records. Automakers are accommodating even the smallest number of fleet vehicles to qualify for fleet management services. Most accept five trucks, and some as few as two. Toyota's fleet policy is 10 or more. Almost all automakers offer incentive programs for signing up.

Programs are geared to specific needs and can be custom-tailored to your business. GM has several options, including FleetTrac, which takes charge of the day-to-day monitoring of your fleet. Their Fleet Service Card allows entrepreneurs to decide which of their employees are authorized to buy what products and services within set limits, provides an analysis of fueling and maintenance costs to identify operating inefficiencies, and spots irregularities in use.

Verizon Wireless debuts Fleet Administrator, a turnkey program for small and midsize businesses. The company installs a $550 wireless device in fleet vehicles along with software for your office computer. The program tracks your vehicles at all times, helping to improve your operations and use of transportation, all for $50 a month.

To get started, both fleet and commercial customers can access auto manufacturers' easy-to-navigate websites and learn about every aspect of how they manage and serve a fleet, as well as how to buy need-appropriate fleet vehicles. Manufacturers' websites detail one-stop service information and maintenance programs as well as provide general advice. GM's site provides a new personal customer-service number you can call if you need an answer quickly. Log on to www.fleet.chrysler.com , www.fleet.ford.com , www.gmfleet.com and www.fleet.toyota.com for more specific details. In addition to warranty programs from dealers, there are independent fleet-management companies you can find online. Be sure to check out their credentials.

Showing Serious Incentive
Automakers' incentives hit a high earlier this year. Chrysler, Ford and GM averaged $3,942 per vehicle, with full-size SUVs averaging incentives of $5,164, according to www.edmunds.com . Those very popular employee-discount programs for everyone may have ended by now, but buyers have become accustomed to such deals, and small-business owners in particular welcome them. While rebates and cash-back promotions come and go weekly and monthly (check your local newspaper), fortunately, fleet incentives are usually constant and negotiable. At Ford, your fleet ID number entitles you to off-invoice incentives and other benefits. Dodge offers $3,000 off its 2006 Ram and $1,000 off the MegaCab, and Toyota slices $2,000 off the 2006 Tundra V-8. And don't forget that several states offer incentives for hybrid light-duty trucks. In New Jersey, it's up to $4,000.

Vans, Wilder

Almost as easy as furnishing a warehouse or office, customizing the interior of a van is simply a matter of selecting adjustable shelves, bins, drawers, workbenches, cabinets and more. The choices in 2006 include wood, metal or plastic racks; cargo organizers; overhead and removable bins; ladder racks and panels; and special seating configurations.

Many basic equipment packages are free for qualified buyers, such as racks and bins in the Ford E-Series, and a storage bin system in GMC's Savana. Under GM's Commercial Business Choice Program, bin packages and ladder racks are complimentary. Ford's Commercial Connection Program supplies a no-charge package that includes a full partition, shelf units and drawers. Other programs provide protective, padded wall and ceiling paneling, and there are packages specifically designed for electrical contractors, delivery drivers and others.

If your van is used as an on-site workshop, you can order built-in shelves and storage lockers with outside drop-down doors, which can be propped open with support rods for easy access from the outside.

Need your van fitted with custom partitions, windowless side panels or a rear door? GM's fleet and commercial program has advice on matching up specific furnishings and vehicles. Ford's catalog of steel shelving, drawers and cabinets includes a safety partition that allows access to the back cargo area from the driver's compartment. If your freight requires extra height, you can get a higher ceiling in Dodge's Sprinter. Dodge Caravan's dual sliding doors offer a variety of glass and panel configurations for utility and visibility. If you don't need swing-out doors on GMC's Savana conversion van, you can opt for the 60/40-split left-hand, side-hinged doors for flexible loading.

While it is more convenient to order upfits when buying your new vehicle, some entrepreneurs find that their needs change as their businesses expand, and they need to add upfits later. In addition to your local dealer, several independent aftermarket companies can handle the modifications. Look for websites such as www.adriansteel.com and www.inlad.com, which are suppliers to Dodge, Ford and GM. If you need tools and equipment instead of upfits, GM's business fleet and commercial customers are offered a $500 gift card from Lowe's Home Improvement, or up to $1,000 off the vehicle's purchase or lease price under the Business Choice plan.

Play It Safe
Keeping vehicles on the road and in good working order so your business doesn't suffer can depend on the kind of warranty and service program your vehicles carry. Study the fine print in warranty and service policies when buying or leasing your new or used business vehicles. Standard warranties and service contracts cover most major components, such as the engine, transmission, steering, suspension and electrical systems. Emissions are usually covered for five years or 50,000 miles. Rust and corrosion can be a concern: Toyota's warranties cover corrosion perforations for 60 months with unlimited mileage.

New vehicle warranty periods remain, on average, the same for 2006 as they were in 2005, except for hybrids. With the introduction of gasoline/electric models, most companies carry longer warranties on their hybrid components. Ford's Escape Hybrid has a standard warranty for three years or 36,000 miles bumper to bumper, plus a warranty for eight years or 100,000 miles on its nickel-metal-hydride battery. GM's Duramax diesel engine is covered for five years or 100,000 miles, and many Chrysler and Dodge light trucks are covered for seven years or 70,000 miles. The Mitsubishi Raider pickup is backed by a five-year or 60,000-mile bumper-to-bumper warranty.

Fleet vehicles have exceptionally comprehensive warranties. GM's Limited Warranty protects the entire vehicle, including tires, for a period of three years or 36,000 miles. There is no deductible for repairs, and the contract also covers sheet-metal corrosion for six years or 100,000 miles as well as towing costs.

If your warranty runs out and you plan to keep your vehicles, you can buy an extended warranty to pick up coverage when the original warranty expires. This is particularly important if your certified pre-owned vehicles' first-owner warranty is not transferable, or the first warranty is about to lapse. When buying an extended warranty, check for deductibles, which can be budget-busters, and be aware that the price is negotiable. Ask if you must pay for repairs upfront and wait for reimbursement, even if the vehicles are covered by a warranty.

Not all dealers provide warranties backed by the manufacturer, but if you own a Ford truck, for example, you can request Ford's Extended Service Plan rather than sign up for an aftermarket contract that a dealer may prefer.

Extended warranties are also sold by independent companies, such as www.warrantydirect.com, and are great for comparing quotes. While bypassing your local dealer can be risky if you want to be guaranteed genuine factory replacement parts, some extended warranties can be contracted for the length of time and mileage you specify. But make sure they can be honored at your brand's dealerships nationwide.

Unless your vehicles are covered by fleet programs, a service contract may suit your needs better than an extended warranty. Service contracts can be purchased anytime, not only when you buy the vehicle, although they may not be factory-backed like extended warranties usually are. Some of the least expensive service contracts are offered by insurance companies, but again, read the fine print and know what the deductibles are.

Dodge has a Business Link priority service program for small businesses that provides extended-hours repairs, free loaners and no enrollment fee, even if you don't buy a vehicle. Nissan's programs include a choice of bronze, silver or gold coverage that provides service and preventive maintenance every three or six months, and three plans for certified pre-owned vehicles.

Take It Easy

Negative equity could be adversely affecting your business. Kelley Blue Book's market research shows buyers who financed with little or no money down and for a six- or seven-year term find they owe more than the vehicles are worth, piling on debt.

Researching financing options is a snap if you know how to navigate the internet, and shopping around and arming yourself with information before you visit the dealership can save you percentage points in the long run. Find out if you qualify for your own bank or union loan, and know your credit score so you're prepared for high financing rates if your score is low.

Some business owners use credit cards for down payments on vehicles. OPEN from American Express provides its Platinum Business FreedomPass card users with a credit line up to $50,000 and no annual fee. If your employees use the cards for purchases such as fuel, repairs and other business items, you earn points.

Fleet and commercial customers at GM have an edge with a Business Choice card that offers incentives, promotions and credit, including 3 percent off GM vehicles. Targeted at small businesses that buy or lease vehicles, Chase Business Card offers more benefits, including an expense-management tool that has spending limits for employees.

General Motors Acceptance Corp. offers several fleet-financing options. The Commercial SmartLease program allows customers to pay for only the time period they expect to use the vehicle during the lease term, plus a rent charge, taxes and fees. The advantage of this over traditional purchase financing is that it lowers monthly payments for better management of your cash. There are no resales or trade-ins to worry about, and there could be tax benefits. Another GMAC plan, ComTRAC, allows qualified buy or lease customers to select specialized upfits in the vehicles. Unlimited mileage is offered, and there are no excess wear-and-tear charges, which are often a blow to the budget.

Car companies have their own financing arms. Ford's commercial credit lending arm at www.fordcredit.com has many financing programs, including flexible term limits, simple billing systems and statements, and a no-float period after payments are received. Ford's CommercialLeasePlus and CommercialLease both offer open- and closed-end lease lending programs with tax advantages.

At Chrysler, the Business Vehicle Finance Group provides custom financing packages. The group offers payment plans to suit your business cycle, with delayed first payments, token payments, and balloon or accelerated payments.

Several independent financing services will help businesses lease or buy. Primus Commercial Lending offers an open-end leasing program geared specifically toward the commercial customer, generally with no down payment, flexible terms and residuals, and consolidated monthly billing. Another lender, PHH Arval, works with businesses to tailor a financing program with several funding choices, such as a floating funding source that allows you to switch to another rate for the remainder of your vehicles' service lives, or a one-time option to fix the rate of interest on a vehicle-by-vehicle basis.

Insurance for Less
A clean driving record is one of the quickest ways to keep insurance costs down, as are safety features on your vehicles. A higher deductible is a third way to lower premiums. Ask for discounts, shop around, and check out websites such as www.intellichoice.com and www.insweb.com, where you can compare quotes. The Insurance Information Institute advises checking insurance fees before buying a vehicle. Another company, www.fleetriskadvisors.com, keeps tabs on drivers and estimates their cost to your business with regard to risk and profitability. One client found that newer hires, rather than long-term employees, were less of a driving risk. Many insurance companies offer low-mileage discounts. If you're leasing, consider gap insurance that covers the difference between what your insurance company pays if your vehicle is totaled or stolen and what you owe the finance company on the vehicle.

At Your Service
If you own or lease a fleet, your local dealership is the obvious choice for servicing your company vehicles, but on-the-road repairs may necessitate a tow to another garage. No problem if you have a service card such as GM's Fleet Service Card-accepted at more than 600 GM dealers across the United States, whether the need is for fuel, maintenance or emergency repairs. It comes with an ID number, so only your drivers can use it, and only for the products and services your company has authorized.

Buying Certified Pre-Owned

A fancy term for used cars and trucks that undergo factory-guaranteed inspections (though the tests are done by local dealers), certified pre-owned vehicles are about $1,000 pricier than noncertified cars, but they're usually in prime condition. According to J.D. Power, CPOs accounted for 38 percent of all sales at used-car dealerships in 2005.

For budget-conscious business owners, CPOs can save you thousands of dollars on 2- to 6-year-old vehicles with up to 60,000 miles on the odometer. Many are sold with a free extended warranty if the original warranty is close to expiring. Read the fine print to make sure all the components are covered by name, ask what the exclusions are, and make sure coverage includes service on the road as well as at your local dealer.

Sure, CPOs aren't brand-new vehicles, but odds are, you won't have to add expensive options, since many buyers can find a CPO that's already equipped with what they need. Many CPOs are off-lease after two years, which often means they are clean, well-maintained and well-equipped.

Manufacturer certification procedures include a checklist of more than 100 items, such as the powertrain, chassis, electronic and electrical systems, suspension, frame, steering, brakes and many others.

GM sells CPO vehicles that are up to 6 years old with a maximum of 60,000 miles on the clock. Its dealers put vehicles through a 112-point inspection, offer 24-hour roadside assistance, and provide a vehicle history report, since it's important to know if the vehicle has been in a wreck. The 112 items include a road test to check performance and acceleration, transfer case operation, body-chassis integrity, anti-skid/traction control, shifting, steering and alignment. Under the hood, the ignition, fuel and starter systems are checked. Then the mechanics go under the vehicle to examine the shock absorbers, driveline, axles/differentials, brake hydraulics and springs. Ask for a copy of the complete checklist.

Dodge ups CPO mileage limits to 65,000 miles, and has a 125-point inspection, plus 24-hour roadside assistance, a vehicle history report, a rental car and service coupons. Toyota's meticulous CPO 160-point list, in addition to the standard checks, ensures there's no abnormal engine noise at a cold start; license plate lights are working; light bulbs aren't cracked; and tires are the same brand, size and load rating. Nissan's CPOs undergo a 142-point inspection and are protected by a 36-month/100,000-mile limited warranty.

Additional savings on CPOs come from reduced-rate loan incentives offered to qualified buyers by a few manufacturers. GMC's financing options on CPOs range from 2.9 percent to 3.9 percent; Ford's are a uniform 4.5 percent; and Honda offers 4.9 percent. Chrysler, Dodge, Toyota and others are not offering these incentives at press time, but programs can change week to week.

Some used-car lots and dealerships that sell only used cars are certifying vehicles as CPOs, but they may not be factory-backed. Ask for the Vehicle Identification Number (VIN) on a vehicle you're considering and check with the manufacturer to see whether it's covered in their CPO programs.

Most CPOs carry a warranty. GMs are supported by a zero-deductible, three-month/3,000-mile comprehensive limited warranty.

Compare CPO programs at sites such as www.autos.msn.com and www.edmunds.com.

Something Extra
The 2006 pickups, vans and SUVs are already well-equipped, and adding pricey extras to the bottom line when buying vehicles for your business can be a financial concern, but a few well-considered, affordable options might save you money in the long run.

Safety features should be one of your priorities. While 2006 light trucks are designed to protect drivers and passengers with reinforced side-impact door beams, energy-absorbing steering columns, head restraint bolsters, anti-lock brake systems and even a loose fuel cap alert, additional safety options not only help prevent damage and injury during a crash, but can also lower your insurance premiums.

Among the most popular extra features are side air-bag window curtains for head protection, back-up warning systems that sense obstacles behind the vehicle, traction control, stability control, roll mitigation, and adjustable pedals, which are convenient if you have several different drivers. Ford's bestselling SUV, the Explorer, includes AdvanceTrac with Roll Stability Control as a standard feature, while its Freestar cargo van is a "Best Pick" by the Insurance Institute for Highway Safety. Adding similar options to your vehicles can make a potentially life-saving difference in an emergency.

Hydraulic rocker panels that slide out, or steps to assist in exiting a vehicle or for reaching cargo on a roof rack are useful on large vehicles. Navigation systems such as OnStar are a popular option, not only because they offer safety, security, theft-prevention, information and GPS service, but also because they can be used to track fuel and oil usage in fleet vehicles. Each month, the vehicles automatically send this information to OnStar as a maintenance and cost-checking control. OnStar can also get you back into the vehicle if you've left the keys in the ignition; send emergency assistance; and provide hands-free, voice-activated phone calls. GM offers OnStar on dozens of light-duty models. Dodge makes Uconnect, a hands-free Bluetooth system, available. Navigation systems aren't limited to OnStar-dozens of other systems are available on the web, including portable devices.

Keep your sales and delivery drivers happier with a Sirius or XM satellite radio system. In addition to being factory-installed at purchase, they're an option for business owners who already have a standard radio and want to upgrade at the dealership. Ford already offers the option in the F-150, Explorer and Mountaineer for $195, including a free six-month subscription or an upgrade later at the dealership. XM's NavTraffic has a real-time traffic information service.

Need something else? Businesses that must accommodate extra-long cargo can opt for a bed extender. Nissan offers a sliding version on its Titan. Smaller additions include flashing turn-signal mirrors, available from www.muth.com and other websites. Or obtain other aftermarket items from www.sema.com, where you'll find dozens of options that can be added to commercial vehicles.

Jill Amadio is Entrepreneur's "Wheels" columnist.