6 Signs that Your Car is a Rolling Piece of Junk

How do you know if you’re driving a clunker? If your car’s name includes the words Gremlin or Pacer, stop reading and go buy yourself a new car this minute. You know these cars are bad when Disney calls them out by basing characters called “The Lemons” on these vehicles in the movie “Cars 2.” For the rest of you who need help discerning whether your car is, in fact, a rolling piece of junk, here are your six signs.

Sign #6: A Bucket of Bolts

You say your car makes noises that sound like a bunch of bolts rattling around in a bucket? The crystal ball reveals many visits to an automotive repair shop in your future. Or, perhaps you’ve already spent hundreds of dollars over the past year fixing your fixer-up. If that’s the case, it’s time to reevaluate your strategy.

Buying a new car isn’t as difficult as you may think with excellent deals from Instant Auto. Certainly, getting a new-to-you car is better than pouring money into a losing proposition (i.e. your clunker). Use the Kelly Blue Book or other method to determine the value of your car. If you’re spending more money on repairs than the car’s worth, it’s time to upgrade.

Sign #5: Your Car has a Drinking Problem

Old cars drink too much gas. This drinking problem ends up draining your wallet dry at the pump. If you drive a great deal and have an older vehicle that isn’t fuel efficient, consider the money you’d save with a newer car that has better mileage. In addition, clunkers may have other problems such as bad tires that put a drain on fuel efficiency.

Sign #4: It Plays Cassettes

First, congratulations on knowing what an 8-track cassette is, and double kudos for still owning a device that plays them. What’s that you say? Your car plays the smaller cassettes? While it may be kind of kitsch to have a cassette player, it’s definitely a sign you’re driving a hunk of junk. Dump your mix tape and find yourself a better ride.

Sign #3: The Oh-No Odometer

If that ever-rolling set of numbers on your dashboard has hit 100,000, you’re starting to flirt with clunker territory. A car with that many miles is more likely to need repairs than cars with less wear and tear. While many cars built in the last 15 years can handle six-digit miles, older models don’t have the parts to withstand that level of use. It’s best to evaluate your car’s worth against typical repairs that come post-100,000 miles.

The level of routine maintenance your car has had during its lifespan impacts how well it will fair with this many miles. Hitting this mileage milestone is a good time to evaluate your car and decide if it’s ready for the junkyard.

Sign #2: Undiagnosed Problems

Does your car have chronic warning light syndrome? With this condition, one or more warning lights on the dashboard remain on whenever the car is in operation. When these symptoms first appeared, you took the car to a mechanic who went through the usual checklist. However, no one could give you a clear reason why your car was suffering, trying to communicate its need yet failing miserably.

Sign #1: You’re Afraid to Drive Your Car Long Distances

Taking your vehicle out on the open road for any period of time makes you nervous, nervous enough to have the cell phone fully charged and emergency food and drinks on hand. As you click off the miles, you wonder if a serious problem is going to rear its ugly head and leave you stranded in the middle of nowhere. Maybe it’s the car’s age, mileage, clunking sounds, or recent repairs that make your stomach turn. Whatever the cause, if you don’t feel comfortable taking your car beyond the city limits, you may be driving a piece of junk.

Rid yourself of the car that only goes in whatever direction the wind is blowing. Upgrade to a newer vehicle that will save you time, money, and headaches. Sure, you may miss your junker, but in the end, you’ll know you made the right decision.

Better Know A Sustainable Investment: Tesla Motors

Let’s start this post with a little thought exercise. If you had 18 billion dollars, which of the following three investments would you invest in:

Investment A: You’d own approximately 36% of a company that made $3.8B in profit last year. They sold $152B of product in 2012, and have grown production over 12% since 2010. They do not currently pay a dividend, but will most likely pay one in the near future.

Investment B: You’d own approximately 27% of a company that made $5.99B in profit last year. They sold over $134B worth of product in 2012. As a 27% shareholder you’d be cashing over $425M in dividend cheques per year.

Investment C: You’d own 100% of a company that lost $250M last year. They just started production of their flagship product last year, and are currently on pace to sell 25,000 units in 2013. While the company does not make money, the flagship product is raved over for its quality and performance.

Personally, I’d choose investment B. I could take my dividend cheques and buy myself a nice island in the Pacific somewhere. The company is obviously huge, so I wouldn’t worry about it going away soon. Company A doesn’t pay a dividend and company C is too risky, at least for my tastes.

Allow me to reveal the companies in question. Company A is General Motors. Company B is Ford. And Company C is Tesla Motors, one of the new darlings of the market.

Tesla isn’t like other auto manufacturers. They exclusively deal in electric engines, through an exclusive arrangement with a Japanese battery company. Tesla has two sources of revenue, they make cars and they make parts for other auto manufacturers, including Daimler and Toyota. The company’s founder and CEO, Elon Musk, has stated the company’s objective is to make an electric car which is affordable to the masses.

Currently the company produces one model, a sedan called the Model S. The Model S retails for anywhere between $70,000 and $100,000, depending on the size of the battery and other extras. The Model S has a range of over 300km at even the smallest battery size. The Model S easily won the 2013 Motor Trend Car of the Year award, among other accolades. People who drive the Model S rave about the acceleration and the handling. The company is also planning on releasing a crossover SUV next year, called Model X.

Tesla doesn’t have dealerships. If you want a car you contact the company, tell them the specs you want, and they build you a custom car. A few weeks later a Tesla vehicle shows up at your door. It’s exactly how you’d expect a 21st century car company to operate. They’ve also got a network of Tesla approved mechanics to come to you in case there’s ever a mechanical issue.

That’s not all. The company is currently rolling out hundreds of charging stations, where owners can swap out their dwindling batteries for fresh ones during long road trips. This solves the range problem that has always plagued electric cars.

The technology sounds promising, there’s just one problem. The stock is expensive.

Tesla has only had one profitable quarter in the company’s history, back in the first quarter of this year, where they earned a fraction of a penny per share, and that was only because of a profit booked from carbon credits from the U.S. Government. It will be years until the company is able to make money from operations. The stock price is trading approximately 50 times book value. They’re expensive no matter the metric you use to value them.

The stock has been a terrific performer in the last year, shooting up from less than $30 per share to today’s closing price of just a shade under $150. Bullish Tesla investors have bid the price of this stock up aggressively, hoping to profit on this new and exciting technology.

Onto the good part. Would I buy shares in Tesla? I wouldn’t, and here’s why.

The company is just plain overvalued. The technology is cool, but we all know the major auto manufacturers will eventually be in this space in a big way. Tesla is a fun appetizer, but probably won’t be around for the main course – at least not in its current form.

They also guarantee a resale value for the Model S at $50,000. This will be expensive for Tesla to maintain once a legitimate competitor comes to market. There’s also the issue of batteries continuing to both improve and come down in cost in order to make future models affordable.

And finally, I just don’t think the market is there for electric cars. For most families, gasoline is not a prohibitive cost. Most people enjoy knowing their range isn’t limited to finding a Tesla charging station somewhere. If you’re looking to invest in the next cool car technology, invest in whoever finally mass produces a driverless car. I’d pay a premium for that long before I paid a premium for something electric.