Tuesday, November 26, 2013

Government Motors Meets Obamacare

Our fleet of company vehicles is due for a major overhaul so today I am out car shopping. I’m looking at several different options because come January the prices of the cars are going up by 40%-80% and the selection of options for the vehicles will become extremely limited.

Lucky for me President Obama is allowing a couple of options to avoid the major aspects of his new car law. There are two options I can choose from. One is renewing my leases early without having the dealership check the mileage and wear and tear. The other is renewing my leases when they are due April 1st but now the dealer has the right to increase my price based on those three criteria. The question is, which option should I choose?

Early Renewal

The current leases expire in April of 2014 but I am able to renew my leases December 1st. The new price allows me to keep the cars that I like while only increasing my price by 8% a month. By extending my leases I have the ability to renew it for another 12 months now, which will carry me through November of 2014.

Renew and Retain

I also have the ability to keep my current lease price, but come April my lease price might change. It could go up quite a bit depending on the mileage and the wear and tear on the vehicles. And I can’t change any of the terms of my leases or I become subject to the new requirements. These new requirements will cause substantial price increases for new vehicles because they'll be required to include free roadside assistance and oil changes; I'll also be forced to purchase options like navigation systems and DVD entertainment units. The worst part is that I have no idea of what the costs will be for keeping my current leases, nor do I know what it will cost me to lease new vehicles.

Decisions, Decisions

As the business owner I have a limited budget and absorbing a large cost hike for the fleet could put us out of business. Since our current leased cars don’t meet the guidelines for vehicles set in March of 2010, I don’t have any choice but to change to the new ones available next year. I can potentially buy time through the early lease renewal program or I can roll the dice until April and hope that my employees have taken very good care of their cars. In that case I could keep my costs lower until April of 2015. My gut tells me to take the safe route and renew my leases with the 8% increase December 1st. At least that way I can budget for 2014. Because after that, all bets are off.
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