DEAR DIARY: MY HEART IS RACING TO BUY A CAR

Professors Seung Hwan (Mark) Lee and Matthew Thomson wrote this case solely to provide
material for class discussion. The authors do not intend to illustrate either effective or
ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.

Dear Diary,

What a long day… My only wish was that I would come home with a car. Instead, I came
home with a headache.

Today, I went to the local auto dealership and found exactly what I was looking for: my new
baby. I have been saving up for months, touring random dealerships across town and scouring
classified ads in my active pursuit of a car. As a graduate student, I don’t have that much
money, but working at a small, local packaging plant for 30 hours a week has allowed me to
save just enough to buy a car outright, even after paying for all my necessities. After weeks
and weeks of searching, I was able to narrow down my choices to two cars. They weren’t
new, but both cars were in my price range (US$5,000 to $6,000). The problem was that I
couldn’t make a decision!

When I set out on my initial search, I wanted to buy a car that was going to be functional and
convenient. I also needed a car that was going to be suitable for my work. Recently, my
manager told me that I was in line to be the next assistant supervisor in the department, but I
would need a car to perform some of the duties – specifically, a vehicle with a large amount
of trunk space. Although not frequent, part of the requirements of this new position was to
transport boxes across the city. I wasn’t sure whether I wanted the job in the first place (the
pay is only marginally higher than what I’m making now), but I thought it would look good
on my resume if I did get that promotion. Besides the large trunk space, I also wanted to get a
car that had plenty of seats. I have three younger brothers and sisters, and it would be nice if I
could drive them around town and go on road trips. Given these criteria, Don, the sales guy at
the dealership, suggested that I pick up an SUV. Specifically, he showed me a 2000 navy
blue Honda CRV with all-wheel drive (AWD), with 140,000 miles. The price was listed at
$5,999.

I took the car for a test drive and was quite satisfied with it. I’ve always heard great things
about the Honda CRV from other people, and the insurance premium on the car was not too
bad. While I was initially worried about gas consumption (since it is a larger-sized car), the
benefits (e.g., trunk space, number of seats, AWD) outweighed those downsides. I did try out
other similar SUV’s on the lot, but there was nothing that came close to the Honda CRV. For
the price and functionality, this car was quite ideal and, I thought, quite a deal.
But then, my mind drifted, and so did my eyes. In the corner of the lot, there was a beautiful,
red 2000 Ford Mustang convertible that was calling my name and waiting to be driven. Not
only is red my favorite color, but I have been a Ford Mustang fan ever since I was in middle
school. Back in the day, I always dreamed of owning a Mustang. I loved the idea of driving
down the country road with all that American muscle at my fingertips. Initially, I took that
car for a test drive because I wanted to just try it out. What happened next was something I
did not expect.

As I took the red Mustang out for a test drive, I instantly fell in love with it. I even named it
Captain Stallion. I loved how the steering wheel felt in my hands, I loved the strong revving
sound of the engine, I loved how I could drive into the wind with the top down, and I loved
how it gave me a raised level of confidence. There was no doubt that this was my favorite car
on the lot. Even better, the price was listed at $6,500, but Don said he could knock it down to
match the price of the Honda CRV ($5,999). When I called my insurance company, the
premium was not too much different from that of the CRV. The Ford Mustang might eat up a
little bit more gas, but the difference was marginal when comparing it to the SUV. In terms of
overall price and the amount I would have to spend on maintenance, the two cars were quite
similar.

Then reality kicked in. There was no way I could use the Ford Mustang to transport boxes
across the city. There was no way I could go on road trips with my brothers and sisters
because the back seat was too cramped in a Mustang for any type of long-distance trips.
Besides, while I loved the feeling of driving the Mustang, I knew in my mind that the car
didn’t offer much functionality. The trunk space was small, and convertibles were not the
smartest idea for a guy who lived in Wyoming. Given the amount and irregularity of snow we
got during the Wyoming winter, it would be a wise choice to purchase an all-wheel drive
vehicle.

In the end, I faced a perplexing conundrum: Should I go with the Honda CRV or the Ford
Mustang? The truth was, I loved the Mustang and I would do anything to get that car. I was
indifferent about the job promotion (even though it would be nice to get it), and I guess I
could always rent a larger car if I ever wanted to go on a road trip with my siblings. As for
the winter, I would make sure to put on a nice set of winter tires and be very careful when
driving during harsher conditions. But then again, I was quite happy with the Honda CRV,
and it met all my functional criteria.

Now that I’m home, I don’t know what to do next. Do I go with the Honda CRV, perhaps a
more rational choice, given my personal and professional needs? Or do I go with the Ford
Mustang, a car that I enjoy driving, even though it doesn’t necessarily meet my functional
needs? My mind is saying “CRV” while my heart is saying “Mustang.”

I’m going back to the dealership tomorrow. Help me.

Jaime.