August 21, 2019

Car Advertising: From Bad To Worse

The fine print is getting longer and the prices are now more ridiculous than ever.  Most ads now are almost all employee pricing with at least six price deductions that most people don’t qualify for.  How about “consumer cash” or a “trade in bonus”?   The ads have one purpose – to get you in the dealership where you will find out the real price which is usually much higher than the price advertised.

Several dealers have tried to establish one price and stick to it, but apparently they have been unsuccessful.  I was in a dealership looking at the new cars the other day while I was having my car serviced.  I asked the salesman if he could give me a price on a specific model.  He came back 10 minutes later with an amount written on his business card that he claimed was “blessed” by the mysterious new car manager.  The amount was “out the door with sales tax” but nothing was itemized.  It makes it more difficult to comparison shop when you have nothing but one number.

Most dealerships now realize that people shop so they do all they can to make the process confusing and cumbersome.  The ideal lease now is a “low mileage, employee return lease.”   The new pricing strategy is to take the manufacturer’s suggested retail price and deduct as many “phantom” numbers as possible.  I guess what makes it legal is there is a person out there who would qualify under this crazy pricing but the average person doesn’t stand a chance.  You can’t even rely on the picture as the ad states that “the picture may not represent an actual vehicle” and the quote “ price” is plus tax, title, license fees, and the cost to bring the auto to the dealership called a “destination” charge which can be as much as an additional $900.00.

I am not sure where the new “low mileage” lease originated but I know of very few people who can drive a car less than 10,000 miles annually.  This represents about 192 miles per week.  If you drove to work and back 5 days a week, for example, and your employment was 20 miles away from your home, you would exceed the weekly cap of 192 miles before you even drove to the grocery store, cleaners or the gas station.  The dealer expects either you will run over the limit and pay the additional cost of $0.25 cents per mile or upgrade your lease to 12,000 or 15,000 miles per year for an added cost.

Now how about a lease for $129.00 a month?  Sounds almost too good to be true and it is.   Buried in the small mini print is a down payment of $2,995.00.  Add this $83.00 to the 36 monthly payments and you are at roughly $225.00 per month with the added monthly sales tax.

I purchased a new magnifying glass the other just to read the car ads.  The trick is to match the number of asterisks with the disclaimers in the fine print.  I guess a qualified GM employee is a GM employee who still has a job?  Every car is advertised with the basic equipment of an automatic transmission, A/C, Tilt, cruise control, and special features such as floor mats, a cargo net, a heavy duty battery, plastic wheel covers, and “much more.”  With some newer models, a power driver’s seat is now part of a package otherwise it is the old grab and pull seat.  I knew it was only a matter of time before this feature went away along with the ash tray.

Cars are getting smaller with smaller engines.  It seems the manufacturers are reducing models and selectively adding features to basically the same car but now advertising the upgraded model as an LT, LS, SX, GLS, or a Limited edition.  I have often wondered how the car manufacturers in conjunction with their dealers can continue to advertise employee pricing when they know that there are not enough employees at Ford, GM, and Chrysler to buy all the cars advertised if any given week even if every employee bought a new car every six months.  Something has to change for these folks.  Their advertising program stinks.

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Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

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Written by Donald Wittmer
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