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Friday 28 April 2017
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Auto Manufacturer-Sponsored Bait & Switch

Auto Manufacturer-Sponsored Bait & Switch

For many years, I have warned listeners about bait & switch car dealership ads.  When I still owned car dealerships, I used to look at the fine print in newspaper ads to see how my competitors were advertising unrealistic prices.  I would train my staff on how to educate the customers walking in on why we could not match another dealership’s deceptive ads.  Even when customers did not believe us, they would go and find out what we told them was correct, and usually return to us.

Then comes the Internet, which has pretty well eliminated classified newspaper ads, and the deceptive dealers seized upon a new way to hide the fine print.  Lately, however, I have seen an alarming trend of the automakers themselves burying information in ads and on the Internet.  I am not suggesting any automaker is doing anything illegal, they have plenty of Attorneys to watch out for them, but is it the right thing to do?

I am not picking on General Motors, but after watching ads on TV for months now, one word kept coming up that raises red flags:  SELECT.  Generally, it is a harmless six letters when strung together, but in this case, I think it can be confusing at best for consumers.

By now, surely you have seen the Chevy Red Tag Sale that offered percentages of savings, for instance, 25% off MSRP on select Silverado pickups.  I chased down the fine print at the Chevrolet website and looked at a special the factory was running on 2016 Tahoes.  It touts $11,106 in average savings.  A reasonable person was assume they could go to their favorite Chevy dealer and knock over eleven grand off the MSRP of the Tahoe they chose, maybe even more, and the majority of people only see $11,106 in savings.

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A look at the breakdown, however, shows this is based on the LT model with Signature Package.  That is pretty specific and does not apply to the very popular LTZ models.  $1700 of the savings is a discount package…but that discount is shown above the bottom line MSRP amount.  Yes, there is $1700 in savings because the dealer ordered this package, but it does not come off the sticker price.

Then there is $4406 in what they call the “average holiday price reduction below MSRP.”  I assume they did some math from actual transactions on this exact vehicle package.  Then to finish the math, it says $5000 total cash allowance.  So, from the MSRP price on these vehicles you can deduct $5000 in rebates and either more or less than $4406 in a dealer discount.

What most people don’t catch in this same ad are the words “find your tag”.  You see, Chevy gives the dealers additional money on a small percentage of their inventory to offer bigger discounts on SELECT vehicles.  The kicker is the dealers have to choose which vehicles that want to apply the special tags to at the beginning of the month and they can’t move them around.  Once selected, they can’t take the extra money off one vehicle to apply to another.  The end result is a dealer can have two identical vehicles sitting side by side, but one might be substantially cheaper than the other.

Of course, dealers are going to choose to tag the vehicles they need to sell the worst.  These are generally less popular models, perhaps demos or loaner cars, but generally it will be their slowest sellers and oldest inventory.

On the “current deals” page at the Chevy website, at the bottom of the page in the fine print, the words “on select tagged vehicles in stock ” or “dealer selected vehicles in stock” appears 18 times.  While the ads on TV, radio, and Internet appear to offer amazing deals, the reality of it is that the offers are only good on a handful of vehicles.

To be fair, Ford and Fiat Chrysler have similar programs.  I talked to a number of the dealers that are part of the Car Pro Show, and they hate these kinds of programs.  They have to take the time to try to explain to customers why they can buy a purple Suburban so much cheaper than the white one they really want that has the exact same sticker price.

For me, it is auto manufacturers engaging in bait & switch tactics.  They save a lot of rebate money by not offering those great deals across the board, instead just on a small portion of their vehicles, all the while giving the illusion that everybody can participate.  It is the dealers that then have to do the cleanup and try to salvage a customer who has been loyal to them for years.

Automakers, if you want to pay the dealers extra money to help sell distressed merchandise, that is all well and good.  Just don’t make us believe that everybody in America can get these great deals when in reality, only a few will.  That is the very definition of bait & switch.

Photo Copyright: Sohel Parvez Haque/Shutterstock