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Thursday 21 September 2017
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Factory MSRP: Don’t Fall Prey To The Ad

Factory MSRP: Don’t Fall Prey To The Ad

In the automobile industry, there are three different groups of advertisers.  In most cases, they are identified as tiers one, two, and three.  Tier one is the ads you see purchased and produced by the automakers themselves.  Tier two is dealer groups of the same brand in the same market. As an example, I served three terms as Chairman of the North Texas Ford Dealers ad association.  There were 57 Ford dealers that pooled their money together, and the Board allocated the money that was spent.  Each Board member was elected from within the group.  Tier three is the ads you see from individual dealers.

I wrote not long ago about how some of the automakers were putting bigger incentives on a small percentage of the vehicles in dealer inventories.  You’ll see ads that talk about huge discounts or a large percentage off on “select” vehicles.  Once you get to a dealership and pick out the vehicle you want, you will probably find out it is not one of the “select” vehicles and will be quite a bit higher.  I called it factory-sponsored bait-and-switch.

Another disturbing trend I am seeing on TV and on the Internet is artificially low base prices.  For instance, a new model comes out and you see a price that looks wonderful, but in smaller print it says: “starting from” then much larger, $29,995.  The luxury brands seem to be the worst offenders of late.  This gives people false hope that they can afford a top-tier brand vehicle.  Right off the bat you find out although it is a luxury brand, it is a stripped down version of a make you would expect to be nicely equipped.  You can bet, too, that the “starting from” price doesn’t include transportation charges, which are typically $1000 or more.

Just looking at some models I have reviewed this past year, I see this problem getting worse.  I have the Infiniti QX30 this week, at the Infiniti website, it states “starting from $29,950*.”  I followed the asterisk to read: “Price is Manufacturer’s Suggested Retail Price (MSRP). MSRP excluding destination charge, tax, title, license, and options. Dealer sets actual price”.  And options?  So translated, there is not a single option at that price.  Actual MSRP on my review vehicle was just over $46,000.  I also noted it did not have a power lift gate or air-conditioned seats, but in fairness, it was an all-wheel drive version.

I recently had the 2017 BMW 530i, which was an exceptional car.  Base price $52,195 and final MSRP was $72,135.  Last year I had the BMW 750i, the flagship BMW model that you would expect to come equipped with just about everything considering the base price of $97,400.  All said and done, the total sticker price was $128,445.

The newest, largest Cadillac CT6 I reviewed had a base price of $63,570 and a final MSRP of $77,340 and the list goes on and on.  It is not just the luxury brands either, this same trend is happening with mainstream vehicles, especially SUVs.

So what is driving this?  Search engines.  For instance, search for crossover SUVs between $25,000 and $30,000 and you’ll get everything from the Nissan Juke, the Kia Sorento, and the VW Alltrack, to you guessed it: the 2017 Infiniti QX30, even though as you now know, that doesn’t include transportation charges, and a nicely equipped one is $46,000.

So to bottom line this, don’t get overly excited when you see a low price on TV or the Internet, do your homework.  Every automaker website I know of will let you build a vehicle like you would want it, and that will give you a much truer picture of what you will need to spend.



Photo Credit: Tashatuvango/Shutterstock