Dealers double-down on Ripping Customers Off by Chris Justice

A lot of Car Dealers have graduated from "sleight of hand" advertising to full blown false advertising.

In the mist of shrinking sales and declining revenue, some dealers have forgone tomorrow’s business for today’s floor traffic.

In what appear to be a price war one would believe this to be a great time for customers to find great deals. Although this may be true, many would-be customers are being manipulated by deals that are too good to be true.

A large dealer in my area spends a lot of money advertising low prices on new vehicles. I mean the lowest in the state, by a large margin.

Customers walk into what appears to be a deal of a life time. Everything is good until they review the first numbers. They quickly discover that the advertised price included a $500 college rebate which they don't qualify for. An $800 owner loyalty rebate they don't get. A $2000 rebate if they give up the special financing. $800 destination, $300 for nitrogen in the tires which has to be added back, $300 military discount, $250 for etch and on and on. That's almost a $5000 difference.

This dealer would say that in the tiny print it reads "includes all rebates and discounts" is enough.

This business model won't stand long term. It may bring in traffic and some do end up buying after negotiating however the ones you sell will not be back. Nor will they refer anyone to you. Your sales people get burned out from trying to intelligently explain the deceptive ad and quit.

Dealers who think long term look for study consistent grow. They put customers first. They realize that buy killing them with kindness, being professional and by offering a fair deal, they will be very successful.

Dealers should look towards technology as a means to generate traffic and leave the gimmicks alone

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Comment by Chris Justice on November 10, 2011 at 12:46pm: My experience is also that the customer waiving the low-ball ad doesn't come back once they leave. Even after you explain the trick pricing. I believe that many have already shopped that Dealer and they know it's a gimmick. Their thought is Wal Mart matches prices so we should too.

I train my Sales Professional to say one of two things. 1. "Mr. Customer before you show me their ad, allow me to give you my best numbers. If you are not happy with my proposal, we can always look at the ad then. Fair enough?" This is to get the customer back on the road to a sale. 2. Smile and say "They all start there. Let's pick you one out." Again this allows us to get the customer back on track. We know that most people don't buy the car they originally came to see. Once we change units the ad is a non-factor.

We are all on the front lines competing against bad dealers. Education and technology are our tools.

Comment by Jason McIntosh "Jmac" on November 9, 2011 at 10:01pm: Agreed Joe & Marsh! The dealership I spent the bulk of my career at had to deal with a local dealer using deceptive advertising in the worst way possible as a ploy and once the customer arrived the dealer bullied there way into a deal and wore the customer out...

Chris you are SPOT ON! That will be last car the purchase from the dealer and NO they will steer potential customers clear from that dealer. I can remember pleading with customer who mentioned the advertisement not too waste their time and what would unfold. But we know how that goes, we just want to see for ourselves and even when you say its ok too come back, I wont say I told you so... Rarely did you see them back!

Well I would say to customer eventually they way they choose to do business will catch up to them soon enough and sure enough it did! They filed BK and WE bought them!!!

One tactic we did to offset their advertisement is advertise a WARNING in bold print and clearly show potential rebates with net price only if they qualify, that way you advertise a REAL price and show real discounts as they qualify.We went on to mention in the warning not too fall for deceptive advertisements where you have add back rebates you dont qualify for. Highly effective counter measure tactic!

...and yes Social Media is the new Print Ad!

Great Topic Chris! You have a Great Team at your store lead by a Great Leader now THAT will prevail...

Your customers want to business with YOU because how they are treated and THAT my friend is the biggest R.O.I. and the most powerful advertising tool period! and will prevail long term!

Comment by Joe Clementi on November 9, 2011 at 9:28pm: Chris - Thanks for posting a topic that drives the legitimate dealer crazy! These tactics have been ongoing for years and every time it catches up with the dealer, our industry suffers. This is the exact reason why the internet pricing concept took over.  Web sites like Truecar.com don't help any either by hosting deals at or near net costs while the "marketing genius" reaps in $300 per car from their "Dealer Partner". If that isn't crazy enough...some desperate dealer allows them to dictate the pricing structure AND pays for that right! The end result is as Marsh said "gives our industry a black eye".

It's no wonder the negotiation process takes on and adversorial role!   These "creative" marketing ploys have no business in our business and if the dealer can't sell value instead of price they simply won't last. Customers have tremendous reach in today's economy. Don't underestimate the value of social media, blogs and chat rooms...customers know which dealers are a fraud.

The good news? We can use those same tools they use against them.  When faced with that under valued over packed price we call them on the carpet right on the showroom floor.  If you follow up right after their visit you will often find the customer already knows the low ball price is too low and no lunch is free.  Some customers want the WalMart price at WalMart service and others want the Target price at the Nordstroms service.

Comment by Marsh Buice on November 9, 2011 at 8:56pm: Chris, it's those dealerships that give our industry a black eye; it wont last. Social media and word of mouth will shut this cat down. We had a similar situation here and eventually the dealer went BK. Yes we lost a few sales for a period, but we kept buiding a book listing customers slanderous reports and allegations of that dealership as well as gave a copy of the BBB F rating, to our shoppers to further discredit this guy. That is not selling and they are a disgrace to this industry. Keep your head up sir..