Saturday, February 03, 2007

BEWARE OF DECEPTIVE INTERNET CAR PRICING

Last September, I wrote a column for this newspaper entitled “The Internet Price is the Lowest Price for a New Car”. If you missed that, you can read all of my columns at www.EarlStewartOnCars.com. Although, I still believe you can find your best price on the Internet, I thought that I should write another column to stress how careful you must be in determining whether or not you have a real, bottom line, out-the-door price.

The reason that a dealer always tries to post his lowest new car price on the Internet is simple. If he doesn’t the Internet shopper will simply ignore the price quote and buy from another dealer who has a lower price. A car dealer gets “just one chance” to sell you a car when he puts his price out on the Internet. The Internet is theoretically the purest and best form of a competitive marketplace, favoring the buyer. Think about it…if you wanted to take the time you could get a price quote from every Honda, Toyota, or Ford dealer in the USA! There are about 1,300 Toyota dealers in the USA. It might take you a while (about 8 days if you worked 8 hours a day and spent 3 minutes per email), but you sure would know who was selling your selected model Toyota for the lowest price.

Whether you are reading newspaper ads, watching TV ads, reading direct mail advertising, or surfing car a dealer’s Web site you have to be careful of deception. Internet advertising on car dealer’s Web sites and their Internet price quotes can be more deceptive than other media. This is because the Internet is the “new frontier”. Legislation has not caught up with the Internet like it has newspaper, TV, and radio advertising. A dealer can get away with a lot more on his Web site and price quotes than he can in a newspaper ad. Electronic media and newspaper advertising are also a lot more visible to the regulators than the Internet.

I’ll give you an example of the type of violation you must be wary of. There’s a car dealer in West Palm Beach who quotes prices to his customers over the Internet excluding $879.90 which are dealer fees. He also calls them doc fees, but they are simply profit for him. Furthermore, he excludes any “dealer installed option”. This means that he can charge you anything he wants for stripes, glass etching, floor mats, undercoating, etc. that he has pre-installed on the car. He does disclose in fine print the fact that he does charge doc fees and dealer installed options, but does not tell the amount of the charge. This is your “surprise” when you come into his dealership to take delivery.

Your defense against this sort of thing is to call those dealers who have given you the lowest price quotes on the vehicle you want to buy. Start with the lowest price and simply ask, “Is there anything else added to my price other than Florida sales tax and a state fee for a license tag or tag transfer?” If they do add something, find out specifically what they do add so that you know you have an “out-the-door”, bottom line price when you come in to take delivery. If they won’t give you a clear answer or are ambiguous, hang up and call the next dealer.

Dealers who advertise deceptively have the philosophy that all that counts with their advertising is to “get them in the door”. Another slang dealers use for this is “driving floor traffic”. They calculate that if they can trick enough people to come through the door, they will be able to fool a certain percentage of them. It’s like Abraham Lincoln said, “You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all of the time.” Well these dealers don’t have to fool all of the people to make lots of money. All they have to do is fool some of the people all of the time and that’s exactly what their advertising is designed to do. Don’t be one of those who are fooled.

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