Friday, June 15, 2007

When a Car Dealer Crosses the Line

Readers of this column know my thoughts about unethical advertising. I have written about advertising a very low price which is applicable to only one car that is always “gone” when you ask to see it. I wrote about advertising giant discounts on cars that are artificially marked up over MSRP. You have read several of my articles about dealer fees which are really just additional dealer profit, disguised as a federal, state, or local “official” fee. You probably know about “get em in the door” phrases like “no credit application refused” [They will accept a credit application from everyone, but they won’t approve everyone’s credit if they don’t like your application].

As bad and unethical as this kind of advertising is, it is not illegal and it is not an out and out lie. If a dealer made the above statements under oath, she would not go to jail for perjury. I was made aware of a direct mail advertisement recently that crossed over this line. It was a “personal letter” written by the general manager of a local dealership to owners of a particular make of car imploring those owners to sell their used car to this dealer. Several of my customers called me about this and some sent me the letter that they received.

This dealership’s general manager explained that she had stopped buying cars at the auto auctions to protect her used car customers from buying “Katrina flood cars”. Because she couldn’t buy cars from the auction, she therefore had to buy cars directly from the public. She also promised to pay “over book” for these cars because she was desperate for used cars. She didn’t comment about the higher price she would have to charge her used car customers for these cars that she paid so much money for.

I did a little checking on this and found out that this dealer rarely ever bought cars from the auction (just 5 so far in 2007). This general manager said that she normally bought over 200 cars a month from auctions. This is simply not so. This dealership doesn’t sell anywhere near 200 used cars per month and they trade in more used cars on their new cars than they can sell. In fact, they sell a lot of used cars at the auction because they cannot retail them.

The proof of the Katrina flood car problem was an article inserted in the envelope from a company named CarFax, whose business is researching the history of used cars for evidence of flood damage, collision, etc. My dealership and all responsible car dealerships screen all of their used cars with CarFax before they buy them or sell them to the public. The responsible auctions also screen their cars for problems like flood damage and do not sell cars like this at their auctions. If one should slip by the checks, the dealer could return the car to the auction.

This letter is simply a ploy to get you “in the door” based on a totally false premise. This general manager’s goal is to sell you a new or used car. They can and will offer you “over book” if you trade your used car in for new or used car because they can mark up the purchase price high enough to make it look like you are getting a great price for your trade-in. If you will not buy a car from them, they have no choice except to offer you as much below book for your car as they can get away with.

The bottom line is that the general manager of this dealership premeditatedly and deliberately made up a story to fool you and other potential car owners to come into her dealership. How can she get away with this? For one thing, direct mail advertising gets far less scrutiny than TV, radio, or newspaper. Also, because this is not directly an advertisement for new cars, the manufacturer will likely not get involved. The public who reads this letter doesn’t have the inside knowledge to know that they are reading a fairy tale written by a wicked queen that has a very bad ending.

1 comment:

  1. You cross the line everyday. Criminal.


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