Tuesday, May 28, 2013

Anatomy of a Car Ad

Most car advertisements are deceptive to the extreme. That doesn’t mean that all car dealers are bad people. I believe that many car dealers believe that they have no alternative but to “fight fire with fire”. Some car dealers are bad people in the sense that they choose to deliberately trick prospective customers into coming into their dealerships. In the minds of the other car dealers, who would rather advertise honestly, they have no choice but to “out exaggerate” and even “out lie” the bad dealers. The bottom line is there is no difference in the net effect on you, the car buyer. One could argue that the real villains in all of this are the regulators or even the media. The state attorney general, the Department of Motor Vehicles, the County Office of Consumer Affairs and even the BBB look the other way when it comes to unfair and deceptive advertising of car dealers. With the exception of the BBB, their defense is that their “just too busy” with other concerns. In the case of the BBB, as long as a member pays his dues and responds to all complaints, he will usually have a high BBB rating. The dealer who ran the advertisement this article is about, Napleton Hyundai, has an A+ BBB rating! The media are complacent in running ads that are obviously deceptive, pleading ignorance. They also recognize that car dealers are one of their, if not their, largest advertisers.

This full page newspaper ad appeared in Sunday’s (5-20-13) PB Post and Sun Sentinel. You can view the ad by clicking on www.AnatomyOfACarAD.com. The upper LH side of the ad has a picture of the General Manager with the caption, “Thanks for making us your #1 volume Hyundai store 55 months in a row in PBC.” The ad is for the North Palm Beach and WPB Napleton Hyundai stores. There are 3 Hyundai dealers in Palm Beach County, 2 of which are owned by Napleton. The 3rd is Delray Hyundai and it’s not surprising that 2 Hyundai stores sell more than one.

Reading left to right, “Double your Rebate up to $8,000”. In the fine print it says on “select models” off of dealer list. The key word is “dealer” list which is not MSRP, but a markup over MSRP by as much as Napleton chooses…thousands of dollars over the manufacturer’s suggested retail price. Furthermore the fine print says “trade-in required”. This is so Napleton can allow you far less for your trade than it’s worth to help him cover doubling the rebate. The ad also says “free leather” or $1,000. Napleton can give you a “free 5 caret diamond ring” if you allow him to mark his dealer list price up high enough!

Reading further to the right you will see, “$1 over invoice”. The dealer invoice is not what the dealer really pays the manufacturer for the car. The average car invoice packs in thousands of dollars in profit to the dealer in the form of holdbacks, advertising subsidies, dealer cash incentives, and customer cash incentives to name a few. Any dealer would be happy to average the “invoice profit” on every car he sells.

Reading further to the right, “$4,500 for your trade” even if you have to “push, pull, or drag it” into the dealership. Napleton can give $45,000 for all trades if you’ll let him mark up the new car as high as he wants…remember his cars are all priced at “dealer list”, not MSRP which is displayed on the federally mandated Monroney sticker.

Just below this is 0% financing, $0 down payment, and 0 payments for one year. Of course to get 0% financing, you can buy only the Sonata and Santa Fe models and pay (you guessed it!) dealer list. $0 money down and 0 payments for one year are available only with credit approval by the banks (banks usually prefer a down payment and will not waive payments for one year). Oh, none of the above is available on the cars in this advertisement (fine print).

On the top far right of this ad, “We will beat any Hyundai dealer in the USA by $500 or we will give you $1,000.”  This requires a valid buyer’s order from the other dealership signed by you and the manager. Virtually no car dealer will give you this unless you are buying the car and driving it home at the same time. They do not want to allow you to show a firm price to their competition which they can beat. Also in the fine print, Napleton reserves the right to buy the car on which the other car dealer gave you the low price, at that price. I can promise you that no car dealer is going to sell a car to his competitor and allow that competitor to steal his customer and sell him a car. If Ed Napleton can show me proof that he has ever honored this “Price Beater Guarantee”, I will contribute $10,000 to his favorite charity.

Just under the phony guarantee is “Drive a 2013 Hyundai Santa Fe sport for only $179 per month lease. The fine print requires $3,967 down payment. You also must qualify for all rebates and incentives. This means that you must be an active member of the military and a college graduate of an accredited 4 year university within the last 6 months. It may also include loyalty or competitive conquest rebates. This means that you would have to be driving a specific year and model Hyundai or a specific year and model of a competitive make to be eligible for  the advertised payment.
There are 7 more models with advertised lease prices, just like the Santa Fe, each requires a large down payment. Also, in the fine print, all lease payments are “plus dealer installed accessories”. This means that Napleton can add thousands of dollars in virtually worthless accessories to the advertised prices. Typical dealer accessories are nitrogen in the tires, paint sealant, stripes, emergency road service, and glass etching. This can add thousands of dollars to the already highly marked up dealer list.

Finally, almost every advertised car carries a number next to the price. One example is stock #46413F45 for the Elantra. In the fine print it says that the $795 dealer fee is included in the price. Florida law requires that the dealer fee be included in the price of every advertised car. But, if you buy any other Elantra than stock #46413F45, you will pay an extra $795, even if that Elantra is identical to the advertised car. The salesman is also not paid a commission on the advertised car, so you can imagine how good your chances are of buying that car even if it hasn’t already been sold.

My last column was an “Open Letter to Our Attorney General, Pam Bondi”. I asked her to consider reprioritizing her focus objectives to rid Florida of crime and unfair and deceptive trade practices. I hope she will look at this column and this advertisement by Napleton Hyundai. 

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