Recently I saw an interesting piece on CTV’s W5 regarding new car dealers and the application of hidden costs to purchase prices. Journalist Victor Malarek and the Automobile Protection Association’s (APA) president George Iny presented the findings of a survey in which 19 out of 22 Calgary-area new car dealerships failed to fulfill advertised offers.
Posing as prospective buyers and equipped with hidden cameras, men and women brought ads for various offers to dealers and simply asked to have ‘this deal’. They made it clear that they wanted exactly what was offered, only to find out that there was a problem. Perhaps there were no more in stock (but a similar, more expensive vehicle just happened to be available). Or they discovered that there were substantial hidden costs, aside from taxes, that would be added – in one case an annual fee of more than $2000 on top of lease payments. Sometimes these costs were mentioned in the small print – the very small print – but often not.
I used to work for an advertising agency that had as clients several local car dealerships, so the minutia of advertising in this realm is nothing new to me. A number of print ads that I checked in my newspaper this week had the statement ‘Wise buyers read the small print’ as the lead in to the small print. Evidently hinting at the ability of small, or mouse print to essentially change everything in the ad above. In addition to the details of deals, and a description of who is eligible (i.e. credit rating), most of these ads include a disclaimer in the fine print. They usually begin with the phrase ‘The dealer reserves the right to …’, and seem to give the dealer carte blanche.
It has always amazed me that two identical new vehicles can be sold for two different prices in the same vicinity. This only applies to new cars; used vehicles can not be assumed to be identical given the effects of use. But brand new cars arriving at the showroom right off the assembly line and kitted-out with the same options packages should cost the same, at least within the same geographical area. I understand transport of a new vehicle to, for instance, a far northern region may add to the price, but everyone buying that model in that region should be paying the same price.
I am not a huge fan of Apple; not that the products are in any way inferior, in fact I am very pleased with my iPad, I just do not like the way they tie you in, I find them inflexible and often frustrating. But I must admit one aspect of Apple marketing that I like is that the price is the price. Yes, the prices of many Apple products are too high, but they are too high for everybody. Apple products do not go on sale. And when purchasing an iPhone you know it will be the same price all over town, if not all over the country.
I once read the findings of a study, which now annoyingly eludes me, which illustrated that of the two big-ticket purchases, houses and cars, it was the latter that caused the most angst and post-purchase second-thinking. Houses, unless newly built, never before occupied townhouses or condos, are rarely identical, so comparison is difficult. But identical new vehicles provide an ideal set of conditions for pricing comparison.
Every so often one of the owners of the dealerships we worked for would express his concern about Ford Canada’s desire to do away with new car dealerships as we know them altogether. The idea is to reduce the number of dealerships, use them solely as new car showrooms. Potential buyers can drop in, ask questions, kick tires and test drive models. Then, should they be interested in buying, they are directed to a bank of computers – or they can go home to the comfort of their own computer – and ‘build’ their car online. Standard pricing for automobiles, much like ordering Birkenstocks online or buying shorts from L.L. Bean. No haggling, no post purchase sleepless nights.
The W5 APA survey findings should fuel the argument that the time has come to do away with the middleman – or middleperson – and provide open, clear and honest car pricing. It is one thing to pay a buck or two more for a grocery item in a store because it is close to home, but hundreds if not thousands of discretionary dollars quickly add-up in car sales. Caveat emptor indeed.