Are Your Pricing Strategies Putting Your Dealership at Risk?

by | Aug 3, 2017

Auto Dealers and the FTC

Death By Deal

There are several things that have been accelerating in the world of vehicle advertising that should have many auto dealers alarmed. It’s no longer just the car buyers and the consumer advocacy groups that need to concern you. It’s also the US government that’s coming down on dealers. The FTC has started cracking down on auto dealers that use “deceptive advertising tactics”. So far, they’ve started with the most egregious offenses like advertising low prices that didn’t mention the price was after a substantial down payment or advertising low monthly payments. This without mentioning there was a large balloon payment at the end.

Are You at Risk

Most dealers aren’t doing these things. But there are other practices that a good number of auto dealers are doing that will eventually put them at risk. As with most things that pertain to the FTC, they’re starting at the top and working their way down. This is designed to get dealers and consumers used to the fines and penalties.
So that when they get to the “lesser” offenses, they will be expected.
These lesser offenses include one that a good chunk of auto dealers across the country does today: price transparency violations. If you post that you’re selling a vehicle at a particular price, you must demonstrate how you got to that price. Discounts, rebates, and special offers must be detailed in everything that you advertise. So far, there have only been a handful of high-profile cases where this has been brought to light.
However, we can expect that it will only become more common as the top-tier offenders start thinning out.

Examples

Let’s say you are applying a military discount to your advertised sale price on your website or a third party site. If you don’t disclose that discount, you’re in violation. We have to be aggressive with the way we advertise our pricing in this industry. It’s the right way to keep competition strong and push the boundaries of sales. As long as we keep the rules in mind and apply them accordingly, all should be fine. When we start down the slippery slope of hiding how we got to the price we advertise, we’re risking our business altogether.