(aka The Whole Truth)
Myths & Half-Truths 101
Cutting Thru The
Whenever sellers address potential buyers, in advertising or face-to-face presentations, their objective is to create “a sense of urgency” that will motivate those prospects to buy NOW. They work hard to convince us that today’s unique opportunity will be gone tomorrow. In most cases, this “call to action” is not true, but we gullible consumers fall for it, time after time.
Nowhere is that tactic more prevalent than in the retail car business. My purpose here is to debunk some of those old myths and half-truths, replacing them with the whole truth. (I call that stuff “boomfog,” a word I stole from an old friend who invented it.)
Half-Truth #1: Here’s a boomfog “call to action” that new-vehicle shoppers are peppered with year-round — one that’s based on a half-truth, but is really a sham because it hides the whole truth (which automakers don’t want you to know). It may pass some legal sniff test, but in effect, it almost always ends up being a lie in disguise. Here’s the message those ads aim to convey:
”OUR CARS MAY LAST FOREVER, BUT THESE DEALS WON’T. AND WHEN THEY’RE GONE, THEY’RE GONE!”
Literally, legally, that’s true. Automakers’ incentive programs always have end dates, typically monthly. But what the ads and the salespeople don’t tell you is, “The same incentive (or a better one) usually starts again within a few days.”
The reason automakers put end dates on incentives is (you guessed it) to give salespeople a rationale for getting you off your couch and into a car store. They want you to think this is a short-term offer, and when it ends, it’s really over. When the truth is, that offer or something like it is highly likely to be in effect next month. In my opinion, that’s tantamount to lying.
Example: Every month during the first 8 months of a recent year, Nissan’s basic national incentive offer on an Altima sedan was a $1,000 customer rebate or alternatively, cut-rate financing in the range of 0.0% to 3.9%. This offer had 8 different “end dates:” 2/1, 3/1, 4/1, 4/30, 6/1, 6/30, 8/2 and 8/31. So legally, the incentive ended 8 times in 8 months, but effectively, it never ended during that entire 8-month period, and those “end dates” were just a sham to fool consumers into thinking the offer would disappear, when in fact, it was continued, month after month after month.
I’m not trying to pick on Nissan here. Regrettably, all automakers use this misleading tactic to spur current sales.
And I’m not saying that incentives don’t change periodically, because they can. Car companies might adjust rebate levels, or even discontinue rebates and allocate the same amount of incentive money or more to low-interest financing and subsidized leases.
But after 20 years watching this game unfold, month after month, I can say that it’s rare for incentives on any vehicle to disappear from one month to the next. And if there’s an incentive on a car early in the model year, there will almost always be an incentive on it, month after month, throughout the balance of the model year. But automakers and their dealers don’t want you to know that.
Myth #1: Here’s another story we tend to swallow every year — hook, line and sinker — when the new models start arriving. You’ll see and hear commercials featuring this ancient call to action:
”THE DEALS ARE SPECTACULAR NOW BECAUSE WE’VE GOT TO MOVE OUT THE 2012s TO MAKE ROOM FOR THE 2013s!”
Near the end of a model year there often are good reasons to buy or lease sooner instead of later. For example, if you find there’s a dwindling supply of 2012s with hefty cash incentives or eye-popping financing or leasing offers (incentives that typically won’t be that lush on 2013s right out of the starting gate), you should move quickly to get one before they’re gone. But the claim that the deals are better then “because we’ve got to move out the 2012s to make room for the 2013s” is a myth.
The “model year” is not a calendar year. Many models with next year’s date on them start arriving on dealer’s lots in June or July, and most are available in September or October. There is no “magic time period” when any given model gets there. It can differ dramatically from one nameplate to another and from year to year.
Dealers must borrow money to finance their expensive inventories, paying hefty interest bills every month. So they stock enough vehicles to provide shoppers with a good range of price points and equipment and color choices, but not so many as to require burdensome interest carrying charges. In the retail auto business, that “ideal supply” is about two months’ sales.
Fact is, there’s no more pressure on dealers to move cars when the new models start arriving than there is at any other time on the year. Dealers are always pushing hard to sell new cars and replacing them with more new cars — day after day, week after week. The smart dealership keeps its overall inventory level at about a 2-month supply year-round. As the model year winds down and the stock of 2012s diminishes, those sold get replaced by 2013s — day-by-day, week-by-week. Over several weeks, the inventory of 2012s decreases from 100% of a dealer’s total to 0%, while that of the 2013 model increases from 0% to 100%.
So don’t be bamboozled by the “we’ve got to move out the 2012s to make room for the 2013s” claim. There may be strong reasons to get a 2012 before they’re gone, but this isn’t one of them. It’s boomfog, a myth designed to get you off your couch and into a car store.
I don’t invent the news, I just report it. My job is to educate consumers, improving their financial literacy in this product category by uncovering and revealing the truth — facts they’ll never find on those big corporate automotive websites which get all their revenue from car company advertising and dealers’ referral commissions from “click-throughs” for price quotes. Those sites masquerade as consumer-oriented, but they’re in the pockets of the automotive establishment. And sadly, many consumers, hungry for any information they think might level the car-buying playing field, believe what they read there.
Fighting Chance customers don’t get bamboozled by anything automakers or their dealers say because they control the negotiation process. The Fighting Chance information package contains everything you need to negotiate the price in a competitive bidding process, without walking into a car store. Detailed instructions tell you exactly what to do and when to do it, what to say to dealers and when to say it, each step of the way. Including a sample message you’d send dealers requesting price proposals.
If you feel enlightened by what you’ve read here, why not have the consumer advocate who wrote it help you cut through the boomfog and navigate through your next new-car negotiation like a pro?
I look forward to helping you get the best deal available on the new car you want.
Copyright & copy; 2017 Fighting Chance
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