Are New Cars Ever Really on Sale?

January 14, 2009 by  
Filed under Spending

In the past few months the car companies have been burning a lot of cash and media time advertising their “Toyotathons”, “Red Tag Events”, “Employee Pricing Plus “, and “Loyalty Incentives”, trying desperately to inspire bargain hunters to buy a new car.  Sometimes these car commercials interrupt a stimulating TV interview of some Deputy Assistant Undersecretary of Bailout Funding (former job title:  printing press operator).   When the car commercials do get my attention, I watch and listen intently to see or hear exactly what vehicle is on sale and what the precise terms of the sale are.  You may wonder why I would do that, given that I don’t buy new cars.  The reason is that I am still waiting for an automobile manufacturer to come right out and explicitly say that a certain car is “on sale.”   I hear about “sales events” and “special pricing” but never “sales.”  Why is that?

I think I know the answer:  Car companies and car dealers rarely if ever put their products on sale. 

The Federal Trade Commission (FTC) regulates deceptive consumer advertising.  Some years ago the FTC decided it needed to crack down on retailers that advertised products as being “on sale” when, in fact, the prices being offered during the “sale” were no better than at most other times when there was no “sale.”  Car manufacturers and dealers were notorious for this.  Sears was also a culprit, as the saying was that if you bought anything at Sears that was not on sale, you paid too much.

The FTC actually publishes guides against deceptive pricing.  Retailers of all kinds have concluded from these guides that to stay out of trouble, they needed to drop the phrase “on sale” from their advertising vocabulary, unless the prices offered during the alleged sale were truly lower than the regular selling price.

New cars are rarely sold at a pre-determined price.  Negotiation is expected.  Thus, the price that someone negotiates in July could very easily be better than prices negotiated during a January “Red Tag Event.”  That being the case, the auto company can’t take the legal risk of calling the “event” a “sale.”

So next time you are tempted by TV images of excited shoppers in a new car showroom, start by asking the sales person if the actually selling prices being offered (net of incentives and rebates) during this “Toyotathon” or “event” are better than at any other time of the year.   In fact, ask for a low price guarantee like you might get from a big box retailer.  I’m betting that instead of answering your question, the sales person will ask you the three most notorious questions in new car selling:  (1)  What monthly payment can you afford? (2) What color are you looking for? and (3) What will it take to put you in a new car today?  Your answer to question (3) might be:  “How about really putting this car on sale.”

Listen to a new car commercial next time one comes on.  I’m curious if you think my observations are accurate.


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Comments

2 Responses to “Are New Cars Ever Really on Sale?”
  1. G. Jules says:

    I highly recommend Remar Sutton’s book Don’t Get Taken Every Time for anyone looking to buy a car — new or used, dealer or private party sale. He goes into the breakdown of dealer “sales events” like these, along with basics on how to choose a used car, how to understand loan financing and leases, how to negotiate on price, how to maximize trade-in value, and so on. It’s an excellent book.

    If you actually need a car, this isn’t a bad time to buy from a new car dealer — they’re hurting. Bad. Just make sure your answer to question three is “Sell the car to me for my price.” And don’t budge. (I got my car for invoice minus a grand in manufacturer’s rebates. If I’d known how easily they’d give me that price, I would have started lower! And no, they didn’t get me on the financing — I financed through my credit union.)

    The downside to the poor market for new cars is that the used car market in my area is seriously out of whack, which is the only reason I was willing to go new. 2006 Toyotas with 30K miles for only a grand or two less than the new models? Not so much.

  2. SmallBusinessYouWantTOKill says:

    “You’re forgetting that employees don’t just get UI automatically.”

    Once again you are forgetting that employers are required to prove that they are fired for reasons other than layoff. Which is not exactly something that small business has time to spend on. Try and argue with that when you become a business owner, then you can come back here and tell me how you like it.

    “It’s not hard, yet you do nothing but come up with excuse after excuse as to why you don’t/won’t/shouldn’t have to do it. ”

    OMFG, why can’t you get it? “Its not hard”, right! I am saying the UI are causing problems and causing small business not to hire if they can help it (especially with manufacturing work), and you are saying its not hard to prove otherwise, dude can you understand that I am saying UI is a problem, your answer is not a solution that many small business are using, cause if it is our unemployment rate won’t be in 9.2% right now!

    “And you still have not provided any arguments to support your claim that the UI system is broken”

    YOu have got to be brain dead, my business operation is the prove that not hiring and having majority of manufacturing done oversea is the proof that our UI system is one of those regulations that is causing our country’s high unemployment rate, REMEMBER, if the regulation worked today, you will never have seen such high number of unemployment.

    ” Companies are not going overseas because of UI compensation. They’re going overseas because the labor is cheap and they are able to avoid paying many US taxes”

    YES finally you are getting it, but you must understand that business go oversea for multiple reasons, and one of the reasons for us not hiring extra hands in our business instead asking oversea manufacture to do our special designs is because of UI system (and health insurance), but HI its not something this article is talking about.

    ” UI rates are a drop in the bucket compared to the big picture”
    YOU are absolutely clueless, any increase in UI rates can cause potential problems for small businesses. Please tell what big picture you are talking about? Big picture that says economy is recovering because Ben Bernanke is printing out more money for you?

    “so I’ll just let you have the last word on this for now. Hopefully, these UI researchers whom you apparently believe are spending hours on Google”

    Right, listen to my word and go open a business with a your hand instead of a employee handbook because you will never get anywhere. Hopefully, I can open some closed mind drone like you to see that your unemployment is due to our country’s regulation. LOL apparently you have no idea how researchers these days works, I was a UMCP ME grad student once, and I can tell you that I got most of my data for research paper by researching from google, not the library, the library is old tech, get on with the new way.

    “UI system will find much more credence in your arguments and revise the system so that you can hire employees sans all your aforementioned fears.”

    Once again, you are losing yourself here, need I say more? I post my opinions here, and your solution of having more legal/paper work done by employers to cover their own ass is not a solution that many small businesses are using, which is why we have such high of unemployment rate.

    As a employee on software side of work, you should be careful about your own get getting outsourced to India.
    GL

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