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Internet Pricing Strategies?
Hey all, we've seen a downward trend in leads lately. Of course, it is the "slow season" here in SW Florida. (March-November when the snowbirds go back north with their dollars)
Much of our inventory is priced below book. Some by several hundred, some by several thousand.
So I'm thinking about reducing prices again but adding to my disclaimer something to the effect of:
"All advertised prices shown are with $3,000 cash down payment or trade equity. All prices exclude government fees and taxes, any finance charges, any dealer document preparation charge, and any emission testing charge. Vehicle availability is not guaranteed and subject to prior sale. All vehicle details advertised are true to our best knowledge, but not guaranteed. It is the customer's sole responsibility to verify the existence and condition of any equipment listed. The dealership is not responsible for misprints on prices or equipment. It is the customer's sole responsibility to verify the accuracy of the prices with the dealer. Pricing are subject to change without notice. Any advertised down, monthly, bi-weekly, and weekly payments are estimated examples and / or approximate payments only and subject to credit check and approval, 720 beacon score or higher.
This will allow me to show a lower list price. Any thoughts? Ideas? Any compliance/legal issues I may need to be aware of?
For what it's worth, I don't just arbitrarily post a price. I look at NADA/KBB, history report, current market values based on similar vehicles with similar miles posted on AT, Cars.com, etc.... Then go from there. I don't want to price myself out of market for the sake of trying to hold max gross, but don't want to leave money on the table either.
Thanks!
Mike
Much of our inventory is priced below book. Some by several hundred, some by several thousand.
So I'm thinking about reducing prices again but adding to my disclaimer something to the effect of:
"All advertised prices shown are with $3,000 cash down payment or trade equity. All prices exclude government fees and taxes, any finance charges, any dealer document preparation charge, and any emission testing charge. Vehicle availability is not guaranteed and subject to prior sale. All vehicle details advertised are true to our best knowledge, but not guaranteed. It is the customer's sole responsibility to verify the existence and condition of any equipment listed. The dealership is not responsible for misprints on prices or equipment. It is the customer's sole responsibility to verify the accuracy of the prices with the dealer. Pricing are subject to change without notice. Any advertised down, monthly, bi-weekly, and weekly payments are estimated examples and / or approximate payments only and subject to credit check and approval, 720 beacon score or higher.
This will allow me to show a lower list price. Any thoughts? Ideas? Any compliance/legal issues I may need to be aware of?
For what it's worth, I don't just arbitrarily post a price. I look at NADA/KBB, history report, current market values based on similar vehicles with similar miles posted on AT, Cars.com, etc.... Then go from there. I don't want to price myself out of market for the sake of trying to hold max gross, but don't want to leave money on the table either.
Thanks!
Mike
Replies to This Discussion
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Permalink Reply by Bob Bressi on -
When things are slow why do we always fall prey to LOWER PRICES? I realize inventory ages and we have to move it but we will never correct "PRICE SELLS CARS" if we are always advertizing the lowest price etc.
Take the car in on trade RIGHT and buy at the auction RIGHT and then price the car RIGHT. This is nothing new it is simply good business practice. When times are slow we sell less cars but we get more gross.
We never get Internet leads that make any sense. We are in a Rural town so all the leads we get from outside of here are trash meaning they are at the lowest possible denominator. When we do make a Deal on an Internet lead it is simply a bonus sale, not our every day dependence.
Repeat / Referal is our life blood.
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Permalink Reply by Thomas B. Hudson on -
There are enough legal issues in that disclaimer to keep a compliance lawyer occupied for awhile.
As just one example, the federal Truth in Lending Act and Federal Reserve Board Regulation Z use a concept called "triggering terms." If you use a triggering term, such as the amount of any payment, you must disclose other terms, such as the APR and terms of repayment. It's OK to use examples, provided the examples contain all the required applicable terms.
Some states' advertising laws and/or motor vehicle dealer laws and regulations specify what can and cannot be contained in an advertisement. As an example, some states require that the cost of doc fees and other items be included in the advertised price.
Some state laws and regulations impose type size requirements on ads (example - requiring that any disclaimers be in the same size font as the font used in the rest of the ad).
Still other state laws and regulations make it a violation not to sell a vehicle at the advertised price (that would make me nervous about the "Prices are subject to change without notice" language in a state with such a prohibition).
Nearly all states have a version of an "unfair and deceptive acts and practices" statute that state Attorneys General use to great effect on dealer advertising. I can see an AG making the argument that advertising terms that are available only to buyers with a high credit score when the dealer's customers are nearly all credit challenged is a violation of that state's UDAP law.
I wouldn't use a disclaimer like that without having it approved by a knowledgeable compliance lawyer.
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Permalink Reply by David Ruggles on -
The solution is spelled vAuto.
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Permalink Reply by ian wildstein on -
I am a dealer in Miami. According to my lawyer and the DA here in Miami it is illegal to advertise with "cash down or equivalant trade". Additionally any advertised price cannot include dealer fee. Chances are that you could probably get away with it for a while as the DA has got better thing to do than chase dealers. A couple dealers around me were just fined something like $14,000 a piece for adds with discalimers just like the one just mentioned. It falls under the "Unfair and Deceptive Trade Practices Act"
I also feel with a disclaimer like that one you are asking for trouble, leagaly I mean. Additionally from a consumers point of view it looks like you are trying to hide something.
I am not a Lawyer and these are only representations of my opinion.
Good Luck
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Permalink Reply by Janet Rossi on -
I actually thought of something last night about this post. My friend was trying to buy a used Chevy Malibu at a dealer in our town. I told her to "just for fun" scour the internet for the same car, at a lower price. You see the dealer had a "we will match any published price" kind of thing going on. So she did it. She found a dealer down in Denver that had pretty much the same car, color, options, miles at $3,000 less than the dealer in our town. She printed out that page and showed the dealer up here and they matched that price. What I am saying is you might be inadvertently just helping consumers get lower prices at other dealerships. You can't assume that by lowering your price, that would mean that the consumer would just buy from your place. Just wanted you to think about that scenario! - What about offering 6 oil changes a year with each car purchase? Get them used to using your service area. Of course once in a while they would have to buy a fuel filter or air filter - and gives them an opportunity to have you check on updates or recalls for the vehicle while it is in the garage. That can add up to a lot of savings. Just some thoughts! - Janet
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Permalink Reply by ian wildstein on
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I will do you one better. Oil changes for life!!!! Sounds crazy but the truth is that service is all about tires brakes and batteries. No service department makes money on oil changes,if they do they are not being competitve.
The only reason we do not do it at our ealership is we do not have a way to track it, YET. I have a feeling that Oil changes for life are in our future.
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Permalink Reply by Catherine Edwards on
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Sending out a price quote has been shown in multiple studies to increase sales. For instance: 60% of car buyers said if they received a competitive price quote from a Dealership they would stop shopping elsewhere. (Kurt Baumberger, Adapt or Die 2010). A major OEM study showed that the sending of a price quote was directly correlated with increased sales. And speed matters too: CapGemini showed that a response in 20 minutes doubled conversion rates.
Catherine
www.responselogix.com
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Permalink Reply by Philip Moore on -
You don't have to have the lowest price, but you do need to be on the first page of a low-to-high price sort on whatever inventory site you use to advertise. So do a search for your vehicle in a 50-mile radius around your zip then price just below the 4th cheapest comp. That gets you above the fold on the initial search. Now people are going to see your listing, so make sure you follow Phillip Cannon's advice about a unique selling proposition. You may not be the cheapest Malibu, but if yours comes with oil changes for life, or an iPad, or a service waiting area with WiFi and foot massages, then you're going to get lots of action.
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Permalink Reply by Janet Rossi on
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Foot Massages? I'm in! love it.
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