The BBB serving Denver/Boulder has completed challenge one of three in their review of advertising used in the automotive industry. BBB annually conducts these reviews in an effort to identify and address patterns of advertising concerns on an industry level and to specifically ensure all are compliant with the BBB Code of Advertising and FTC advertising guidelines.
In 2015, BBB identified the auto deal industry as one that would benefit from an industry review in advertising practices. Auto dealers are one of Denver’s largest industries and in 2014, were in the top 10 of most complained about businesses. The Department of Revenue’s Auto Industry Division has also been looking into the advertising trends in Colorado and establishing a new set of advertising regulations.
Challenge one (of three) of this review was regarding one of the most fundamental advertising claims: price. With nearly 180 auto dealers participating, BBB identified prices that had ALL of the possible rebates included even though no one consumer could qualify for the rebates offered; prices that had fees added on later in the buying process; advertisements that had 6 prices listed in a confusing mathematical formula; and prices that were simply the selling price.
Through this review, the BBB has been able to work with businesses to modify their advertising through either substantiating their price as the actual price, or updating their ads to make all price claims clearer for consumers prior to purchase. BBB received some positive feedback from dealers, and saw a decline in the total number of complaints year over year from 2014 to 2015.
The other two challenges of this industry are on-going and are due to be completed by the end of 2016. Challenge two reviews advertising around credit approval and challenge three deals with leasing options.
From BBB’s founding in 1912, advertising has been its core principle. Industry sweeps are considered an approach to promote the BBB mission of promoting self-regulation within an industry, and further to educate businesses regarding BBB Code of Advertising and federal, state, and local regulations.
Getting Ready To Shop
You can make a much wiser decision about purchasing a car if you do your homework first.
- Ask friends who have recently bought cars about their experience with local dealerships. Ask them about their impressions of the salespeople, the service department, and the management.
- Check with the BBB first. Ask for a reliability report on the dealership and how many, if any, complaints have been received about the dealership and how the complaints were resolved.
- If you want to avoid the hassle of negotiating, consider a car buying service. You tell the service what model car you want, what options you want, and the service will negotiate with dealers for you. Professional car shoppers may charge a flat fee or, in some cases, charge a percentage of the money saved off the sticker price. If you choose a buying service that negotiates the price, select one that negotiates with several dealers.
- To determine ahead how much negotiating room you have on basic cars and extra options, draw up a work sheet for each type of car you are considering. Using updated price lists available from a number of sources, write down the dealer’s cost and list price (also called sticker price), for the particular make, model, and trim line.
For each car, list the options you want, describing them with the invoice number. Also, write down the dealer’s cost and the list price. Look up the destination charges for the car, and include this in both the dealer’s cost and the list price, since there is no markup. The destination charge is the cost the dealer pays to get the vehicle to the dealership.
Now compare the dealer’s cost and the list price for the car. The difference is your negotiating room. Do the same thing with each of the options. You may be able to negotiate on individual options.