Marketing cars that really look good
By Ed Lowe
Senior Writer
There's an old story about the guy who buys a horse and, after a couple of days, brings it back to the seller. "You cheated me when you sold me this horse. The horse you sold me is blind," says the buyer. "I didn't lie about anything," says the seller. "I told you he didn't look so good."
And that's the way it's always been when it comes to buying transportation. In the early years of the automobile, perhaps 100 years ago, people would buy the chassis of the car and then, separately, buy the body type they wanted and any accessories they might feel were necessary, like rubber tires. Each step of the process involved trading. They were called "horseless carriages" for a good reason.
In fact, the term "horse trading" became synonymous with the practice of buying and selling automobiles. As marketing cars became more sophisticated, there was a single price for the car and many of the "standard" accessories, but it was necessary to shop hard to get the best price. Unlike virtually every other consumer item in the market, you had to be a horse trader to get the car you wanted at the most reasonable price. Many people found this practice unpleasant; others reveled in the chance to test their bargaining skills against those of the auto dealer or his salesman.
The best advice anyone could get was to shop hard, get the best price available on your first circuit around auto dealerships, and then make the rounds again and shop against your best price. You were also told to get the deal in writing so that the car you got might not fall into the same category as the horse who "didn't look so good."
Today, we have to contend with dealers whose prices are in a constant state of flux. What with discounts and rebates, with end-of-season sales events and special promotional deals on accessory packages, special financing packages and lease terms, it's hard to find two dealers offering the same car at the same price. There always seems to be something different. And, in addition, each dealer promises the most magnificent service facilities available anywhere in the Western World.
An additional factor in this morass of selling options comes with the makers of Japanese cars. Toyota recently announced that it was considering raising the prices of their cars to allow American manufacturers to compete with them since their cars, which were generally cheaper than their American counterparts, were better made and were outselling US models. That ploy was, of course, pure hype. Raising prices (and profits) is something that manufacturers do all the time. It's the nature of the business.
There's another factor in the price of cars and that's the interest rate at which they are financed. It's an economic certainty that the use of money has a value. That value is usually defined by the interest rate. When someone promises "Zero interest financing" it means only that they have boosted the price of the car to accommodate the cost of the money needed to finance your purchase. To believe that there's something for nothing anticipates the arrival of the Tooth Fairy, Santa Claus and the Easter Bunny on the same evening. It was, after all, economist Milton Friedman who said, "There's no such thing as a free lunch."
So, it is not easy to comparison shop for cars. It never was, and now every marketing gimmick developed by the auto manufacturers over the past century is designed to make it even harder for the consumer to know whether he is getting a good deal — and certainly not whether he's getting the best deal for the make and model he decided he wants to drive.
The latest ploy being used by the manufacturers is offering the cars with an "employee discount." General Motors came up with the idea and apparently it took off because Ford and Chrysler followed with comparable bargain offers of their own. In addition, one car maker offered a $3,500 rebate (on some select models) in addition to the employee discounted price. And when they're all done, the bottom line requires buyers to go from dealer to dealer to get the best deal for the make and model of car they wanted in the first place. Nothing has changed.
Is there an answer? It's easy. If one manufacturer would insist that his dealers stick to a single price for a particular model with certain specified accessories and guaranteed that no one anywhere would be able to sell that car for less, he'd eventually get all the business — if that guarantee were stated so that there would be a substantial refund if the buyer were able to find another car with the same equipment for less money. A refund in the nature of 10 times the price differential between what was paid and what's available would help manufacturers keep honest. Buyers could relax in confidence that they had the best deal in town, and the automobile industry could go on to other important matters like developing newer, more fuel efficient cars we would be able to drive without worrying about the Mid East's stranglehold on all of us.
This sort of marketing might also bring back the primacy of US car manufacturers and create more than a few new jobs in our economy. And we wouldn't have to worry about whether the car "didn't look so good." |
