Car Buying: Is That New Car Price Too Good to Be True?

car buying is that new car price too good to be true

Price is the deciding factor in many new car purchases, so it’s no surprise that dealerships do all they can to advertise the lowest number possible. While the internet has given consumers a lot of power when it comes to purchasing a new car, many consumers still fall for age-old pricing tricks.

One of the easiest ways to reel people into a dealership is to set up an advertisement for a decently optioned popular car at a sale price significantly lower than MSRP. This advertisement will usually be the lowest in the geographic area and would cause a loss for the dealership if sold. The way that deceptive dealers get around honoring the advertised price is by specifying a single stock number that qualifies and then asking a friend or relative to put a deposit on that specific vehicle as soon as the advertisement goes up online or in print.

Since the specific vehicle is technically still in dealer inventory, they can continue to advertise it. However, once a potential customer shows up, they can tell them that it is no longer available due to the pending deposit. The next step is to try and switch the customer to a similar vehicle on the lot and sell it to them at a higher price. The best way to check for this type of deceptive advertising is to offer a deposit on the vehicle before you step on the lot. If the dealer refuses to take the deposit and asks you to come in and discuss, the vehicle is most likely not available.

The website popup coupon is another practice to make the customer think they are getting a deal, but in reality only serves the dealer as a lead generation tool. In most cases, a potential customer will receive a popup while on the dealer’s website offering a few hundred dollars off their purchase if they fill out their information for a coupon voucher. Once they fill out the information, it gets transferred to the dealer as a lead and generates a voucher for the potential customer. These vouchers usually have some fine print which states that it must be presented at the beginning of the transaction in order to be valid. This caveat allows the salesman to build the savings from the voucher into the price quote so that the customer believes that they are getting a better price.

Another favorite for many dealers is to advertise a vehicle online with all incentives and rebates combined. These dealers will show a very low price but will list a disclaimer that you must qualify for all rebates and incentives and have excellent credit in order to qualify. While this may seem attainable in theory, it usually requires someone to have an odd combination of qualifications that might include being a retired veteran that graduated from college in the past six months, who insures their vehicles with USAA, and is trading in a competing vehicle on the last Tuesday of the month.

Options are another easy avenue for dealers to bring additional profit. Dealers will advertise a vehicle for a low price but will include a disclaimer that dealer installed options are not included in the price shown. Once you show up on the lot, they tell you that they will sell you that pickup for a lower price but will need to add a few charges since they have already installed a $1,000 bedliner, added $200 worth of nitrogen fill to the tires, sprayed on $400 worth of undercoating, and tinted the windows for $300. These options cost the dealer pennies on the dollar, but since they are already installed the dealer can push for you to pay the higher price once you are in front of them.

The only somewhat honest version of these advertising tactics involves the use of “loss leader” vehicles. These vehicles are usually unwanted models that are missing important features or have odd colors. These models are listed at cost or lower in order to bring customers to the lot and generate buzz. The dealer hopes that once the customer comes to the lot and sees that the vehicle has manual crank windows and is missing air conditioning that they will ask to step up to the next trim level and buy a more expensive version. The dealers will pressure you to go for the higher priced model so that they can make money, but will actually sell you the loss leader at the advertised price if you push for it.

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  • TDIGuy TDIGuy on Aug 04, 2015

    WRT dealer invoice pricing or employee pricing, I just use that as a starting point. I have told the sales drone: "Great that's your price, so what's my price?" The old chestnut they drag out around here is the "free gas card". Wording is usually something like "includes .89/L gas card", when in reality the fine print says it is really a discount of .30/L to a limit of $1000. In other words, the card is worth $300 and you can bet that's not what the dealer paid for it.

  • Jim brewer Jim brewer on Aug 04, 2015

    It's fairly easy to find out who the "quality buying experience" dealer is and who the high pressure scumbag is for the car you are interested in. They usually share the same inventory because of manufacturer rules. High Pressure guy is for test drives. Quality guy is for closing the deal. Even still, you should plan on some dickering.

  • ToolGuy @Matt, let me throw this at you:Let's say I drive a typical ICE vehicle 15,000 miles/year at a typical 18 mpg (observed). Let's say fuel is $4.50/gallon and electricity cost for my EV will be one-third of my gasoline cost - so replacing the ICE with an EV would save me $2,500 per year. Let's say I keep my vehicles 8 years. That's $20,000 in fuel savings over the life of the vehicle.If the vehicles have equal capabilities and are otherwise comparable, a rational typical consumer should be willing to pay up to a $20,000 premium for the EV over the ICE. (More if they drive more.)TL;DR: Why do they cost more? Because they are worth it (potentially).
  • Inside Looking Out Why EBFlex dominates this EV discussion? Just because he is a Ford expert?
  • Marky S. Very nice article and photos. I am a HUGE Edsel fan. I have always been fascinated with the "Charlie Brown of Cars." Allow me to make a minor correction to add here: the Pacer line was the second-from-bottom rung Edsel, not the entry-level trim. That would be the Edsel Ranger for 1958. It had the widest array of body styles. The Ranger 2-door sedan (with a "B-pillar", not a pillarless hardtop), was priced at $2,484. So, the Ranger and Pacer both used the smaller Ford body. The next two upscale Edsel's were based on the Mercury body, are were: Corsair, and, top-line Citation. Although the 1959 style is my fav. I would love a '58 Edsel Pacer 4-door hardtop sedan!
  • Lou_BC Stupid to kill the 6ft box in the crewcab. That's the most common Canyon/Colorado trim I see. That kills the utility of a small truck. The extended cab was a poor seller so that makes sense. GM should have kept the diesel. It's a decent engine that mates well with the 6 speed. Fuel economy is impressive.
  • Lou_BC High end EV's are selling well. Car companies are taking advantage of that fact. I see quite a few $100k pickups in my travels so why is that ok but $100k EV's are bad? The cynical side of me sees car companies tack on 8k premiums to EV's around the time we see governments up EV credits. Coincidence? No fooking way.