We have been investigating a marketing ploy that car dealers use to entice customers into their showrooms. It’s called the “bait and switch” because dealers use a low priced ad car (a vehicle they use in an advertisement) as “bait” to lure customers into the dealership. Once there, the dealer will “switch” them to a higher priced model with more profit for the dealership.
The “bait” car is usually a stripped down model that lacks the features that most people want such as air conditioning, power windows, or radio or CD player. It may have a manual transmission. Or it could be a color that’s difficult to sell because no one wants it. These can also be cars that are getting close to having a birthday: they have languished at the dealership for almost a year without selling. Dealers do not celebrate inventory birthdays. These cars are usually the source of much pain and even embarrassment for the sales managers and G.M. Flooring (finance) charges have been racking up on the vehicles every day they’ve sat on the sales lot unsold. Dealers will often sell these cars at a loss, and in some cases, thousands of dollars below their cost.
The Good News
What we haven’t yet acknowledged is that there are buyers who are looking for exactly what is offered by these “bait” cars. When that happens, count your blessings and drive away with extraordinary savings. However, what usually happens is a customer arrives at the dealership and is surprised and disappointed when they realize the car that lured them here is not the car they want. At this point, the salesperson cleverly points to a nearby vehicle that has all the features that the buyer actually needs. The problem is that it costs significantly more. Thus begins the “switch.”
What to Do?
If you find yourself at a car dealership and realize that you were just taken in by a bait and switch marketing ploy, stop what is going on and walk out. If you think you can salvage this trip and still drive away in a new car at the price you want, well, the odds are stacked against you.
In previous articles we have discussed how difficult it is to get a good price from a car dealer when you begin the negotiation process at the dealership itself. This is usually a loser’s game. Why? When you walk into a dealership and ask about the price of a display car, the salesperson usually points to the sticker on the window displaying the Manufacturer’s Suggest Retail Price (MSRP or sticker price). Many dealers use other ploys to price their cars higher than MSRP, but this is a subject for another article.
Do you really want to begin negotiating the price of a car from MSRP or higher? What’s the alternative? Try emailing the dealership’s Internet sales department from the comfort of your home. They usually begin pricing the same car at a much lower price. Depending on circumstances, make, the time of year, and so on, this price can be the invoice price or below.
Who is in Control?
This leads us to the question of who is control when you visit the dealership. The answer may surprise you. More on that tomorrow.