"No Payments For Life" Ad Costs American Suzuki $18.5 Million

September 9, 2011
We’ll let you in on an auto industry trade secret: sometimes car dealerships, in an effort to move units, artificially embellish the truth. We’d never accuse them of lying, since that would be unethical; instead, some dealerships use advertising that promises much and delivers little.

A local dealer here, for example, offers a “guaranteed minimum trade” of “up to $6,000.” In essence, all they’re saying is that they take trade-ins and will pay you up to $6,000 for your vehicle. That’s not what people hear, so imagine the disappointment of a customer who drives in with a 200,000-mile Dodge Omni, infested with tin worm, to learn that he’ll get $50 in trade, not the $6,000 he’d planned on.

Some schemes are even more outlandish than that. Take the deal offered by a Kansas City Suzuki dealership, owned by Chad Franklin. They offered customers “no payments for life,” which not only sounds too good to be true, it proved to be too good to be true. Most dramatically affected by this promotion was Jeremy Franklin, Chad’s brother and the owner of a rival Suzuki dealership, also in Kansas City.

When the “no payments for life” campaign tanked, lawsuits ensued. Customers sued Chad Franklin, claiming that they were entitled to what the ad had promised. Jeremy Franklin, who was smart enough not to participate in his brother’s ambitious-but-ethically-questionable ad campaign, sued American Suzuki Motor Corporation, claiming that the bad press from the “no payments for life” scheme irreparably damaged the Suzuki brand in the Kansas City market.

Why was American Suzuki named in the lawsuit? Because co-op advertising, paid for by American Suzuki, was used in Chad Franklin’s ad efforts to promote “no payments for life.”

A jury sided with Jeremy Franklin, awarding him damages of $3.5 million and punitive damages of $15 million. American Suzuki Motor Corporation will, of course, appeal, and a spokesman for the company says it was “disappointed” by the award.

This much is certain: if the award is upheld, it’s Jeremy Franklin, not his brother Chad, who will be enjoying no more payments for the rest of his life.

[Automotive News (subscription required)]

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