Don’t Fall For Dealer Deceptions and Bad Faith Prices

Some of these topics are covered in the FTC’s initiative to level the playing field for honest dealers. We are big fans of most of these ideas. We wrote a blog about it here. But for a bit of a deeper dive, here are some specific ways dealers are hammering customers yet often not being clear about it to customers in advertising.

This post is a bit long, so here is your quick summary. More details are covered on each topic below.

1. Requiring trades and financing – price is higher or the dealer won’t sell you the vehicle without financing with the dealer or providing a trade
2. Addendums with mandatory accessories – adding nitrogen in tires, door edge guards, and other items to the vehicle at highly inflated prices and not including them in the advertised price on the website
3. Dealer “doc” fees not disclosed or included in the advertised price – these extra “fees” are dealer-created, not government-mandated, and cover dealer expenses. This prevents customers from looking at dealer prices apples to apples.
4. Destination Charges (Freight) charged separately – dealers show a great price online but don’t include a separately charged destination charge that is part of the MSRP. Instead they add it back on top of the advertised price.
5. Undisclosed market adjustments – dealers advertise an MSRP on the website but put into the fine print that a market adjustment may be required. This is sometimes thousands of dollars on top of the MSRP because the supply is limited for the vehicle.

Requiring Trades and Financing

When you get to a VDP (vehicle detail page) for a vehicle on a dealer website, it is important to scroll all the way to the bottom to see the “fine print” language that gets added to the website listing. A common tactic of dealers is to advertise a price in the “math box” at the top of page, and then add small print conditions to the bottom of the page. The below example is one of many you can find on dealers’ websites.

Many dealers only apply a discount on the advertised price if you trade a vehicle, and often a vehicle with minimum mileage and maximum model year age. Lure you in with a price, and then increase it if you don’t meet requirements. Chevrolet has an Advertising Integrity Standards program to clean up dealers doing things like this, but it doesn’t catch all dealers pulling these shenanigans. But give Chevrolet credit for trying to clean this up as it used to be more brazen.

Along the same vein, dealers will make a pricing discount contingent on financing with the dealer. When contingent on that, dealers feel free to use it to hammer the customer with a poor rate. Not all rate offerings from dealers are bad deals. You have better odds getting a better rate from a dealer that works with multiple banks than walking into your local bank and asking for an auto loan. And most dealers are set up to utilize several credit unions for customers that like using those. If the dealer says to get a $1000 discount you must finance, then it is a way to remove leverage from the customer.

In Texas, the Senate passed a bill to eliminate “forced financing” where dealers refused to sell a vehicle to a customer that was paying cash unless the customer financed with the dealer. Dealers would also refuse to sell to a customer using outside financing from the dealer’s financing.

Addendums with Mandatory Accessories not on Website

Another trick of dealers is to add accessories beyond the ordered accessories from the manufacturer as part of the vehicle build. Below is an example of a dealer that says the price excludes options added by the dealer. News flash. The dealer could enumerate and price those options on the listing for the vehicle if the dealer can add an addendum to the vehicle window sticker (an addendum lists added items to the vehicle price beyond the manufacturer’s window sticker with listed options, and it is attached to the window sticker for reference).

Here is another example of disclaiming accessories, saying they may not be included in pricing. The one above at least shows in the pricing math box. This disclaimer is at the bottom in the fine print.

Here is the logical follow up question. Why wouldn’t the dealer list the accessories and options in the math box? First, the dealer wants to lure you in with a lower price. Secondly, you would be mostly offended at the options added to most vehicles. Here is an example of an addendum shared with us by a customer from another dealer. By the way, this information was NOT in the listing for the vehicle on the dealer’s website. This is for a Silverado 1500.

The MSRP of accessories OEM steps on a 1500 range from $795 to $1145, but for the truck involved here, mostly around $800 to $900. The addendum has a price almost double the MSRP from Chevrolet for the most common steps. Can’t be sure, but take a gander if these side steps are premium. Need proof? Check out some common assist steps. https://accessories.chevrolet.com/product/crew-cab-short-bed-6-inch-rectangular-wheel-to-wheel-assist-steps-in-chrome-84016709

Another common item is nitrogen in tires, which FTC has noted in its fraudulent junk fees category. https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-proposes-rule-ban-junk-fees-bait-switch-tactics-plaguing-car-buyers We will let you do your own research on the value of nitrogen in tires.

Here are the most expensive wheel locks from searching the VIN on Chevrolet’s accessories site. MSRP of $235. https://accessories.chevrolet.com/product/wheel-lock-and-lug-nut-kit-in-black-85105299 The other option is $125.

What about some floor liners? First row Chevrolet is $130 MSRP and second row is $90 MSRP. Total them up to $220. Why pay more than double? Because they are already installed in the vehicle, and the dealer likely isn’t taking them out if you don’t want them. Check out the liners. https://accessories.chevrolet.com/product/first-row-interlocking-premium-all-weather-floor-liner-in-jet-black-with-chevrolet-script-(for-models-without-center-console)-84333606 and https://accessories.chevrolet.com/product/crew-cab-second-row-interlocking-premium-all-weather-floor-liner-in-jet-black-84333635.

Many dealers offer their own branded care products they claim are part of the vehicle price. It includes free oil changes and other benefits that rarely save money. In fact, you get one free oil change maintenance event from Chevrolet with the purchase of a new vehicle, and you get GM Rewards money (if the dealer appropriately signs you up) that could cover 1, maybe 2 more oil changes. Could these care products be worth it? Of course, they could. But they would need to be assessed with each dealer’s particular offering.

Dealers should NOT be putting certain products into your pricing without your explicit consent. When financing, some dealers will payment pack, or slide the products into the contracts. The customer is focused on the payment per month and doesn’t pay attention to items added in. Reputable dealers provide a menu of products and show the impact on the payment of each product, allowing you to choose the products you need and explicitly sign documents you want those products. When priced appropriately, service contracts, GAP, tire and wheel protection and other products can be excellent options for customers. While insuring yourself may be statistically better, not everyone can afford large expenses associated with adverse events like a transmission failing, a car being stolen or totaled with more owed on it than it is worth, or tires needing to be replaced from a blowout.

Doc Fees not Included in Advertised Price

The doc fees could serve a valid purpose of separating out additional expenses, but way more often than not the dealer isn’t including them in the advertised price. Read the fine print with statements about how doc fees are not included in the advertised price. Why? The dealer can advertise a lower price but sell to you for amounts that are higher through an additional fee. Keep in mind the doc fee goes to the dealer. When we are talking about government fees and taxes, that is a different category. The dealer is collecting and passing money through to the government. Not the case with the dealer fee.

While many dealers do not show the documentation fee on their own websites, when the vehicle is found on Chevrolet.com by searching inventory, Chevrolet has gathered documentation fees from dealers for a digital retailing initiative, and that information can be found on the listing at Chevrolet.com for the dealer. This doesn’t work for all dealers, as some dealers still aren’t providing the dealer fee through this channel.

We can highlight one store we found (there aren’t many) that notes its dealer fee on the math box on its website. It still wouldn’t tell you about the accessories it added. But at least it showed its dealer fee.

Charging Destination Fees separately on top of MSRP

This is the most egregious example of dealer deception. The dealer will start with the MSRP of the vehicle and show a discount to a lower price. Then, a line below will show a destination charge added back that is already included in the MSRP.

In this sales proposal example, the MSRP is $53,660. The dealer discounts $7,100 to a lower price, then later adds back the destination charge built into the MSRP of $1895. On the dealer’s website, the fine print at the bottom says the freight is charged separately. The dealer can advertise a price that is $1895 cheaper to the public, but then charge $1895 more at the time of sale.

Market Adjustments are not reflected in the advertised price.

As many customers have found, the MSRP listed on a dealer’s website with nothing else besides the manufacturer’s incentives does not mean the price of the vehicle is MSRP. Some dealers will put a market adjustment in the math box, but many will put a disclaimer in the fine print on the vehicle detail page. The dealer’s argument will be that the webpage is only showing the MSRP, not our price, and the customer should not assume MSRP is the dealer’s price.

We wrote a blog post on market adjustments as well (click here). At the end of the day, if the manufacturer creates an MSRP at less than the market value of the vehicle, there is an argument the dealer should price at market value. Many customers would buy at MSRP and resell it immediately for more than MSRP. Therefore, dealers are reticent to just hand over money to a customer not knowing whether the customer intends to resell it or keep it. Another news flash is that customers lie to dealers – frequently.

But what isn’t good is to fail to properly advertise the market adjustment to the public because you are ashamed of it. Pick a lane. Either say it is market price and deal with the backlash or sell at MSRP and risk leaving money on the table.

How do I protect myself?

Read the vehicle detail page (VDP) carefully. Ask the dealer about additional fees. Ensure you don’t have to trade a vehicle or finance with the dealer to get the advertised price. Confirm there are no market adjustments and the price on the website is the sales price. If dealers aren’t transparent, hold them to account through customer reviews and complaints to the state or federal regulatory agencies for trade practices.

Donohoo Chevrolet position

We have no dealer doc fees. We have no market adjustments above MSRP. We do not charge destination charges as a fee on top of our pricing. Accessories on vehicles are reasonably priced and disclosed in our pricing on the website clearly. You are not required to finance with us as a condition to purchase a vehicle, and our pricing is not contingent upon trading a vehicle.

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