Pricing Games on Classified Inventory Websites

It's these dealerships that are somehow going to stay, while others go. Maybe customers like being duped?

I also see dealers list their inventory for like 1,000,000 dollars so they have the highest price and come up first. It's silly but it works. We have ex Internet sales guys on staff that used to over price used cars all the time.

Dealers are still even listing inventory without prices. CALL FOR PRICE. Online shoppers do not want to take that extra step. Or the 300-words-per-second narrator on radio ads.

Jeff

I know cars.com has sent an email to its dealers (at least in my area) that misleading prices with down money in the fine print are not allowed and will lead to the listings being removed and possibly the dealer being blacklisted. IMO that is the best way to handle this situation so as to maintain credibility with the consumer. I don't know what Autotrader is doing but I am told they have a policy similar to cars.com.

This is a great point. I am not a dealer but, I run into this with many of our Dealer customers. The pricing of cars becomes a covert war or a “paradox of choice”. Both of these practices I urge customers not to participate in.
Buy Here Pay Here Dealers & Secondary Dealers fall into this “paradox of choice” category. Ultimately they aren't putting any price hoping to get a bite...then not focus on the cost but on the ability to get the person in a car. In order to comply with law they cannot price a car & add the finance company's fee to the price at the time of sale. So if they price a car say at $5,995 which may be market price & then a customer that has a 390 beacon score wants to purchase the car…they are in major dilemma. The only viable financing can be made with a company that charges the dealer a $2,000 fee & then charges the customer the interest. Legally the dealer cannot tell the customer the car is now $7,995 plus you will paying the finance company. So the dealer must now figure out how to post a price on the internet that a good credit customer finds competitive, but what do they do in the case of the credit challenged customer that saw the lower price? Hence the “paradox of choice”… should I stay in compliance and miss leads or should I play games and get burned. This adversely affects the consumers, because the information in the market place is not as pure as it should be. Because many cars are not priced & consumers typically skip over cars with no price….their choices may seem more limited than they really are in many cases.
Pricing covertly by hiding money in other areas creates exactly what you elude to… customer distrust & long term failure on honest perception from customers. As a heavy internet consumer myself… when any company plays these games with me… they lose my business forever. Camera stores on the internet are infamous for this game… you Google an expensive camera and presto you will see prices on the exact same brand new camera all over the board…usually the cheaper price means the camera is not made in the US, has No warranty in the US, & the customer support is dismal. Point blank I pay more money for the companies that don’t play games & that provide me with great information on the “ins & outs” of the merchandise.

I mentioned this to my Autotrader rep last week that I don't think it should be allowed by their site, while he agreed, it sounded like there wasn't much that could be done about it.

I think Vauto/Firstlook should lobby the classified listing sites, as this type of pricing drastically reduces the effectiveness their services provide.

<b>Toby Albergotti</b> - one thing I can gladly say I don't know much about is the buy-here pay-here game. There are a lot of them in my neck of the woods (because of all the military here), but I have not tried to understand that part of the business. Fortunately, Checkered Flag rarely ever competes against them - we're the opposite end of the spectrum. Your post is interesting and makes sense. If I had a hefty bank fee, I'd probably be getting "creative" in my pricing too.

At the end of the day it is up to the website that allows this kind of practice to police it. I wonder if <b>Autotrader.com</b> is paying attention? Buy-here Pay-here's are a huge part of their income, so I doubt they'll do anything about it. THANKS to <b>Cars.com</b> for heading in the right direction. At the end of the day - it is about the consumer - not the dealer.

Yea...ok...like cars.com is going to blacklist a dealer. They aren't google. They need the dealers probably more then the dealers need them.

There are 3 million vehicles listed on both ATC and Cars.com. It is policed and corrected when it is brought to their attention. Here's a novel idea...Dealers should start being honest with the consumer and we wouldn't be having this discussion.

The way the life style has changed, dealers need CARS.com and ATC more then Cars.com and ATC need dealers. When you go shopping for a vehicle do you go driving from state to state or move the mouse website to website? Which is easier?

This is why it is so important for these companies to enforce the policy. i know from buying 4 cars through cars.com they do a swell job.

I've worked for both companies and they do enforce it when the dealer is caught. It's impossible to monitor all listings. Most are caught when dealers report their fellow dealers cheating. Customers are wise to this. The click percentages are significantly lower on "over priced" cars such as the ones dealers list for $99,999. Consumer behavior is to scroll down to the actual market price and start shopping. The click percentages are actually lower on the cheapest vehicles. 60% of all searches, customers enter a price range. Therefore, if you have a vehicle listed without a price it won't even show up 60% of the time. Also, if it is listed extremely high it also won't show up on 60% of the searches when the customer enters a price range.

Alex BHPH is less that 2% of Autotrader.com's business so I am not sure where you get your information from.

I don't have ATC's make-up, but when I go on the site I sure do see a whole lot of BHPH stuff. If it is less than 2% they're sure getting a lot more than 2% for their money!

Silly... my old used car manager used to want me to do that stuff.

But I'm almost glad they're still around, because when those customers get burned they come to me!

William is right on. We do attempt to police this kind of stuff, but the reason why may surprise you.

The dealerships that use classified sites in this manner are usually the first ones to cancel. The buying cycle is at 90 days and the consumer trend is to utilize classified sites throughout the entire cycle( see the NYC Google Summit post). By the time the consumer is ready to buy the dealership has marketed themselves right out of contention. The consumer doesn't want to play the old school games, otherwise they would have gone straight to the showroom with "red" being their only qualification. I know we still switch people, but you are far more likely to hear a stock number at the greeting than ever before. The consumer is better educated than ever. They see through the gimmick on one listing and don't click through any other listings returned in search from that dealer.

Point is that the dealerships that use these tactics eventually don't get the same kind of results that an upfront dealer will get and they cancel. We police this in order to retain customers.

To Toby's point earlier, there are still all kinds of games being played. I wonder what percentage of dealers still keep stale inventory on-line trying to generate leads only to respond, "that car was just sold, but come on down... " when they don't have anything very similar to that vehicle?

It is amazing that although the number of truly transparent customer-centric dealerships has increased over the last few years, the number of gold chain wearing, fast talking, shell game playing salespeople and more importantly sales management seems not be going away quick enough. There is a reason the latest automotive industry buzzword is “Reputation Management” instead of “Reputation Creation.” It’s too bad for those of us that love being in the car business, but hate the reputation created by the likes of those with shady advertising practices. With the combination of truly forward thinking internet sales managers that now ALMOST have the ball in their hands, but are still subject to a one way thinking “how can I trick a customer today” boss pulling the strings I think we will see more of these tactics. Until the people responsible for leading a store understand that you can only “Reputation Manage” your way out of poor reputation creation for a short time before customers see right through it.

Honesty and openness is the best policy. Misleading pricing may result in more calls for some dealers, however in the long run those who conduct business in an ethical way win.

Is it really up to the classified site (or any advertising venue) to police these dealers? I sold newspaper advertising to dealers and this was standard practice for years to put the real deal in the fine print. ("Used cars at $49","Double rebates", "Guaranteed $$ for your trade") Classified sites host dealers listings. What dealers say reflects on them and state and federal laws regulating automotive advertising. Car buying is, and always has been a "negotiated purchase" like buying a house. It IS fair to try and clean up these practices when the dealer does it--but it shouldn't be up to the advertising medium to police these practices. Buy Here/Pay Here customers know their credit situation and know it costs them more to do business in most financed purchases: credit cards, housing,and car buying. Yes, these shady dealers will always do it and, as usual, it will reflect on the overall reputation of car dealers in the eyes of the public.

This is kind of like white hat vs. black hat SEO in my opinion. Black hat will work for a short time but end up costing you everything eventually. White hat SEO might start slow, but it continues to build indefinitely.

You need to educate your customers so that they can identify malicious practices.

Most of my customers appreciate that I am 100% transparent. In fact, I have even won over customers with a higher price because of my honest and straight-forward attitude. They know what to expect from me and they are willing to pay for the honest.

In the long run, the people that use these tactics will lose.

Matt Watson said:

"I also see dealers list their inventory for like 1,000,000 dollars so they have the highest price and come up first. It’s silly but it works. We have ex Internet sales guys on staff that used to over price used cars all the time."

I guess that explains why they are ex Internet sales guys!

I am the Director of Fraud Prevention Strategies and in my world "abuse" is considered fraud and I thought it would be important to weigh in and let the audience here know that AutoTrader.com is aware of these practices and we do care about our car shoppers and their experience. We know that without buyers there are no sellers and its in our best interest to maintain a trustworthy marketplace. We are not turning a blind eye to these practices, we ask our consumers to flag listings that they feel are misleading or fraudulent and we follow up on these reports. The link is at the top of our vehicle detail page and it is labeled “Suspect Fraud”. Please use this tool when you’re on our site and let us know when you find abuse.
Thank you

I was the local cars.com rep for the Columbia, SC area, now I'm the ISM for a Toyota Dealership here, and I will tell you that Cars.com WILL NEVER BLACKLIST A DEALER! Like AD HUSTLER said, they need the dealers way too much and every dealer is looking for a way to cut costs and many GM's don't care what the ISM says ( Thank God I don't have that problem) and are looking for ways to cut money.
Not to mention most Cars.com reps work for the local newspaper anyway and cutting a dealer out of Cars.com is also going to make what few dealers still advertise in the papers, pull out and the Newspaper can not afford that at all!
This is an animal that we are just goign to have to deal with and hope it pisses the customer off so much that they come to me!

regrettably I am an ISM for one of "those" dealerships. I have to say it is an unending battle and YES we were blacklisted! Cars.com pulled our prices and ATC pulled our listings entirely!!! I have to say when they put their foot down I was ecstatic. I am a true believer that as far as the net goes the days of having 4-5 pounders is over. I would rather price the cars to move and have more shots at the back end money. Unfortunatly Im not in charge of pricing and since we lost the battle with cars/at we have pulled prices altogether.