THE AUTOMOTIVE TRADE, or more to the point, the automotive retail sales industry, is a dark business. Some people seem to put it on par with practicing necromancy.
How often do you hear a story that paints the process of buying a new car in a positive light? Not many people talk about the good experiences, most will only tell you about it when they’re not happy. But, like in any trade, there are decent staff and dealers out there; trust me, I’ve worked with them.
I guess it seems we all love to give car salespeople a hard time.
So how do you improve perceptions of the industry? Where do you even start? Is it the advertising? Is it the fine print? (The ACCC would seem to think so.) Or is it something about the TV-stereotype salesmen, you know, the comic-image ones adorned in gold chains and micro-fibre suits?
Having worked in that field myself, I know what it’s like on both ends.
For that reason, I have to comment on what the ACCC has cooked up to help the new and used car buyer - stepping in, it would appear, to rid the world of dodgy advertising and shonky deals.
And yes, on the face of it, the new ACCC ruling requiring that cars are advertised showing a ‘drive-away’ price should aid consumers in understanding exactly what the final costs will be with the purchase of a new or used car.
You would think so. That, after all, is what the ACCC wished to achieve.
And yes, it all sounds wonderful getting rid of the ‘hidden’ costs.
But there are problems with this ruling that have nothing to do with practices in the new car sales sector, and that have nothing to do with manufacturers’ policies, that make the ACCC ruling an unworkable mess.
The problem is that state-based taxes, statutory charges and levies in Australia vary from state to state. Stamp duty on a new car for instance can vary from between 2.5 percent to 6 percent of the purchase price, depending upon which State you live in. Registration charges and compulsory third party insurance also varies across borders.
And it is not just the across-border variances: these costs and charges can vary within states. In Victoria, there is a difference in registration costs from metro to rural areas; if you are a pensioner you pay less registration; and if you are a pensioner and live in NSW you don’t pay stamp duty.
Making sense of it across Australia is a nightmare.
I agree that a car’s advertised price should be shown only as a final or ‘drive away’ price, and agree that the practice of quoting an ‘RRP plus on-road costs’ in advertising should be abolished, but the solution is not as simple as the ACCC simply waving a magic wand. And worse, waving a magic wand and saying to manufacturers and dealers “this is the new ruling - comply with it or else!”
But that’s exactly what they have done.
The result is that manufacturers have done the only sensible thing they can do: they have removed their recommended retail pricing schedules from their websites.
How can they advertise a price nationally, and even within a state, when there are so many variances at work?
So it is going to be harder – not easier - for ‘would be’ consumers to compare prices. More of them will be in the dark because no manufacturer will risk publishing a price that will be wrong depending upon where it that advertised price is seen geographically.
Buyers will now need to contact a dealer to get a clear picture of how much a particular car of a particular brand is going to cost them to get it out the door. How much harder – not easier – will this make things for buyers? It will be much harder drawing up a short list of potential purchases from the newspaper or websites.
Everyone in the industry is running scared for fear of falling foul of the new ACCC rulings (because the ACCC carries a very big stick).
At the end of the day, these new regulatory standards in advertising were not well thought out and brought in at the wrong time for an industry under stress.
Without a lot more thought, and without harmonisation across State borders, they will not work for car buyers nor for the industry.
It perhaps illustrates just how out of touch the ACCC is with the “practice of being in trade” – as opposed to Trade Practices – when such a poorly thought-out ruling can be applied in such a blanket way.
We’re all for openness and disclosure in vehicle pricing, but this needs a thorough rethink.
Click here to view the ACCC pricing manual for the motor vehicle industry.
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So what happens to the new car sections of websites like carsales and carpoint? How do I compare the prices vs options available on new cars? I agree it appears the ACCC has just slapped it together and has not thought about it state by state as they are a national entity not local. Muppets!
There is no reference to third party advertising in the ‘ACCC manual on advertising for the motor vehicle industry’, there are some provisional rules at Manufacturer level, but nothing on outside parties. Well thought out isn’t it!
Joshua it’s a very good point you raise, one that advertising boffins are struggling with and what’s funny is that you were able to ascertain this problem after just reading a small article on the subject yet the ACCC in all its wisdom fails to see these major implications to the car buying public.
I will be following this story as it unfolds, as I’m sure a lot of readers will be. Stay tuned.
I have worked for the manufacturer and for the retailer (dealer) and wish to add that so far the on road pricing has been fantastic. Customers feel confident; other dealers can no longer hide ridiculous dealer charges & fees; it’s already easier to talk to customers about the whole thing. I’ve seen TV adverts from manufacturers with on road pricing, it’s great to know what something ACTUALLY costs, so then why is it so hard for them to advertise; they already are - or just don’t state a price, I’m sure we know where to go to find that dollar figure. Each city/rural area has their own local media, each manufacturer just has to adjust their pricing to suit each state - they are still welcome to state the breakdown of charges (see the rules). Dealers will actually have to be honest and so will manufacturers - they can no longer advertise their “cheap” hatchbacks only to learn the on roads make up a lot more. The only one’s missing out [as written] are the minority who pensioners, war veterans and so on, but really…what’s stopping them visiting their local dealer and geting a quote, as for all of us on that matter? Why does everyone have to do ALL their shopping online or by the TV? Is it so hard to actually talk a person about this if you really are a serious buyer? The ACCC ruling is very welcomed and those who find it painful need to relook at your approach to the public as it’s been in the pipeline for five years. And not just for the motor industry; it’s a consumer ruling. Just as Abel Car Rental who are apparently in the poo now for their ‘plus extra charges’, it’s not just $29 per day for a rubber band motor’d hatchback!!
robbo, thanks for your input. It’s nice to see the other side of the fence once in a while.
Believe it or not, there are people out there who don’t want to simply drop into a dealership and start talking to a sales person about their next car purchase; instead they like to browse online in the comfort of their own home without feeling pressured in any way, shape or form, and those same people would be in majority.
We all know that print media for automotive advertising and sales is suffering because of the strengths and ease of use of online media, that simply is a reality and a hallmark or the age we live in. In a recent JD power survey in America is was found that 93% of consumers do research online before buying a car! The problem I foresee is that those same 93% of consumers who cannot get ‘accurate’ pricing online as a part of their research, will be frustrated to say the least!
I can see the new rulings would be very welcomed to sales staff across the country, and as it so happens I know from personal experience there is a lot of trust building in the process of selling a motor vehicle, yet with all the extra or on road costs, the sales person no matter how nice or honest loses credibility during the sales process because of the way things were structured.
Your point about the ease of use for the sales person with this new pricing structure is a huge gain for sales staff though, no arguments there. The new rulings on pricing makes the sales process much more palatable ‘inside the showroom’, but the question is how and why do the consumers get to the point of walking in the door in the first place?
Bodies like the AADA (Australian Automobile Dealers Association) have long recognized the fall in ‘walk-in’ traffic since online automotive marketing strategies have been in use. They also recognize the that while there is a fall in floor traffic, the consumers that do walk through the doors of the dealership are a much stronger proposition, as they have already done their research and have narrowed it down with what they want when they do finally stroll through the doors.
The issue isn’t about the changes that the ACCC have brought in; it’s about the haste and short sightedness with which they have been brought in. Clearly there are major issues that simply have not been addressed, Joshua touched on one earlier with third party advertising.
Clarity is what’s needed.
Robbo, dealers are not always the most helpful of people. Let’s say you want to compare 4 cars. Previously you could visit the manufacturer website and get all the options and specs and pricing in less than 10 mins for all 4. If you have to contact a dealer you will probably have to give them your phone number and/or email and open yourself up to being contacted by them. And what happens if you are interested in a car but want to know if you can even afford it - or if you are interested in a range of different cars from the same manufacturer such as cross-shopping an Audi A4, Audi A5, and Audi Q5.
It’s a real pain to consumers and pushes back the process that has made car research so much easier in the past few years.
This move by the ACCC is long overdue.
The car companies / dealers are crying over SMALL problems now when they have had over 50 years of misleading the consumer.
They are pushing this line (and you have bought it) that due to ACCC consumers are in the dark about prices. What a joke !
The issues with different states, rego, ctp etc…. are an easy fix and they know it. They also know transparent car pricing will cause overall prices to go down.
About time.
I totally agree with Tony, the dealers and manufactures have all the information online these days… so how hard is it to use the internet to programming and create a region web based pricing system… If the ACCC were smart they would have mandated a open source national pricing network where dealers and manufactures input live pricing… and the public review and compare… keep everything totally open and competitive
I bought a Golf GTI in geelong as it was cheaper and a better deal than any of the Melbourne based VW dealers, we were accused of starting a price bidding war in getting the prices down, a public right I would have thought, a good use of capitalism… yet once the dealers started to talk to each other, we were frozen out, the geelong dealer did not agree with their city counterparts action, we bought the car, had it serviced in geelong, it worked out to be a good way to take a day off and drive to a dealer who cared, these days most dealerships are small minded self centered businesses…
It about time the car industry grew up and got with the program… they need to change their tune or get out of the game… I’m not here for them, they are here for me as a customer
Comment by volker: “these days most dealerships are small minded self centered businesses…”
Yes, how dare a dealership actually try to make a profit rather than squeezing every last cent out of their cars for customers who will think they’re being ripped off regardless, and all the while sending themselves and other dealerships out of business? What were they thinking?!
The ACCC has already confirmed changes to it’s new structure that was implemented around a week ago on May the 25th 2009.
Stay tuned for the changes!