Advertising "Loss Leader" or a mistake?

[XDCX]

I was surfing the Internet the other day and noticed the following banner ad:

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When I saw the monthly lease price of $129 for a Grand Cherokee Laredo I was wondering how big of a down payment was required to reach that payment - that's when I was surprised to see that the ad was $0 down with $0 security deposit.

That deal seems too good to be true....

Based on the ad there's about a $10,500 spread between MSRP and residual but the total of the payments will amount to less than $3,200 - and that doesn't even factor in the interest expense associated with leasing the vehicle.

What's your opinion - is the ad just a "Loss Leader" to generate traffic for the dealership or did someone make a mistake?

[DealerEx]

The price is for a specific unit...Stock #14-10399 and it' s a low mileage lease...only 7500 miles per year, but still, that certainly doesn't calculate out. As you noted, the payments wouldn't come close to covering the depreciation even if it had a $4000 rebate and a markup of from MSRP of $3000 you wouldn't break even. I think it's a bait and switch loss leader that they have no intention of selling...."I'm sorry, but we already sold St.# 14-10399".... and they are gambling that they won't get hit with a deceptive advertising charge.

[steve_biegler]

And we wonder why people don't trust us?

[DealerEx]

I was on the DAA (advertising board) for 10 years...there are still lots of dealerships that just skate right on the edge of a thin legal line on their ads and get by with it year after year. They do it because it WORKS...a lot of people WANT to believe they can get something for nothing and those ads will get those people in the door, and then their strong closers can talk them into a totally different deal. I once had a local BANKER call me after seeing an ad on TV from a dealership about 50 miles away advertising a new Dakota PU for $109 per month. He wanted to know if I could get one of those for his son who was about to leave for college, and he asked me if that was for 48 or 60 months. I told him it was a 24 mth. low mileage lease deal with $3500 down plus TTL. I asked him if he had added the payments up and he said no. I pointed out that that would be a total of $5000 to $6200 without any interest, but the ad showed a base model 4cyl stick truck that listed for over $13,000. He still asked me, "so I can't really buy it for that payment?"... as if there might be some magical way do away with simple math.

[steve_biegler]

No disrespect intended to ethical dealers. Its the sleeze balls that I can't handle. I guess the old saying "No one went broke underestimating the stupidity of the general public" continues to hold true.

[ohiobuckeyes]

Really here's another one...



States there is 4500 in Rebate, 5000 in Bonus Cash, 1000 Trade Assist, 500 Bonus Bucks, 500 Military, 1000 Returning Lessee.

When in Reality we have 1000 Express Bonus Cash, 500 Truck Bonus Cash, 500 Bonus Bucks, 500 CCAP Bonus Cash. Just another way we get a bad rap. We need an ad police like Honda dealers it will only make it a fair game.

[The StraightShooter]

The factory loves Auffenberg stores regardless of how many complaints are made about their ads.

[DealerEx]

Originally Posted by ohiobuckeyes

Really here's another one...



States there is 4500 in Rebate, 5000 in Bonus Cash, 1000 Trade Assist, 500 Bonus Bucks, 500 Military, 1000 Returning Lessee.

When in Reality we have 1000 Express Bonus Cash, 500 Truck Bonus Cash, 500 Bonus Bucks, 500 CCAP Bonus Cash. Just another way we get a bad rap. We need an ad police like Honda dealers it will only make it a fair game.

A prime example...again, first words in the disclaimer is THE stock #...only one of them at that price. Second key phrase: "not all will qualify", and of course most won't be a returning lessee or military, but with the first two "outs" they are pretty much assured they won't have to sell it at all...it's either "sorry, we already sold it" or "sorry, but our finance manager says he can't get you approved". As I stated I was on the Ad board a long time, and we had to deal with the complaints from the other dealers trying to get those ads pulled, but the ones doing it would just tell us to go ahead and file a complaint with DMV or Attorney General because they'd already had them checked for legality. They were right....and we couldn't stop them. Straightshooter is correct...the factory guys act upset about it, but it's with a wink and nod....bottom line is, if they are moving the iron, the factory isn't going to do anything to slow'em down.