Consumer Reports’ Auto Price Service Study Finds Dealers May Leave Consumers in the Dark on Special Rebates, Financing Offers

YONKERS, NY -- December 29, 2004 -- Auto manufacturers are using a plethora of special incentives and rebates to help drive traffic into dealer showrooms. But a survey by Consumer Reports Auto Price Service shows that consumers are frequently not being told about those programs by salespeople.


Only 60 percent of prospective car buyers were offered an available cash rebate, and only 40 percent were offered available special low-financing rates, Consumer Reports Auto Price Service survey showed.

“Consumers shouldn’t expect dealers to tell them about all the rebates and incentives that are out there, because it’s very unlikely that will happen,” said Rob Gentile, Associate Director of Consumer Reports’ Auto Price Service. “Our research shows that many consumers probably spend hundreds or even thousands of dollars more than they have to on a new car simply because they don’t know about all the available offers. Don’t trust the dealer to tell you everything you need to know.”

Gentile said that it’s especially important for consumers to exercise caution during heavily promoted year-end sales, when salespeople are anxious to make quick sales.

The Consumer Reports survey also found that: -- The majority (58 percent percent) of new-car shoppers was offered, and accepted, extra cost, and often unnecessary items including alarms, VIN etching, and gap insurance. -- Less affluent shoppers, those with a yearly income of less than $60,000, were more likely to accept the extras.

Consumer Reports findings are based on a nationwide survey of 13,716 adults conducted earlier this year. The study investigated the buying behavior of new- and used-car buyers.

Results showed that respondents were often misinformed and confused about the latest rebates and incentives, and how to best use them when negotiating the price of the vehicle. “In an ideal world, dealers would help shoppers find the right vehicle for their needs at a fair price,” Gentile added. “Unfortunately, some dealers place more emphasis on their profit margins than on satisfying customers.”

Consumer Reports offers the following tips to help consumers get the best new-car value: -- Do your homework. Many dealerships prey on the unprepared. Going into a showroom “cold” -- without having gathered key facts and preliminary pricing figures -- gives the salesperson too much control over the buying process. -- Don’t assume that the sticker price is the purchase price. To get the lowest price, go in with a starting price that’s based not on the sticker price but on how much the dealer paid for the vehicle. The dealer invoice price is commonly available on Web sites and in pricing guides. But the invoice price isn’t necessarily what the dealer paid. There are often behind-the-scenes bonuses, such as dealer incentives and holdbacks that give the dealer more profit margins. -- Negotiate one thing at one time. Salespeople like to mix financing, leasing, and trade-in negotiations together, often asking you to negotiate around a monthly payment figure. This tactic gives the dealer more latitude to offer you a favorable figure in one area while inflating figures in another. -- Arrange financing in advance. Compare interest rates at several banks, credit unions, and loan organizations before checking the dealer’s rates. If pre-approved for a loan, you can keep financial arrangements out of the negotiations. -- Don’t pay for extras you don’t need. Dealers often try to sell you extras such as rustproofing, fabric protection, and paint protectant, dealer paperwork fees, or VIN (Vehicle Identification Number) window etching.

Consumer Reports Auto Price Service provides all the pricing information-including information about customer and unadvertised dealer rebates and special financing incentives and the Consumer Reports Wholesale Price-and advice a consumer needs to get the best deal on virtually any new or used vehicle. Call the service toll-free at 800-395-4400 or visit http://www.ConsumerReports.org/carbuying to learn about the latest year-end deals.

Consumer Reports is one of the most trusted sources for information and advice on consumer products and services. CR has the most comprehensive auto-test program of any U.S. publication; CR’s auto experts have decades of experience in driving, testing, and reporting on cars. To subscribe to Consumer Reports, call 1- 800-234-1645. Information and articles from Consumer Reports can be accessed online at http://www.ConsumerReports.org.

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