Opinion: Bringing car buyers into the driver’s seat

Consumers face difficulties when trying to uncover true cost of new vehicles

Buyer, beware!

Automakers and car dealers appear to be showering us with free money these days.

Their pitch: Buy a new set of wheels with no money down and an interest-free loan on the entire purchase price for up to seven years.

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Zero down! Zero-per-cent financing for as long as seven years!

Who could ask for more? Well, actually, I could, namely for the answers to a few simple questions: What is the price of this vehicle? Could I buy it for less if I paid cash?

Good luck with that.

I bought a new car in Ottawa last month – a 2012 Chevrolet Cruze. I felt quite pleased with the price I paid: approximately $22,500, with all taxes and fees included. But I have no idea whether I could have bought the car for less with some shopping around and by taking a more hard-nosed approach with the nice young salesman and his immediate boss.

As a consumer, I failed miserably. I wasn’t misled by anyone. I just failed to do what I usually do in a retail situation – shop around extensively, compare prices, negotiate forcefully and make absolutely sure I am getting the rock-bottom price.

Shopping for something new should be fun. Buying a new car is the exception, for me, at any rate, and many others, I suspect.

Price sells – that’s a maxim of the marketplace, perfected by Walmart and others.

Until recently, airlines were notorious for advertising prices that were only a fraction – sometimes less than half – of the true cost of the flight. What the airline ads failed to mention, except in very small print, if at all, were all the taxes, airport fees, fuel surcharges and the like.

Under prodding by the federal government, the airlines are now more honest in their advertising.

But, truth be told, only a fool could ever have been taken in by those ads offering flights from Ottawa to Europe for $99.

And the new full-disclosure airline ads are not much more helpful than the old ones. As any experienced traveller knows, the way to learn the true cost of a flight – to anywhere, any time – is to go online, state the actual dates you plan to travel, and wait a few seconds while the computer works out the bottom-line price, all taxes and fees included.

In other words, it’s a piece of cake learning the full cost of an airline ticket. However, it’s a huge challenge to learn the full cost of buying a new car, unless you actually buy one.

I didn’t get any nasty surprises when buying my new General Motors vehicle. But it was just so difficult to understand how the price was calculated.

GM ads recently proclaimed that “Vehicle pricing is now easier to understand because all our prices include freight, pre-delivery inspection and mandatory government levies.”

That’s true. But, as the GM ads went on to state: “Prices do not include applicable taxes.” And then comes this kicker: “Consumers may be required to pay up to $799 for dealer fees.”

“Dealer fees” sound – and probably are – a bit like the charges made by airlines and cruise lines to pay some of their operating costs, or to increase their profit.

In my view, these charges should be included in the dealer margin, meaning the gross profit the retailer makes from the sale. But the dealer margin – indeed, any of the dealer’s costs – is none of my business. Nor is the dealer’s profit. All I need or want to know is my cost.

I was able to negotiate a $200 discount on my Cruze. When I asked for a $200 discount, the salesman didn’t laugh, and immediately agreed. Later, my wife took over and sought another $200 off, to which the salesman also agreed. We didn’t push our luck further.

That $400 discount did not appear on the itemized bill of sale, although we definitely got it, since I saw the salesman lower the bottom-line sum by $400 on the computer.

As for those “dealer fees,” the bill included $489 for “administration.” I did not notice this until later and did not inquire what it was for.

I later asked a finance manager of the dealership where our $400 discount was included in the bill, but he couldn’t say. He suggested, helpfully, that the $400 might be included in the $500 trade-in we received for a 10-year-old Sunfire.

We took that interest-free loan, which was available for three years on the Cruze, since there was no point in turning down a freebie. But I can’t help thinking the cost of that “free” money was hidden somewhere in the bill.

It’s probably just as well that car manufacturers and dealers don’t stress price in their advertising, since any price quoted could be misleading – except the all-inclusive, bottom-line price, of course. Don’t hold your breath waiting for that.

As it is, the industry prefers to stress the low cost of borrowing money to buy or lease a new vehicle.

Which brings us back to where we started: buyer, beware.

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