Dealers will advertise real car prices—unless dealers gets their way; comments are open

Some dealers are advertising the list price of cars on their web sites, then demanding up to $5,000 above list as well as, in some cases, over $2,000 for filing paperwork with states, not including government fees or taxes. The Federal Trade Commission has proposed rules which would, among other things, require dealers to advertise actual selling prices (including paperwork fees).

The rules would also ban add-ons that provide no benefit, require online lists of prices for optional finance and insurance products, stop dealers from misleading customers about lease rates by using false online claims, and stop including rebates which aren’t available to everyone in the listed prices. The exact rules can be seen in this PDF file (at ftc.gov)

feldman cdjr (jeep dealer)
This photo is only used for illustration.

The National Auto Dealers Association is furiously fighting these proposed rules, which were  passed by a four-to-one vote by the FTC’s commissioners. NADA chief Michael Stanton claimed the requirements were “completely unwarranted, redundant and ineffectual,” and wrote that the “complexity” of the new rules would increase prices (they would certainly increase advertised prices). NADA’s position is generally that dealers are honest and need no regulation.

The FTC developed the rules after analyzing its own actions against certain dealerships and gathering a good deal of input from car buyers. The agency noted that more than half of dealerships’ gross profit ($2,444 per car in 2020) was from financing and insurance and add-on services (“F&I”). Used cars brought even higher profits, $2,675 per vehicle, more than a third of which came from F&I. Since then, with car shortages across the industry, dealerships have taken advantage of the situation by tacking on extra fees and posting cars on their web sites which have already been sold—at prices that are unattainable.

Stellpower conducted a brief survey of local dealerships and discovered that the majority of dealers are charging above list price, and also telling customers they can come in for test drives of cars they do not actually stock. The price above list varies between $500 (plus a mandatory $2,000 “paperwork fee”) to $4,000-to-$5,000, the latter in force at every Hyundai-Kia dealer contacted and one Chevrolet dealer out of three contacted.  The dealership pictured below was not part of this exercise. 

To file a comment, see the Regulations.gov comments site.

15 thoughts on “Dealers will advertise real car prices—unless dealers gets their way; comments are open”

  1. Comment filed in support of this new regulatory action. What the dealerships in Metro Detroit get away with should be a crime.

  2. I believe this is the right move. Too many shenanigans going on when it comes to the actual price of the car. I welcome this change.

  3. These SHADY dealerships and their political arm (N.A.D.A.) are just trying to get ahead of the S**t Storm (See 2008-2009) that will again destroy their sales #s and profits. Thank you F.T.C. Our tax dollars at work for a change.

    • My point is that ordinary people have to submit comments in favor of the new rules if they like them, because agencies do respond to comments. Dealerships are certainly going to be opposing the rules, so those who want them have to submit positive comments. (Responding to your “anonymous” posts.)

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