buy a truck and get a free car (in the US anyway)
It's finally come down to this: Buy a truck, get a car for free.
With rebates, bonuses and special financing deals perpetually rising, the auto industry was bound to hit this sweet spot.
Last month, rebates on 2004 models hit about $4,500 for SUVs and $1,500 for compact cars — on top of bonuses of as much as $1,500 for customers who financed through certain credit companies.
It didn't take long before a few crafty auto dealers started putting two and two together, and figured out the combined deals made a lower-priced car practically free. So presto: The latest buy-one-get-one-free deal was born.
Or, as one blaring radio ad put it: "Buy one Chevy truck or SUV and get a Chevy car At No Extra Charge! ... Buy a Tahoe for Mom, give the Aveo to your daughter! Dad gets a new Silverado Crew Cab. Billy gets an Aveo. ..."
Van Chevrolet-Cadillac in Kansas City, Mo., began running that ad around Labor Day weekend, and some nearby dealerships followed suit. Some offered compact cars with new trucks, others offered used cars with new cars or trucks.
Adams Ford began offering a free 2004 Focus compact car with the purchase of an Explorer, Expedition or Excursion SUV to clear the way for the 2005 models.
Todd Hill, general manager of Van Chevrolet-Cadillac, said the program was a hit. He ran the deal "until I ran out of Aveos. Then I did it with Cavaliers, until I ran out of Cavaliers."
He had to buy about 20 Tahoes and Silverados from a competing dealership just to keep up with orders.
In all, about 50 customers took a pair of vehicles, some flying in from out -of state. What's more, the savvy marketing effort brought in other customers who decided on just one car or truck, causing the store's overall sales to double in September compared with the prior year.
Ray Adams was a little less enthusiastic about the results of his freebie sale, which he used at both his Ford and Chevy dealerships. But he said he'll run the program again at some point, probably when his lots get crowded again with inventory.
"It's a doable thing — it's not just a ploy," said Adams, who recalled running a similar program at his Toyota store many years ago. "Plus it lowers our inventory twice. ... It was really a good deal."
To some industry observers, this tactic might be a sign of desperation.
Buy-one-get-one-free deals — known in the retail industry as BOGO offers — usually involve cheaper products, such as shoes, videos or day-old bread. Neither GM nor Ford had a comment about the concept of giving away cars with trucks or whether they were worried such deals might devalue their brands.
"Our dealers are independent businessmen, and we cannot influence how they do their business," said Ford spokesman David Reuter.
GM spokeswoman Elaine Redd added, "We encourage creative thinking that makes good business sense and wish them luck with the program."
Cars have been sold in BOGO offers before. In the late 1980s, at least one dealer gave away a Yugoslavian-made Yugo with the purchase of an expensive Cadillac.
But Hill said there's an appetite for this kind of program nationwide. He should know: He's been fielding calls from dealerships across the country, answering questions about how he came up with the idea and made it work.
Hill said he started the month of September with such a glut of 2004 inventory, on which he had to pay interest, he had to do something big. He wasn't aware that GM would offer a clearance sale the last week of the month, so he prodded his sales staff to think outside the box.
And then he came up with an idea that some industry insiders have been joking about in recent years: Buy a truck, get a car for free.
After doing some math, Hill, who has spent 20 years managing dealerships, decided he could give away an Aveo with the purchase of a 2004 TrailBlazer, Tahoe, Suburban or Silverado Crew Cab. In most cases, he figured the store could still make a profit.
There was only one catch: The consumer would have to pay full price for the truck, finance it through GMAC, which is GM's credit arm, and sign over all the rebates and bonus cash — a total of about $7,500 — to the dealer.
Aveo prices start at about $9,455 for consumers but cost the dealership about $8,935 wholesale. That means the Aveo giveaway would cost the dealership only about $1,400 or so, if the dealer applied all the discounts to the car.
But the markup on either the SUVs or pickup more than covers that. For example, the Chevy Tahoe starts at about $35,175, but the dealership pays about $4,400 less for it. So the dealership pays for the rest of the Aveo out of that markup, still making a profit of about $3,000.
That calculation does not take into account trade-ins or higher-end versions of the vehicles. But in most instances Hill found it worked.
Hill said he lost some money on a few of the deals. On average, though, he made a profit, although it was a little bit smaller than what he normally takes in on a new vehicle sale. But he sold about 100 cars and trucks that would have kept costing him interest had he not moved them.
Consumers seemingly got a deal, too.
The combined sticker price of the base models of the Aveo and Tahoe is about $44,630. The incentives totaling about $7,500 bring that down to about $37,130. So the consumer who doesn't like the hassle of negotiating saves nearly $2,000 by paying full-price for a Tahoe and getting a free Aveo.
Customer David Hattok said he was skeptical of the deal when he first heard it on the radio. But when he realized he could get his two teenage daughters a new, rather than used, car plus a truck all for the price of a Silverado, he was in.
"I feel like I got the two cars right about dealer cost," he said.
Last month, industry incentives in the auto industry hit an average of $3,120.
Dealers have been complaining that the come-ons no longer grab consumers. But Hill said he thinks his program will be remembered for some time.
"Whenever they look outside of their house," he said, "they'll think: 'That was a great deal.' "
http://www.cars.com/news/stories/10...ry&aff=national
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