Buy a New Car, Get Another Free?
By: Staff

By Carl Winfield
These days, buy-one-get-one-free deals aren’t just for pizza anymore. Car dealers in Miami, Fla., and Medina, Ohio, are finding that they can move old models off the lot by doing the same thing.

“We had 200 cars total, and now we’re down to 50,” says Georg Haimovich, general manager of Rob Lambdin's University Dodge in Davie, Fla. “We didn’t make much money, but this wasn’t about money. This was about getting rid of the 2008 inventory.”

The Wheel Deal
It’s not quite as simple as buying one car and walking away with two. (Car dealers may be desperate, but they’re not stupid.) The deal works like this:

The dealer has one car which sells for $40,000 and another that sells for $20,000.

If each car normally comes with a $12,000 rebate, the dealer gets $28,000 on the more expensive model and $8,000 on the cheaper one. However, if the dealer packages the deal as a buy-one-get-one-free deal, the customer pays full price for the $40,000 model, nothing for the $20,000 model, and ultimately the dealer saves money. But, instead of saving $24,000 (two $12,000 rebates), you’ve only saved $20,000 (the cheaper car for free).

“These buy-one-get-one free promotions aren’t unheard of in the industry,” says Scott Fink, CEO of Newport Ritchie Hyundai, also in Florida. “But they’re really more of a ploy.”

There’s More Than One Way To Sell a Car
Auto dealers will do almost anything to move a product, but there are more reputable ways to get cars off the lot.

Chrysler introduced its Employee Pricing Plus Plus sale, with 0% financing for 36 months, employee pricing discounts and cash back offers last year. Mazda is offering as much as 0.9% financing for up to 60 months, $3,000 cash back and no payments for 90 days on many of its models. Even Mercedes Benz is offering 3.9% financing for 36 months on some of its models.

Auto dealers can drop prices all they want but, in the end, the real problem is that fewer people can afford new cars.

“Buyers are just not getting credit,” says Haimovich. “There are buyers out there, but without financing, nothing’s moving.”

So far, Hyundai’s are the only cars leaving the lots. The South Korean auto manufacturer saw a 14.3% increase in sales last month. Some of their success may be due to their offer to give potential buyers the opportunity to walk away from their car payments through the Hyudai Assurance program.

A New Deal For Car Buyers
Few consumers have the money or the inclination to make large purchases during a recession. However, if you’re looking for a great deal (and if you need a car), be advised: Even the most successful dealerships are trying to get models out of the showrooms and onto the road.

“All dealers are loaded with product right now,” says Fink. “If you can’t sell a car, then you have to find some way to get rid of it somehow."

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