Automotive News - June 9, 2008 - (Page 14)

14 • JUNE 9, 2008 Sticker law cleaned up a pricing mess 50 years ago, labels saved the auto industry from itself John K. Teahen Jr. This is a big year for anniversaries. General Motors will celebrate its 100th in September. Toyota has been in the United States 50 years. So has Nissan. And it’s the 50th anniversary of the Automobile Information Disclosure Act, known throughout the industry as the Monroney price sticker law. That law put an end to ruinous pricing practices — by dealers and manufacturers — that were destroying the public’s trust in the auto industry. It is the most important piece of automotive legislation ever passed by Congress. Sure, important safety and fuel economy laws have been passed since automobiles became a regulated industry in the mid-1960s. Some of them (fuel economy) have yet to take effect, and they will be difficult and expensive to meet. But the price sticker law was different. It is the best thing that ever happened to the auto industry because it kept the industry from tearing itself to bits by the shortsighted actions of manufacturers and by the ill-advised and often dipsy-doo actions of dealers and their salespeople. The price sticker law was the final result of the 1955 Senate hearings that raked GM over the coals for what dealer spokesmen charged was unfair and coercive treatment of its retailers. GM and the other automakers revised and liberalized their franchises as a result of those hearings. And Congress passed the Automobile Dealers’ Day in Court Act — the good-faith law — which required automakers to act in good faith with their dealers. EDITORIAL STAFF 313-446-0361 E-mail autonews@crain.com Web site www.autonews.com Keith E. Crain Publisher and Editor-in-Chief Peter Brown Associate Publisher and Editorial Director DETROIT 313-446-0361 Fax: 313-446-0383 1155 Gratiot Ave. Detroit, MI 48207-2997 David Sedgwick Editor dsedgwick@crain.com Edward Lapham Executive Editor elapham@crain.com Richard Johnson Managing Editor rjohnson@crain.com John K. Teahen Jr. Senior Editor Mary Beth Vander Schaaf Deputy Managing Editor Charles Child International Editor David Kushma Retail Editor Dave Guilford News Editor NEWSCOM Philip Nussel Special Projects Editor James B. Treece Industry Editor Jesse Snyder Senior Writer Karen Faust O’Rourke Insight Editor COPY EDITORS: Bob Allen, Tom Fetters, Patricia C. Foley, Kenn Jones, Gregory Skwira Susan Zavela Bamford/Graphics Editor Rick Kranz/Product Editor REPORTERS: Leslie J. Allen, David Barkholz, Mary Connelly, Ralph Kisiel, Jamie LaReau, Arlena Sawyers, Robert Sherefkin, Richard Truett, Bradford Wernle, Amy Wilson Mary Raetz Director, Automotive News Data Center Debi Domby, Camille Pippen Research Assistants Dan Jones Office Manager Robertta Savage Editorial Assistant Corinne M. Price, Michael Garrison Information Center LOS ANGELES Mark Rechtin/Bureau Chief 310-739-8009 Fax: 310-832-6362 Kathy Jackson/Reporter 323-370-2481 Fax: 323-655-8157 Alysha Webb/Reporter awebb@crain.com 6500 Wilshire Blvd. Los Angeles, CA 90048-4947 NEW YORK Diana T. Kurylko/Reporter Phone/fax: 908-273-6059 dkurylko@crain.com WASHINGTON Donna Harris/Reporter 540-668-7295 Fax: 540-668-7296 Harry Stoffer/Reporter 202-662-7212 Fax: 202-638-3155 814 National Press Building Washington, DC 20045-1801 MID-SOUTH Lindsay Chappell/Bureau Chief 615-371-6654 Fax: 615-371-6655 April Wortham/Reporter 615-371-6617 104 East Park Drive, Suite 315, Brentwood, TN 37027 TOKYO Hans Greimel/Asia Editor +81-3-3828-9060 Fax: +81-3-3828-9061 hgreimel@crain.com Yurakucho Denki Bldg., 20th Floor 1-7-1 Yurakucho, Chiyoda-ku, Tokyo 100-0006, Japan TURIN Luca Ciferri/Reporter lciferri@craincom.de +39-011 961 0194 Fax: +39-011 961 0113 Viale Cavaglia, 8 10029 Villastellone (TO) Italy STAFF CORRESPONDENT: Eric Freedman/Legal file, 517-337-0269 www.autonews.com DETROIT Victor Galvan/Web Editor vgalvan@crain.com 313-446-0345 Scott Kennedy/Multimedia Editor Before stickers were required by law, buyers were clueless about the price of a new car. Now the manufacturer’s suggested retail price — including prep and freight — is right there on the window for all to see. comment John K. Teahen Jr. is senior editor of Automotive News. sale price of the car. The three omissions totaled several hundred dollars. The customer took his newspaper to the dealership and expected to buy a vehicle for the published price. The dealer explained all the add-ons, and the customer often stormed out in a huff and told his friends, “That dealer is trying to cheat me.” If anyone was cheating, it was the factory people who announced only a partial price. Incidentally, the prices published by Automotive News in those days included dealer prep and federal tax — no freight because freight was based on the distance from the assembly plant. Since equalized freight became the order of the day, we have included it in our prices. But the dealers were not without sin. Let’s say you and your neighbor bought new cars from different deal- erships, and your trade-ins were identical — model, equipment, mileage, even the color. Your neighbor asked, “How much did they give you for your trade?” You answered, “$1,500.” (Remember, new cars cost $2,500 to $5,000 in 1957.) “Boy, oh, boy,” your neighbor chortled, “I got $3,500 for mine, and our cars were identical.” Welcome to the ‘pack’ Welcome, neighbor, to the wonderful world of price packing. Sure, the trade-in allowance was $3,500, so the dealer simply added $2,000 to the price of the car. No buyer knew the price of his car so no one was the wiser. The price sticker law ended the price pack because the manufacturer’s suggested retail price — including prep, freight and federal tax — was right there on the window for all to see. Other unsavory pricing practices, like equipment jockeying, also dried up. Standard equipment and options (with prices) were listed on the sticker. The buyer who was hoodwinked on equipment had only himself to blame. Somewhere, maybe in the Automotive Hall of Fame in Dearborn, Mich., there should be a statue of Sen. Mike Monroney, the Oklahoma Democrat Pricing was a jungle But the pricing mess hadn’t been touched. And what a mess it was! No buyer knew the price of his car. The price was what the dealer said it was, and the dealers were not all simonpure. In those days, automakers announced prices at the beginning of the model year. Well, sort of. Their numbers were memorable for what they did not include. No freight, no dealer prep and no federal excise tax, which was 10 percent of the whole- who introduced the law. The industry welcomed the price sticker law, although it sometimes complicated the selling process. I remember the 1975 model year, when the domestic manufacturers raised prices almost 10 percent. (The public outcry forced them to rescind some of that increase.) A dealer told me: “A couple would come into the showroom and walk over to the 1975 car of their choice. They’d check it out and then look at the price sticker, and their jaws would drop. They’d head for the door as fast as their legs would carry them. We wouldn’t even get a chance to talk to them.” Remember the term “sticker shock”? That’s when it started. If you’re into automotive trivia, you might be interested in knowing the first car to wear a price sticker. It was the 1959 Buick. Buick, like other GM brands, was all-new for 1959; it even had new series names. The 1959 Buicks went on sale a week before their GM siblings and before the rest of the industry. The first stickers appeared on the Buick LeSabre, Invicta and Electra, which replaced the venerable Special, Super, Century, Roadmaster and Limited. You may e-mail John K. Teahen Jr. at jteahen@crain.com continued from Page 12 Lack of regulation foils safety laws To the Editor: Kevin M. McDonald’s May 26 column correctly points to several important issues in motorvehicle safety rooted in driver behavior. However, the idea that vehicle performance in the United States is overregulated and has reached a point of diminishing returns misses the mark. Numerous examples of agency inaction have cost thousands of lives unnecessarily. For example, for decades, the National Highway Traffic Safety Administration failed to address rollover occupant protection as much of our fleet switched to lessstable vehicles and designs. McDonald’s example of child-seat safety problems is another case in point. It’s true that an estimated 80 percent of consumers nationwide misuse child restraints. But his suggestion that NHTSA “devote more effort to providing parents and caregivers with the tools and information needed to protect children” ignores the lengthy and well-documented history of regulatory indifference to child passenger safety. Misuse rates have been hovering around 80 percent for decades; the root of the problem is poor design and poor regulation. It’s time to rethink how we regulate child passenger safety. And, as McDonald points out, recall response rates are a problem. At the bottom of the barrel are responses to tire recalls. The tire manufacturers have been content with the failed recall system that they helped shepherd into a regulation more than 30 years ago. Again, real reform is needed to make the system functional. It’s easy to point to operator error, but it doesn’t always square with the record. Performance regulations and driver behavior are both key ingredients to meaningful reductions in motor-vehicle fatalities and injuries. SEAN KANE President Safety Research & Strategies Inc. Rehoboth, Mass. http://www.autonews.com http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - June 9, 2008

Automotive News - June 9, 2008 Hummer Bummer: A death sentence? New F-150, Ram in peril as big pickups collapse Japanese can add small cars faster than Detroit 3 Battery shortage hurts hybrid sales 2 key overseas staffers move to Automotive News in the U.S. Toyota may add Camry to Indiana truck plant Mazda extends warranty on RX-8 rotary engine CAW to consider strike against GM Porsche's new 911 GM plans big ad push for its big hybrid SUVs Chrysler cuts fees to outside service firms 5% Toyota considering 'Made in U.S.A.' Prius Congress, Bush square off over rollover suits GM finance whiz changed the industry GM's big SUVs may get lighter Harbour Report: Chrysler, Toyota most efficient Spring intros can be dicey Ford spends big on MKS ad launch Media buyer for GM cuts 25 jobs Sources: GM poised to buy Cobasys GM dealer program rebounds Mazda updates the RX-8 New Maxima is a tad smaller — but more buff Congress must balance safety, mpg concerns Is the gas crisis real or just temporary? What about poor driving? There's no substitute for safe driving Lack of regulation foils safety laws Sticker law cleaned up a pricing mess Lithia to sell outlets, delay used-car stores Nielsen likes to step off the beaten path GM union local strives to pull parts jobs in-house JCI will open Ga. plant to supply Kia Dealers: Be open about credit problems Finance venture has $1 billion Picture this Personnel Dealers BMW purchasing chief 'looking for waste' Nissan Mexicana gets new chief Ford Flex output begins Hyundai Genesis: $33,000 Ford buys more from minorities Audi's U.S. chief: Brand can handle high gas prices May in Detroit: Scary, not merry Infiniti FX starts at $41,765 Lincoln: 8,600 MKS orders Plastics supplier sees growth Jenkins gets Aston Martin post Smith is CEO of Jaguar, Land Rover Kremlin watching, Chrysler style Toyota breathing down GM's neck on monthly U.S. sales PR chief Steve Harris: At GM through '08 Small-car surge is a replay of 1979 Auto execs would benefit from some store experience Mini's mixed results: Sales soar, quality stumbles Nice car — so what's the ppmpg? Volt's good PR got struck by lightning

Automotive News - June 9, 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.