The Down and Dirty ADM Thread

[Spa2k]

The problem with a new car is a dealer slaps a price above the MSRP to net them a real payday based on the projected public desire for a relatively hard to find vehicle. But, in reality...those dealers have the car on consignment so they don't own the car beforehand and adding anything above MSRP is simply greed. They can charge what they want in theory because they are the owner of the car, but in reality they aren't. So ultimately its just Greed. Call it a Free Market if you want, but this only happens according to the FTC in the Automotive Sales business. And according to the FTC its a criminal aspect of the current dealership model.

Please support your claim about ADM and the FTC with facts, such as a specific FTC report, filing, ruling or action. Yes, the FTC has been going after auto dealers for things such as deceptive advertising practices, nondisclosure of certain loan terms and the value of add-ons such as undercoating, but I am unable to find any case where the FTC has gone after a dealer for ADM. In fact, the only thing I can find on the FTC website is this definition of the term "ADM" on the "Buying a New Car" page:

Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

BTW, you don't have to do a search of the FTC website for pages on ADM. I've already done that (I use the FTC website quite a lot in my work), and there aren't any.

I agree with you that ADM is tacky and bad business, but it's not illegal when the FTC requirements for disclosure are followed by a dealer posting the extra sticker. And no one here has said that dealers who are doing ADM or "local market adjustments" are hiding it.

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[Cruzinaround]

Please support your claim about ADM and the FTC with facts, such as a specific FTC report, filing, ruling or action. Yes, the FTC has been going after auto dealers for things such as deceptive advertising practices, nondisclosure of certain loan terms and the value of add-ons such as undercoating, but I am unable to find any case where the FTC has gone after a dealer for ADM. In fact, the only thing I can find on the FTC website is this definition of the term "ADM" on the "Buying a New Car" page:

Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

BTW, you don't have to do a search of the FTC website for pages on ADM. I've already done that (I use the FTC website quite a lot in my work), and there aren't any.

I agree with you that ADM is tacky and bad business, but it's not illegal when the FTC requirements for disclosure are followed by a dealer posting the extra sticker. And no one here has said that dealers who are doing ADM or "local market adjustments" are hiding it.

I'll need to hunt down the data. It was a a documented industry report written by Experts from the FTC.


But, in the meantime the following does offer some insight...

https://www.ftc.gov/news-events/blo...2014/04/who-decides-how-consumers-should-shop

Also written under the FTC umbrella.

BTW the aspect of the dealership model that the FTC found criminal was where the laws to protect the Dealership Franchises actually were breaking interstate trade laws themselves. Those came about around 1999-2000. Starting in the Grand Ol state of Texas.

 

[Spa2k]

I'll need to hunt down the data. It was a a documented industry report written by Experts from the FTC.


But, in the meantime the following does offer some insight...

https://www.ftc.gov/news-events/blo...2014/04/who-decides-how-consumers-should-shop

Also written under the FTC umbrella.

BTW the aspect of the dealership model that the FTC found criminal was where the laws to protect the Dealership Franchises actually were breaking interstate trade laws themselves. Those came about around 1999-2000. Starting in the Grand Ol state of Texas.

None of this has anything to do with ADM. And the blog posting you cited was written as the independent view of three FTC employees on a topic not related to ADM; it is not a statement of FTC policy or rulemaking.

 

[Cruzinaround]

It offers where their thinking is....if its on the FTC site then its their POV. otherwise there would be disclaimers all over it... not to mention it would not even be there.

Just saying.

If it was going against their thinking and philosphies... then it would not be on an FTC site.


Which, BTW the info I would site would be more of the same.... as its not official policy.

But..policy and mindset can always differ where laws apply.

 

[Spa2k]

It offers where their thinking is....if its on the FTC site then its their POV. otherwise there would be disclaimers all over it... not to mention it would not even be there.

Just saying.

You may be able to make that jump in logic as it relates to independent auto dealers, but I can't. There is absolutely no link from the Tesla marketing model to ADM. And if you're clairvoyant and can guess what the staff at the FTC is thinking, I'll send you a box of Attaboys. Until then, I know of no negative references or investigations related to ADM from the FTC, and it's time to stop saying that there is unless you have proof.

I don't like ADM, I've never bought a car with an ADM, and I will never buy a car with ADM. But I do understand that dealers who often make no money on the sale of new vehicles unfortunately are tempted by the instant gratification of legally using ADM to temporarily boost their bottom lines. Fortunately, some will suffer a negative impact on their business reputations from that mistake later.

 

[Cruzinaround]

Actually the terminology used by the FTC in their reports (take note of the word reports) that my company used when providing market research for what consumers want from a car buying experience flips, from "ADM" to "Intangibles" to "Loan Packing" To "Financing Markups" and my favorite..."Conditional Sales Agreements" ...in much of the related information provided by the FTC and the CFPB which are both on the same page when it comes to policing the activities of the Auto Dealerships. However all those terms reference the same thing in various forms...Additional Dealer Markups.

And the recent push from the FTC to allow Direct buy against what many local governments laws are claiming to protect the dealerships also plays a hand in the ADM overall picture...because with the traditional dealership model gone...ADM's go away with it. (ala Tesla)

But, the end result is charging more for the vehicle based on those factors. All related to ADM's. In fact everything falls under the same umbrella and is in the end additional dealer markups no matter how they spin it. Whether it involves charging for intangibles, or packing a deal to be inclusive of additional dealer warrantees or services or financing options at an additional fee. And lets face it... for most buyers it all wraps up into the final financing package.

If you work in an industry where you reference much of this material... then where are you going with this? Because.... ADM is a much broader frame of reference than what many of the posters here think it is. Its not simply cut and dry as a price over the MSRP. It boils down to much of the activity that is involved within the deal itself and often more is hidden in the final financing options where the dealer is pocketing more even in the form of hidden markups within the financing terms itself.

So if you want more clarity its more involved than a simple post on these forums.

The practices that comprise much of what is really an ADM are far more involved and convoluted than "this is our price over the MSRP". Unless of course you are a cash paying customer with the full payment in hand. Otherwise it involves so much more its not even funny.

 

[Spa2k]

:frusty:

ADM, as defined by the FTC, only applies to what's posted on the second sticker - not interest on loans, not overpriced undercoating, not undisclosed deposits on leases and not anything else you have mentioned. The phrase ADM never is used in the circumstances you mention in any published FTC document - NEVER - and misusing it here or in a company document or on the moon when the rocket-powered GT35000 is available still is incorrect and may lead people to believe that some dealers are thieves, when in fact they specifically are complying with the rules they have to live with that are set by the FTC.

I officially give up.

:headbonk:

 

[Evolvd]

:frusty:

I officially give up.

:headbonk:

Yep...which is why I quit commenting (minus this post lol)....who gives a shit, don't like ADM, don't pay it. It takes all kinds to make the world go round.

 

[Cruzinaround]

:frusty:

ADM, as defined by the FTC, only applies to what's posted on the second sticker - not interest on loans, not overpriced undercoating, not undisclosed deposits on leases and not anything else you have mentioned. The phrase ADM never is used in the circumstances you mention in any published FTC document - NEVER - and misusing it here or in a company document or on the moon when the rocket-powered GT35000 is available still is incorrect and may lead people to believe that some dealers are thieves, when in fact they specifically are complying with the rules they have to live with that are set by the FTC.

I officially give up.

:headbonk:

Good for you.

The FTC does post reports that reflect these points. They are also in agreement with the same perspectives offered by ... The CENTER FOR RESPONSIBLE LENDING, The CONSUMER FEDERATION OF AMERICA, The CONSUMERS FOR AUTO RELIABILITY AND SAFETY, The NATIONAL ASSOCIATION OF CONSUMER ADVOCATES, The NATIONAL CONSUMER LAW CENTER, on behalf of its low income clients and The NATIONAL COUNCIL OF LA RAZA.

Etc etc etc. If it is searchable on their site its views they are sharing with the public. You can speculate all you want as to why.

Just because its not enforced as part of official policy handed down from the FTC doesn't mean they don't report on these views.

The only point you make that holds true is...nothing is deemed illegal, YET. But clearly frowned upon.

And yes these reports that you have access to as well...all place all of the above as Additional Dealer Markups....

Which is interest on loans, overpriced undercoating, undisclosed deposits on leases and everything else I have mentioned. It all falls under things that require full disclosure and with the majority of these pain points... IS LISTED ON THE SECOND STICKER.

Again.. the sticker isn't always going to be what is financed by any given dealership. Unless you have your own financing or cash in hand. So additional Markups will apply with dealer financing options. Also requiring full disclosure and many times in practice HIDDEN.

Keep banging your head.

FTC definition; Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

 

[Five Oh Brian]

opcorn:

 

[10splaya22]

:frusty:

ADM, as defined by the FTC, only applies to what's posted on the second sticker - not interest on loans, not overpriced undercoating, not undisclosed deposits on leases and not anything else you have mentioned. The phrase ADM never is used in the circumstances you mention in any published FTC document - NEVER - and misusing it here or in a company document or on the moon when the rocket-powered GT35000 is available still is incorrect and may lead people to believe that some dealers are thieves, when in fact they specifically are complying with the rules they have to live with that are set by the FTC.

I officially give up.

:headbonk:

Its like talking to a brick wall isn't it? No matter how hard you try the wall won't listen to or understand what you are saying.

 

[Cruzinaround]

Not understanding ancillary terms and actions. Can cause a lot of otherwise intelligent people to bang their heads. Thinking outside the only frame of reference they have causes head explosions.

 

[Five Oh Brian]

I look forward to a day when manufacturers and/or the government force car dealers to sell everything for MSRP. Ah, the beauty of knowing that we'll never again have to sell most every vehicle for thousands below MSRP and - more often than not - for the invoice total or less. That day can't come soon enough, IMO.

 

[Cruzinaround]

^funny...although ADMs apply to cars sold below MSRP to bring those margins back up again, as well....

And you're assuming that at the end of the model year there would be no further discounts even from a direct buy model. Or that the current discounts based on discriminating factors such as Student, Age or Military status wouldn't apply.

That would be naivé thinking even for the most veteran of salespeople.

Oh how the wishful thinking seems to only focus on the personal self interest rather than the bigger picture.

more head banging..should follow below.

 

[OH5GT 2 S550]

^funny...although ADMs apply to cars sold below MSRP to bring those margins back up again, as well....

And you're assuming that at the end of the model year there would be no further discounts even from a direct buy model. Or that the current discounts based on discriminating factors such as Student, Age or Military status wouldn't apply.

That would be naivé thinking even for the most veteran of salespeople.

Oh how the wishful thinking seems to only focus on the personal self interest rather than the bigger picture.

more head banging..should follow below.

Some people....

"I hate ADM"

"Dealer...give me a huge discount"

:frusty:

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