The Federal Trade Commission’s push for more transparent vehicle pricing may already be changing how shoppers compare vehicles online — and CarMax says the shift is showing up in third-party shopping data.
CarMax CEO Keith Barr said during the company’s Sept. 29 earnings call that the percentage of CarMax vehicles rated as “great deals” on Cars.com more than doubled during the company’s second quarter compared with the same period a year earlier. Barr called the increase a significant benefit as consumers increasingly shop and compare vehicles digitally.
Barr attributed part of the improvement to the FTC’s increased enforcement of advertised-price requirements. The FTC’s September guidance says a vehicle’s advertised price must include mandatory dealer charges, with limited exceptions for government-required charges. The agency has said the requirement applies across websites, third-party listings, social media, print advertising and other forms of advertising.
For CarMax, which has long advertised vehicles using a no-haggle pricing model, Barr said greater industrywide price transparency makes it easier for shoppers to make direct comparisons.
CarMax's results also showed stronger used-vehicle sales during the quarter. Comparable used-unit sales increased 13%, while the company said improved price competitiveness was a major factor in the increase.
The FTC says its pricing guidance is intended to create a marketplace where consumers can compare actual prices and dealers compete on more equal terms. For dealers, however, the change also means the price appearing in an online listing needs to accurately reflect what a consumer can actually pay, rather than a lower advertised figure followed by mandatory fees later in the transaction.
Bottom line: As more dealer listings move toward all-in advertised pricing, the numbers shoppers see on third-party sites could increasingly influence which vehicles are perceived as the best deals.
