11:32 am, May 25, 2023
Car dealers could be forced the change the way they advertise price drops after Marshall Motor Group was handed an official warning from the Advertising Standards Authority (ASA).
The dealer group has received a rap on the knuckles after the watchdog found it was ‘misleading’ customers with claims of them making savings.
The case related to an online listing for a Mercedes Benz B Class B200d, which was seen by a customer back in February.
The ad said: ‘Price £19,480 Was £19,899 Saving £419’ which the ASA said fell foul of consumer protection regulations.
An investigation by the body found that the vehicle first went on sale on January 27, priced at £19,890.
The price then changed five times, fluctuating between £19,899 and £18,980 between February 5 and March 2, in accordance with up-to-date pricing data.
This, says the ASA, meant consumers were ‘likely to interpret the claim to mean that they were making a genuine saving against the original selling price’.
It found the savings claim was ‘likely to mislead’ and warned Marshalls about its future conduct.
In its ruling, the ASA said: ‘The ad made the claim, “Price £19,480 Was £19,899 Saving £419”.
‘Consumers were likely to interpret the claim to mean that they were making a genuine saving against the original selling price.
‘Consumers were further likely to understand the higher price to be one which they could use as a reference for estimating the value of the product, and against which the saving offered good value.
‘The ASA expected that, in the context of the “was” price being used alongside a savings claim, the advertiser would be able to demonstrate that the price had been offered for a sufficiently long period of time such that consumers would see it as a genuine reference price.
‘We noted that the original selling price was labelled as a “was” price. “Was” prices were traditionally associated with time-limited promotional offers whereby consumers made a genuine saving against the usual selling price of the product at the time the ad appeared.’
It added: ‘We understood that the car had been advertised at £19,899 for a short period of time and Marshall Motor Group had made the choice to lower the price to meet market demand.
‘The price had fluctuated over a period of days, being advertised at the higher price for five days.
‘Therefore, we considered the “was price” had not been established as a reference for its value, and the price reduction did not represent a genuine saving for consumers.
‘Because the ad incorporated a “was” price and “saving” claim, but did not refer to a genuine saving for consumers, we concluded that the ad was likely to mislead.’
- Motorway advert banned for being ‘dangerous and irresponsible’
- Watchdog rules Carwow and Motorline adverts are misleading
Dealer’s defence
During the investigation, Marshalls told the ASA that price updates on used vehicles changed regularly and were often updated on a daily basis, sometimes automatically, via business software tools.
The group also explained that due to the volatile nature of used car prices, which makes them ‘depreciating assets’, it was unable to wait for 28 days before making price reductions.
Bosses insisted there was ‘no particular emphasis given to the savings claim’ and did not believe it to be misleading.
A statement from the ASA said: ‘They explained that price updates on used vehicles could be made daily. They were based on market conditions using data intelligence and in some instances were amended automatically using their business software intelligence tool.
‘They further explained that the pricing of a one off used vehicle was very different to new stock that was stable and predictable.
‘Used vehicles were unique, based on individual characteristics, condition and current market demand and there was no ‘usual’ selling price.
‘They gave the example of a used cabriolet vehicle that would command a higher price in summer than in the winter.
‘They said to keep their prices consistent and competitive, in a used car market that had undergone significant changes, price adjustments were needed when their market intelligence suggested it.
‘They acknowledged that the vehicle’s original price was not advertised for a long period before being reduced.
‘However, they said used cars had to be sold quickly as they were depreciating assets and waiting a period of 28 days was too long before making a reduction when there was not sufficient interest.
‘They believed other motor dealers worked in the same way.’
The full ruling can be found here.
