Buy 1 get 1 free! Car dealerships, desperate for sales, offer deep discounts on autos

Buy 1 get 1 free! Car dealerships, desperate for sales, offer deep discounts on autos
BY CATEY HILL NEW YORK DAILY NEWS
Thursday, December 11th 2008, 1:04 AM
Theodorakis for News
A car dealership on Fifth Ave. and 69th St. in the Bay Ridge section of Brooklyn.
'Buy one get one free!' No it's not a pair of shoes or a bag of chips - it's a car. Yes, you read that right - buy one car, get one free. The deal is spreading across the country.
"We've heard about the buy-one-get-one-free ads in Florida, Ohio and Texas," said Richard Arca, a senior analyst at Edmunds.com. Arca has not heard about these deals in New York yet, though he said he would not be surprised if we see more of them.
Such a great deal begs the question: is it just a marketing gimmick?
"The first thing people think when they come in is 'It's a fake ad. It's a normal car dealer ad. It's a gimmick.' But it's not," said Ali Ahmed, a Dodge dealer in Miami who offered a buy-one-get-one-free deal.
He's not lying: the deal is not necessarily a marketing gimmick. Dealers are desperate to sell cars as the auto industry gets smacked with slumping sales.
"There is nothing they can do but sell them. They need to get these cars off the lot. They need to mitigate their losses," said Arca.
Here's why a dealer might offer a two-for-one deal: once the 2009 model comes out, the value of a 2008 model will keep dropping significantly. Thus, if a dealer hasn't sold the 2008 model, he's going to have to slash the price anyway. That factor, combined with a possible manufacturer's cash incentive when the dealer sells the car, might make the two-for-one deal a break-even or a bit lucrative for a dealership.
"Sometimes they are better off doing a two-for-one deal now than waiting a month when they'll have a harder time selling an older model," Arca said.
No auto dealers that The Daily News spoke to in New York were offering two-for-one deals. In fact, most seemed suprised by the deal.
"That's nuts. How do they get away with that? Does the car have four wheels and a motor," said Angel Manjarrex, manager of City World Ford Lincoln Mercury in New York.
The auto industry is seeing a rough future ahead of it. GM, Ford, Chrysler, Honda, Toyota and Nissan all saw sales drop more than 30 percent this year. That's a lot of cars sitting on the lot.
"It's definitely a tough climate right now. A lot of people are saying it's a perfect storm of gas prices and financing and consumer confidence," Matt Lee, floor manager for Major World Auto in New York, said. Lee said that Major World Auto has seen a major drop in car sales as well as in people coming in to look at cars, though they have not resorted to two-for-one-deals yet.
These tough times at dealerships around the country mean we might be seeing more of these two-for-one deals, Arca said.
With reporting from CNN