How Automotive Dealerships Have Capitalized By Bait-And-Swap

[ad_1] by BLACK ENTERPRISE Editors July 27, 2025

This all-too-common automobile dealership expertise is the results of a method referred to as bait-and-switch pricing — and sadly, it’s the truth for 71% of used automobile patrons within the U.S.

Few buyer experiences can evoke as a lot anxiousness, uncertainty, and frustration as strolling right into a automobile dealership. As a shopper, you might discover the right automobile on-line at an marketed value inside your funds, solely to drive to the dealership to be met with an arsenal of psychological and emotional manipulation techniques — all with the specific objective of driving up the ultimate buy value with out your full data, understanding, or consent.

This all-too-common automobile dealership expertise is the results of a method referred to as bait-and-switch pricing — and sadly, it’s the truth for 71% of used automobile patrons within the U.S. In whole, bait-and-switch pricing quantities to a $11.8 billion drawback yearly within the U.S. That is the way it occurs: Sellers promote a lower cost to “bait” the buyer to enter the dealership. As soon as they’re on the dealership, the value is then “switched” to the next out-the-door buy value, by way of a spread of manipulative techniques.

It’s essential to be clear, nevertheless, about what and who're inflicting the issue of bait-and-switch pricing. Whereas the stereotype of the shady used automobile salesman is well-known, the true situation lies with the seller enterprise mannequin, somewhat than particular person rogue salespeople.

Throughout the COVID-19 pandemic, automobile shortages drove up costs and seller income considerably — and dealerships now have a major incentive to keep up these income. With used automobiles nonetheless in brief provide from the pandemic, and with the latest onset of auto tariffs, sellers have the clear higher hand with shoppers who've extra restricted choices and who're speeding to purchase earlier than costs improve much more. Because of this, CoPilot has discovered that bait-and-switch pricing has turn out to be an much more prevalent situation for automobile customers in latest months.

Over the previous 12 months, CoPilot has spoken with automobile customers across the nation and analyzed used automobile transactions throughout the U.S. This information, for the primary time ever, quantifies how a lot shoppers had been charged in hidden charges on their used automobile purchases and brings actionable insights and information to this drawback. And we’re solely simply getting began pulling again the curtain on the scope of the issue of bait-and-switch pricing, which sellers are the worst offenders, and the way a lot it’s costing shoppers. The final word purpose? Finish bait-and-switch pricing, for as soon as and for all.

What Bait-and-Swap Pricing Seems to be Like at The Supplier Bait-and-switch pricing is outlined as automobile sellers deploying one or a number of of the next techniques.

Illegitimate charges: Illegitimate charges are fees that sellers add to the underside line value designed to extend seller profitability on the automobile. Extreme charges: Extreme charges are normal charges for professional companies or equipment. Nonetheless, they signify an instance of bait-and-switch pricing as a result of the quantity that sellers are charging the client for them is extreme and above the standard common. Expenses for add-on gear and repair packages: These occur when sellers cost additional for added gear or companies that weren't requested by the client, nor included within the marketed value of the automobile. Examples of add-on seller equipment embrace LoJack, VIN etching, window tint, and exterior/inside safety, whereas frequent add-on service packages embrace oil modifications, tire, prolonged warranties, and car upkeep.

You will need to observe, nevertheless, that sellers do cost professional charges — cheap fees for added gear or companies supplied in the course of the sale course of. Some analysis on frequent charges and their common price in your state ought to reveal whether or not a payment in your out-the-door value is professional.

CoPilot CoPilot By The Numbers: Key Takeaways Hidden charges, a part of a broader sample of bait-and-switch pricing, are outlined as extreme or illegitimate fees which might be added onto the ultimate buy value of a used automobile, with out being clearly communicated to the client.

CoPilot CoPilot CoPilot CoPilot 1. License Payment: $292.64

The quantity in license charges that sellers are allowed to cost is capped by the state and mustn't exceed a specific amount. This quantity is the common quantity by which license charges exceeded the state restrict within the used automobile purchases analyzed by CoPilot.

2. Plate Payment: $275.99

Equally, plate charges are regulated on a state-by-state foundation and can't exceed a specific amount.

3. Transportation payment: $212.33

Transportation charges consult with the price of transport the automobile from one other location, like one other dealership. These charges can typically be marked up or include illegitimate add-ons.

4. Title payment: $205.92

In some states, title charges — the price of transferring possession from the customer to the vendor, together with processing paperwork — are capped at a specific amount. Even within the absence of statewide regulation, these charges may be thought of extreme if the seller fees additional for processing paperwork past the title switch.

5. Doc payment: $204.32

In some states, doc charges are regulated and capped at a specific amount. Some states, like Florida, that don’t have statewide regulation are inclined to see excessively excessive doc charges.

CoPilot 1. Title payment: $205.92

2. Doc payment: common $204.32

3. Registration: common $258.55

This represents the common quantity that seller registration charges exceeded the quantity charged by the state’s DMV.

4. License payment: common $292.64

5. Digital submitting payment: common $220.57

Illegitimate Charges Evaluation The illegitimate charges beneath fall into a number of classes. They will embrace fees for added options that had been pre-installed on the car, however will not be included within the last buy value to the buyer. They will additionally consult with additional options that the seller added to the automobile in the course of the buy course of, with out asking the buyer.

The frequent thread right here is that whereas these charges describe precise add-ons or companies, what makes them illegitimate is that they had been added to the ultimate buy value of the automobile with out the buyer’s data or consent.

CoPilot 1. Etching, wheels and lock: $1,795.00

This contains the VIN etching, the wheel locks, and restoration system to guard towards theft.

2. Reconditioning: $1,581.83

On paper, this payment covers the dealership’s prices to get the car able to promote (together with inspecting, restore, and element).

3. Exterior paint safety: $1,366.17

This payment refers to a model title for a sequence of merchandise designed to guard the outside and inside of the car towards environmental injury (exterior) and spills/stains (inside).

4. Anti-theft/lo-jack: $1,227.25

This refers to a theft safety or deterrent system.

5. Door edge: $1,067.71

This refers to a product designed to guard the sides of auto doorways from nicks, chips, and scratches that may happen from contact with different objects, like partitions and different automobiles, and even when opening the door too forcefully.

CoPilot 1. Exterior paint safety: $1,238.23

2. Reconditioning: $1,366.17

3. Supplier equipment: $1,581.83

4. Guarantee: $1,593.97

An add-on bundle for prolonged warranties, service plans, or different dealer-specific advantages—these companies are completely discretionary to the buyer, and they need to be capable of push again on the payment if they aren't taken with these companies.

5. Anti-theft: $1,227.25

Model Kind Breakdown Home Manufacturers, e.g., Ford, GM, Chevrolet

71% of purchases had hidden charges

The full quantity of hidden charges was $885.19 Illegitimate charges, common quantity: $855.13 Extreme charges, common quantity: $30.07

CoPilot CoPilot International Manufacturers, e.g., Honda, Toyota, Kia64% of purchases had hidden charges

The full quantity of hidden charges was $851.97 Illegitimate charges, common quantity: $729.41 Extreme charges, common quantity: $134.92

CoPilot CoPilot Luxurious Manufacturers – i.e., Mercedes-Benz, Audi, Lincoln

39% of purchases had hidden charges

The full quantity of hidden charges was $425.99 illegitimate charges – common quantity: $361.25 extreme charges – common quantity: $64.74

CoPilot CoPilot The Why: File Supplier Earnings Result in Misleading Enterprise Practices New automobile costs skyrocketed in the course of the COVID-19 pandemic, resulting from a spread of things, together with provide chain constraints and the semiconductor scarcity inflicting new automobile stock to plummet. On the identical time, shopper demand for automobiles heightened. This created an ideal storm of supply-and-demand points within the automobile market, one that also impacts automobile customers immediately after they step onto the seller lot.

The worth will increase within the new automobile market then trickled into the used automobile market, inflicting these costs to soar as properly.

At the moment, new automobile costs at the moment are $49,667, up 29% for the reason that begin of the pandemic. Used automobile costs at the moment are $26,715, up 18% since March 2020. This created an extremely worthwhile surroundings for automobile sellers throughout 2021 and 2022 particularly.

CoPilot New automobile provide began to rebound in mid-2023, as automakers had been lastly capable of produce extra automobiles. Nonetheless, automobile costs have but to come back down considerably from their peaks. New automobile costs, as an illustration, fell by simply 1% in 2024. In the meantime, sellers, who grew to become accustomed to report income in the course of the COVID years, are unwilling to present these up.

At the moment, greater than ever, the seller enterprise mannequin is incentivized to have interaction in nontransparent and at occasions misleading pricing practices, leading to tons of and generally 1000's of {dollars} additional added onto automobile purchases annually.

Empowering the Client and Ending Bait-and-Swap Pricing Sadly — with the overturn of the Federal Commerce Fee’s Combatting Auto Retail Scams Rule in 2024, which had mandated that sellers transparently talk car pricing and restricted add-ons and hidden charges — there isn't a regulatory resolution to this drawback. With out sturdy shopper protections within the automobile shopping for course of, it’s now incumbent on automobile customers to have the ability to determine hidden charges and push again on the seller after they attempt to add these onto a purchase order.

To that finish, there are a number of steps that buyers can take to be ready after they encounter bait-and-switch pricing on the automobile dealership:

Whereas it might appear to be an apparent step, contact the seller upfront and get the out-the-door value in writing. This holds them accountable to a quantity and diminishes the seller’s means to make use of bait-and-switch pricing. Determine any charges that look greater than common or appear pointless. Comply with up with the seller if there are any charges you want extra clarification on and attempt to negotiate any charges down that you simply really feel uncomfortable about. Analysis common charges on your state. It will aid you simply determine if what the seller is charging you is consistent with what different sellers are charging.