Sticker law cleaned up a pricing mess
This is a big year for anniversaries.
General Motors will celebrate its 100th in September. Toyota has been in the United States 50 years. So has Nissan.
And it’s the 50th anniversary of the Automobile Information Disclosure Act, known throughout the industry as the Monroney price sticker law. That law put an end to ruinous pricing practices — by dealers and manufacturers — that were destroying the public’s trust in the auto industry.
It is the most important piece of automotive legislation ever passed by Congress.
Sure, important safety and fuel economy laws have been passed since automobiles became a regulated industry in the mid-1960s. Some of them (fuel economy) have yet to take effect, and they will be difficult and expensive to meet.
But the price sticker law was different. It is the best thing that ever happened to the auto industry because it kept the industry from tearing itself to bits by the shortsighted actions of manufacturers and by the ill-advised and often dipsy-doo actions of dealers and their salespeople.
The price sticker law was the final result of the 1955 Senate hearings that raked GM over the coals for what dealer spokesmen charged was unfair and coercive treatment of its retailers. GM and the other automakers revised and liberalized their franchises as a result of those hearings. And Congress passed the Automobile Dealers’ Day in Court Act — the good-faith law — which required automakers to act in good faith with their dealers.
Pricing was a jungle
But the pricing mess hadn’t been touched. And what a mess it was! No buyer knew the price of his car. The price was what the dealer said it was, and the dealers were not all simon-pure.
In those days, automakers announced prices at the beginning of the model year. Well, sort of. Their numbers were memorable for what they did not include. No freight, no dealer prep and no federal excise tax, which was 10 percent of the wholesale price of the car. The three omissions totaled several hundred dollars.
The customer took his newspaper to the dealership and expected to buy a vehicle for the published price. The dealer explained all the add-ons, and the customer often stormed out in a huff and told his friends, “That dealer is trying to cheat me.”
If anyone was cheating, it was the factory people who announced only a partial price.
Incidentally, the prices published by Automotive News in those days included dealer prep and federal tax — no freight because freight was based on the distance from the assembly plant. Since equalized freight became the order of the day, we have included it in our prices.
But the dealers were not without sin. Let’s say you and your neighbor bought new cars from different dealerships, and your trade-ins were identical — model, equipment, mileage, even the color. Your neighbor asked, “How much did they give you for your trade?”
You answered, “$1,500.” (Remember, new cars cost $2,500 to $5,000 in 1957.)
“Boy, oh, boy,” your neighbor chortled, “I got $3,500 for mine, and our cars were identical.”
Welcome to the ‘pack’
Welcome, neighbor, to the wonderful world of price packing.
Sure, the trade-in allowance was $3,500, so the dealer simply added $2,000 to the price of the car. No buyer knew the price of his car so no one was the wiser.
The price sticker law ended the price pack because the manufacturer’s suggested retail price — including prep, freight and federal tax — was right there on the window for all to see.
Other unsavory pricing practices, like equipment jockeying, also dried up. Standard equipment and options (with prices) were listed on the sticker. The buyer who was hoodwinked on equipment had only himself to blame.
Somewhere, maybe in the Automotive Hall of Fame in Dearborn, Mich., there should be a statue of Sen. Mike Monroney, the Oklahoma Democrat who introduced the law.
The industry welcomed the price sticker law, although it sometimes complicated the selling process. I remember the 1975 model year, when the domestic manufacturers raised prices almost 10 percent. (The public outcry forced them to rescind some of that increase.)
A dealer told me: “A couple would come into the showroom and walk over to the 1975 car of their choice. They’d check it out and then look at the price sticker, and their jaws would drop. They’d head for the door as fast as their legs would carry them. We wouldn’t even get a chance to talk to them.”
Remember the term “sticker shock”? That’s when it started.
If you’re into automotive trivia, you might be interested in knowing the first car to wear a price sticker. It was the 1959 Buick.
Buick, like other GM brands, was all-new for 1959; it even had new series names. The 1959 Buicks went on sale a week before their GM siblings and before the rest of the industry. The first stickers appeared on the Buick LeSabre, Invicta and Electra, which replaced the venerable Special, Super, Century, Roadmaster and Limited.
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