IN YOUR CORNER
Wheeling and dealing: a most unfortunate sequel
Last week’s In Your Corner column regrettably resulted in a consumer’s disgruntlement
I’ve just received an e-mail from a very annoyed woman.
The overseas trip she was booked to go on with her boyfriend next month is now cancelled and it’s all my fault, she says.
“Today, after months of excitement, days taken off work to get my passport and apply for visas, the excitement and buildup and counting down seconds to our bank incentive trip to Prague, Mallorca and Barcelona in June, all to be told it has been cancelled and the reason is Wendy Knowler.
“My understanding is that you are saying that the consumer is paying for this incentive trip … well, what about staff year-end functions, bonuses, commissions: where does that money come from?
“I am absolutely furious …”
This has to do with last week’s In Your Corner column about banks that finance cars, entering into partnership agreements with motor dealership networks, and incentivising them with, among other things, overseas trips.
It was sparked by an e-mail I received from an anonymous dealership finance and insurance manager (F&I) who felt very uneasy about the arrangement. “We are forced to use a specific bank as the dealership company has a joint venture with them … if we get to a certain percentage in terms of penetration and a certain rate … all the dealer principals and their spouses get a sponsored trip overseas. Surely that is a ‘backhand’ to ensure this specific bank gets the monopoly of the business?”
All the banks I sourced a response from denied that their incentives had anything to do with the interest rates on deals secured by dealership F&Is, but most admitted to sponsoring overseas trips as incentives.
Wesbank told me: “The performance criteria usually include the amount of quality deals – deals that have been approved based on internal measurement criteria – submitted for and converted by the dealership in a specified area.”
Standard Bank said: “The incentives are based on various parameters depending on what the bank intends achieving from such an incentive, typically, business growth, customer retention or market share growth over a defined period.”
My point was and is that consumers are unaware of which dealership group is incentivised by which bank, or banks, to push deals.
And it’s surely not beyond the bounds of possibility that an F&I, faced with two quotes from different banks – each the best quote the bank could give, based on their own risk assessment – may favour the one that offers the best incentive to the dealership, even if it isn’t necessarily the best one for the customer.
When I made enquiries about that particular cancelled holiday, I learnt the money that funded it was not sponsored by a bank, and the competition behind it did not ever prejudice a client getting the most beneficial price on the floor.
It was cancelled because the dealership group’s management felt that “the court of public perception” may interpret it differently.
It’s true that public perception is powerful and should never be disregarded, but I feel truly awful that my well-intentioned airing of this issue has led to the cancelling of already-booked holidays that were awarded for performance unrelated to bank incentives, if that is indeed what happened.
To that absolutely furious woman, and others who lost out on overseas trips, I am very sorry.
My only intention has always been to help consumers make informed choices.
Given that we consumers don’t know how those behind-the-scenes bank finance incentive arrangements work, or exactly what the parameters are, my advice remains: don’t assume the finance deal an F&I puts in front of you is the best you could possibly get.
Do your own checks or ask the F&I to put quotes from several banks on the table for you to choose from.
Hidden costs of car rentals
Staying with cars, I regularly warn consumers about the hidden costs of car rentals – what it could cost you if you were to have an accident on a gravel road, for example, or the car is damaged by water, dust storms or potholes. (The answer is the entire repair bill because no waivers apply.)
I’ve also always advised people to take out not only the super waiver, but tyre and windscreen waiver as well.
But the keyword in the latter is tyre, not wheel.
When Bryan Bergsteedt of Cape Town hired a car from Europcar at Joburg’s OR Tambo airport in April, he paid an extra R160 for that tyre and windscreen cover.
When he returned the Ford Fiesta to the airport, it was missing one wheel cap, and that added a whopping R2,117 to his car hire bill: R1,142 for the cover and R975 as a claim admin fee.
Europcar told me that damage to or theft of wheel rims and caps is excluded from that extra cover because the purpose of the product is to limit the liability of customers “who unfortunately find themselves in a situation where items are damaged through normal road conditions and not pilferage”.So, if you scrape that rim on your hired car just a tiny bit, or lose a wheel cap or two, expect a large extra amount to be charged to your credit card.