Car Punching: The Auto Industry’s Dirty Little Secret

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When I first heard the term “car punching,” I imagined groups of rambunctious teenagers vandalizing cars on dealer lots.

It turns out car punching isn’t quite as scandalous, but still isn’t an ideal practice. The term is in reference to car dealers that artificially increase sales, which can pad the bottom line and give automakers an edge when reporting sales numbers.

Carmakers are constantly battling for the sales crown, and car punching could be the dirty little secret that pushes one company over the edge.

How does it work?

Car punching is when dealerships self-register cars as loaner vehicles, which makes them appear as sold. The dealer then sells them later as low-mileage used cars.

Automotive News illustrated a potential outcome of the practice well,

In the U.S. last year, BMW won its fourth luxury-sales crown in five years. The 2015 race was tight until the end. BMW finished 2015 with luxury sales of 346,023 vehicles, followed by Lexus with 344,601 and Mercedes with 343,088.

However, Lexus was tops in U.S. vehicle registrations last year with 340,392 vs. BMW’s 335,259, according to IHS/Polk data.

It’s highly likely that Lexus dealers punched more cars than BMW, helping the Japanese automaker win the crown. There’s nothing illegal about the practice, but it is a hidden blight on the auto industry that should probably go away.

Car punching is generally caused by a couple of things. First, it’s a result of pressure from the automaker to meet month-end and year-end sales goals. It’s easy for an automaker to encourage dealers to self-register a few cars here and there to help make up for any slack in a slow sales period.

Secondly, customers expect great deals at certain times of the year, which tends to create the slow sales months with which dealers must contend.

Car punching has little direct effect on consumers, yet automakers believe it’s the consumers who must be trained in order to reduce the practice. From their perspective, if car punching is to end, dealers need to attract car buyers throughout the year and condition them into realizing that anytime is a great time to buy a new car.

As a car-buying consumer I have to disagree. It’s true that month-end and year-end can be some of the best times to buy a car, and it’ll be near impossible to convince people otherwise. A more logical solution to the problem of car punching would probably involve reducing sales goals to more attainable levels.

I bet automakers would literally punch their own cars, though, before they ever let that happen.

Do you shop for cars at a certain time of the year to find the best deal?

-tgriffith

Find Certified Pre-Owned Cars and Used Cars in your area at CarGurus.

1 Comment

  1. Very interesting. I must look into it just to understand it a bit better and always don’t take what you read in the paper and especially on the web as the Truth!

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