Friday, May 16, 2014

Cruisin' for a Bruisin'

As anyone that knows me can attest, we don't watch a lot of regular TV in our house.  The fact that I still have the $10 basic, BASIC cable plan probably says I prioritize TV somewhere between fertilizing my lawn and finally finishing all of the Canterbury Tales (however, Netflix & Amazon Prime do get a good workout in our house).

Having said this, it's hard to miss the large person yelling at me to buy a car in May so that I can be held captive on a floating Norovirus breeding ground..... I mean receive a cruise for 2 this December.  If you are not in NY or Florida this won't make a lot of sense, but basically one large car dealer in NY/FL buys 1 out of every 4 spots on local media (maybe that's a slight exaggeration) and he is offering a deal - buy a car get a cruise for 2.

1) At first a little light bulb went off when I heard this because to me that sounds like a something the taxman might be interested in.  Generally, when a benefit is derived even if no cash changes a hands, a 1099 will be issued to the recipient (in this case the car buyer) for the "value received" (here the value of a cruise) and the buyer would have to pay tax on this benefit in 2015.

However, it sounds like they found a way around this issue.  While you can't find an of the fine print online, if you pause their commercials it says "Cruise for 2 INCLUDED with the purchase of a new or pre-owned vehicle.......".  There is the key distinction -- they are not GIVING you a cruise, they are merely including it in the purchase price so that it is not a taxable event.

2) Then the question becomes well, wouldn't people notice thousands of dollars being added to the price of their car?  Well, again here is where a little slight of hand takes place.  This cruise is taking a very short loop of a little used route (Tampa, Key West, Cozumel, Tampa) in early December which, as any Disney family can tell you, is the absolute bottom of the Florida tourist market.  You can book basically this same cruise today for $239/per person.  What would be really interesting to see is to find out if I bought a car for x in April (with no incentive) would that same car be x + $478 this month?  Since pricing data is so hard to gather in the auto industry it is impossible to know, but if anyone has any real-time stats I'd be happy review them.

3) Okay, but still that's a $478 cruise for "free"....well, I guess I paid for it, but they are covering the departure fees!!  True, but take note of where the cruise departs - Tampa, FL.  If you live or winter in Tampa -- awesome for you.  If not, they've conveniently arranged to offer a flights from upstate NY & hotel for $590/person.  So now your "free" cruise (that you paid for) is going to cost you another $1,280.

I'm not trying to rain on anyone's parade - most of the people that went on this cruise last year when it was offered to Florida residents seemed to enjoy it.  They knew they were paying for it but they liked the feeling of getting something for free.  It's the same thought process as going to Friendly's for the "Free sundae".  Yes, it's free but you just paid $13.95 for a terrible burger so was it really free?

I just hope that we'll one day reach a point in the next generation or two where people become so immune to these type of advertising gimmicks that they no longer work.

Now go buy a Kia okay!!!

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