Nissan Dealership’s Ad Tactics Draw Fire

A Southern California Nissan dealership, trying to boost business by billing itself as a “factory outlet,” has drawn fire from competing dealers who say the ads could mislead customers into thinking they can get special factory-authorized discounts and deals there.

The television and radio ads by Foothill Nissan in La Crescenta are being reviewed by attorneys for Torrance-based Nissan Motor Corp. USA. But the auto importer has decided tentatively that the wording was carefully designed to avoid stepping over the line that divides the clever from the untruthful.

Most people think of a factory outlet as a place owned by a manufacturer that offers remnants or overstocked goods at steep discounts. For that reason alone, Foothill’s campaign “is definitely misleading to customers,” says Tustin Nissan owner Jim Parkinson, one of those who complained to Nissan.

Sergio Madrigal, general manager at West Covina Nissan, said he thought the ad was part of a Nissan corporate campaign the first time he saw it.

But Nissan says that, while Foothill’s ads tell shoppers they’d be foolish to shop elsewhere when they can get great deals at a factory outlet, they stop short of describing the dealership as “the” factory outlet.

As long as Foothill doesn’t claim to be the only factory outlet in a region where Nissan has 43 franchised dealers, its ad is technically accurate, said Nissan spokesman Scott Vazin.

Paul Wondries, owner of Wondries Nissan in Alhambra, disputes that reasoning.

“A factory outlet is owned by the factory, and Foothill is an independent business,” he said. “I don’t think this is advertising with integrity. They’re trying to make the customer think they are something they’re not.”

Foothill’s general sales manager, Nick Laly, says he’s aware that there has been “some minor grumbling” about the campaign but insists there is nothing misleading about it.

The Department of Motor Vehicles, which licenses California’s car dealers and polices their ads, says it has not received any complaints.

Laly says the ads “have brought us thousands of customers.” He won’t disclose sales, but says traffic through the 40-year-old dealership on Foothill Boulevard is up 30% since the ads began airing about two months ago.

Action in Advertising, a Los Angeles agency, created the ads.

While such campaigns are not common, a spokesman for the National Automobile Dealers Assn. said they have cropped up from time to time across the country.

Dealers try to be clever and creative and a few have tried to profit from the “factory outlet” idea as the popularity of outlet malls for retailers such as Mikasa and Liz Claiborne has grown.

“But we tell them that they do have to make sure that their claims are true,” said NADA spokesman Bill Newman.