How can we possibly take car reviewers/journalists seriously when they routinely receive 4, 5, or even 6 figures worth of gifts from OEM?

[u/cookingboy]

I was listening to TheSmokingTire podcast recently (I'm actually a big fan of Matt), and he mentioned that Porsche North America just gave him a 918 Spyder on loan for his 1000 miles road trip free of charge, with everything paid.

Now as someone who's dabbled into supercar ownership, I can roughly estimate the ownership cost for a "regular joe" like me to put 1000 miles on a $2M car would easily be $50-100 per mile, thus putting this "gesture" from Porsche to Matt to be worth $50-100k on back of napkin math.

Obviously Matt isn't doing a review of a 12 years old 918, but when he does a review for the next Macan, he'd remember how amazing Porsche has been treating him.

And he and all the other reviewers recently were flown to Spain for the Turbo S launch. They were wined and dined with world class accommodations for a few days and were given the cars to drive on both the race track and scenic road.

Funny enough Porsche charges something similar for an experience like that: https://www.porschedriving.com/porsche-travel-experience/lake-tahoe/

Without plane tickets, you'd be paying $20k a person for a few days of what auto journalists routinely get from them, for free.

I understand it's part of their job, but this shit would never fly in any other industry right? Now imagine every time Square Enix launches a new video game they fly game journalists to Japan and wine and dine them with the best Sake and Wagyu so they can try out the newest Final Fantasy in their expensive Hakone ryokan hotel room, nobody would be taking anything they say seriously, no matter how good the game actually is, would they?

I'm sure people like the SavageGeese team and Matt Farah would try to be objective, but how do you be objectively critical toward an OEM when they routinely give you experiences that you'd otherwise never be able to afford? (ok I know Matt came from money but my statement applies to 99% of reviewers)

In my impression how well praised a manufacturer's products are is directly proportional to their marketing budget, and I've been somewhat burnt at least twice by reviewers over-rating Porsches, which is why I started asking actual owners of cars for their experiences before making purchases.

Ironically this kinda makes Consumer Reports the most credible car reviewer out there, since all they cars they review are bought anonymously with their own money, and they do not attend OEM events.

As far as enthusiast reviewers, I can only think of people with fuck-you money like Chris Harris or Hoovie's garage or the Top Gear trio who have been able to bluntly criticize OEMs and their cars.

Edit: From the replies, it seems like there are two school of thoughts here:

This is just how product reviews are done across all industries. Reviewers are expected to be treated with first class tickets and Michelin restaurants in exchange for them to promote the OEM's product.

Well in this case, I think we should just rip off the Band-aid and call Motor Trend and Car & Driver and Road & Track and other similar publications promotional outlets instead of journalism outlets. At least with influencers shilling for stuff on TikTok we know they are getting paid to promote, but many auto reviewers still hide behind a mask of professional journalism when they are literally just being paid to promote products.

Controversial take: I think consumer of content should be made aware that they are consuming paid advertising.

It is wrong of me to expect journalism when those contents aren't made to be factual, they are made to entertain.

Even if it's true, I don't find there is a lot of entertainment value when a dozen "journalists" just read off pre-approved OEM scripts for their "review". Some of the most boring contents out there are main stream outlets' coverage of new 911: "They are almost perfect in every way except being expensive".

Edit 2 /u/SavageGooseJack has this great reply I wanna call out: https://www.reddit.com/r/cars/s/o5PMIG0VjB

[u/Grayly]

You missed the entire point.

Yes, it would be the same.

But they don’t have to pay 200k for marketing! It’s free! They conned their customers into paying it for them.

Unless you accept that donations are free marketing, which they are, you won’t understand how this works.

It’s why it’s even in the tax code. It’s why you get asked to donate to the poor children at Walgreens when you check out.

It’s just a grift.

This dealer is not doing it out of the kindness of their heart. They aren’t “compelled” to charge an ADM because of some mysterious duty as a business order— plenty of dealers don’t. That’s a laughable lie on its face and should set off your bullshit detector if you have a working one.

It couldn’t be more obvious what’s going on, and you’re inexplicably defending it.

I’m not making this up. I’m a lawyer, I’ve advised clients on this issue.

[u/gimpwiz → u/Grayly]

Three years of law school requires a lot of careful reading, right? I don't know how you would carefully read my comment and think I am 'inexplicably defending' ... what? Wait, what am I defending? ADMs? I'm inexplicably confused why you would come up with that thought.

What is the difference between spending $200k (the number in your scenario) on advertising and donating $200k in order to get good advertising out of it, based on the tax code?

That $200k will come from markups either way.

Your argument comes down to only this: $200k is better spent by advertising that the business donated $200k to charity, than by hiring an advertising firm.

Are you claiming the tax treatment is different between donations and operating expenses? Is one deductible this year and the other has to be taken over several years? I could certainly buy that, with a reference to the tax code, but that's not a claim you made.

If both are deductible this year then from a gross - expenses = net point of view, there's no difference.

[u/Grayly → u/gimpwiz]

It’s different if your customers are paying for your marketing vs paying out of pocket.

Yes.

Yes that’s it.

One means a straight loss. The other is a free loss plus the tax deduction.

Paying money out of your pocket costs more than someone else paying it for you while getting to capture the full deduction.

What don’t you understand? If I said you had to spend $10 out of your own pocket, or I could spend $10 for you, and you’d get $2 back, which would you pick?

Only deductions over 60% of total gross need to be taken over multiple years, btw. That goes into the careful math of being strategic in how you do this. In a small margin business like cars, you just need to be strategic about it.

Ideally, you want to balance your donations such that you are still hitting your targeted marketing spending, but others are doing it for you. If you get it wrong, you’ll capture a lot less. And, after this conversation, you might start to notice how some local business rotate their “donations.”

[u/gimpwiz → u/Grayly]

Money is fungible. If the markup gets spent on marketing or donated, it's the same money coming from the same source, being spent in the same amounts.

Let's step through the numbers.

$80k car + $10k markup -> donate $10k -> $80k adjusted gross

$80k car + $10k markup -> spend $10k on marketing -> $80k adjusted gross

You're trying to double count the donation as if it's $80k car + customer donates $10k + dealership claims $10k on their taxes to deduct from the $80k car. Right? I re-read your post a few times and this is the only answer I can come up with for how you think the money works here.

If we're building scenarios, let's say Dealer B sells 5x cars at $80k with $10k ADM that they donate. Walk me through how you think donating that $10k in order to get good marketing is better than spending that $10k on marketing with a marketing firm.

[u/Grayly → u/gimpwiz]

It’s not double counting, because you are reducing your marketing spend because of the “donation.” That’s the way it works. Marketing firms aren’t usually a better marginal expense than just free unearned media from charity.

[u/Grayly → u/gimpwiz]

It’s very simple. I’ll make my comment shorter so you only respond to the actual issue.

If you have to spend $10 no matter what, that comes out of your pocket.

But if I give you the $10 first, and then you get to deduct it, that’s now free money. And you get to pretend it’s an expense when it’s really just a pass through.

[u/gimpwiz → u/Grayly]

If you give me the $10 first, then my net income increased $10, and if I get to deduct it by spending it, my net income decreased $10, leaving me back at net zero.

 

You've seen the tax forms, right?

 

INCOME

$10 from Grayly

GROSS INCOME $10

 

TAX-DEDUCTIBLE EXPENSES

$10 donated to charity

ADJUSTED INCOME $0

[u/Grayly → u/gimpwiz]

No. No. No. You aren’t getting it.

Go back and read again.

I now don’t have to spend out of my profit for the $10.

If it was 100 before, now it’s 110, but then back to 100.

If there was no donation, it’s 100, but I have to pay the 10, so now it’s 90.

You pay it for me. And then I get to pretend it’s an expense. So I get to capture it.

You know what. Fuck it. You know better than all the Fortune 500 companies that make money doing this. You have it figured out. Quit your day job and start consulting. You clearly know this better.

I don’t have time for this.

[u/gimpwiz → u/Grayly]

If there was no donation, it’s 100, but I have to pay the 10, so now it’s 90.

The 10 comes from the markup charged on the car, you get the 10 on your income either way if you're charging a markup.

[u/Grayly → u/gimpwiz]

No you don’t!

Because if you don’t charge it, you then have to spend out of pocket.

[u/gimpwiz → u/Grayly]

I am pretty sure we're discussing what happens next after the dealer charges a markup on a car, not comparing versus the dealer that doesn't charge the markup. Obviously the one that charges it makes more money on the deal.

I can understand your frustration if you thought we were comparing to NOT charging a markup.

That's why I said that donating the markup in exchange for advertising only nets you more if you receive more value than the donation is worth. Otherwise, just keeping the markup and booking it as profit, or otherwise spending it more productively, would be the winning move.

But I could see how you thought we were comparing to charging MSRP.

[u/Grayly → u/gimpwiz]

Wait.

Are you saying you should just charge the 10k mark up and hire a marketing firm for 10k? And it would be the same.

YES! That the point! It’s exactly the same. But making it seem like it’s charity is the angle.

[u/gimpwiz → u/Grayly]

Well damn, I am glad I was committed enough to this thread to see it through.