AGCM

According to the Italian Competition Authority, FCA, Volkswagen, PSA, Renault, Toyota, Ford, BMW, Mercedes, Hyundai, Kia, Suzuki, Nissan, Honda, M.M. Automobili did not provide clear information on the financial terms and conditions of financing and lease purchase offers

The Italian Competition Authority completed, by accepting the submitted commitments, 14 proceedings against the major car manufacturers operating in Italy: FCA (Fiat, Jeep, Alfa Romeo), Volkswagen (Volkswagen, Seat, Škoda), PSA (Peugeot, Citroën, Opel, DS), Renault (Renault, Dacia), Toyota (Toyota, Lexus), Ford, BMW (BMW, Mini), Mercedes, Hyundai, Kia, Suzuki, Nissan, Honda, M.M. Automobili (Mitsubishi exclusive distributor).

According to the Authority, the methods of presentation of the purchase offers through financing and leasing were omissive and misleading: emphasis was placed on low monthly instalments or on a price not including financial charges or expenses, while confining essential information on the cost to be incurred to sections that are not easy to read.

Financing is now one of the most popular ways of purchasing new cars. Over time, traditional long-term loans providing for an advance of variable amount have been accompanied by loans with the provision of a final large instalment. More recently, some car manufacturers have started to offer consumers, as an alternative to purchasing, lease contracts often lasting three years, structured on the basis of a significant advance, a monthly instalment and, in the case of a financial lease, a purchase option. These are rather complex proposals due to the presence of different elements (advance, a number of monthly instalments, final large instalment/residual value for purchase) that allow for different payments to be made over time.

The commitments submitted by the companies - which will cover both online and traditional offline marketing - allow the consumer to understand, as from an initial reading of the terms and conditions of the offer, the extent of the financial commitment required and its distribution over time.

The concentration in a single visual box of all the relevant financial information (the amount of the advance, the number and monthly amount of the individual instalments and lease rentals, the amount of the final payment, the residual value for purchase, if any, the Annual Nominal Rate and the Annual Global Effective Interest Rate), clearly presented along with adequate graphic evidence, allows the consumer to calculate the cost of the car through simple arithmetic operations, and understand the payment methods over time.

Therefore, the submitted commitments represent a significant improvement in the communication of the financing terms and conditions, because they reduce information asymmetry, ensure transparent and immediately understandable offer conditions, innovate the communication of the automotive sector and, above all, put an end to the current practice that emphasised at first contact low monthly instalments (or rentals) or a price that did not include financial charges or expenses.

Rome, 2 August 2022