One of the more annoying things about buying a new car is that the price quoted is never the final price. There are always add-ons; some are understandable, like the cost of getting it registered, or taxes.
The worst is the so-called destination charge, which can be $700 or so. Sure, it costs money for a car to be delivered to a dealership, but why is that cost not included in the original price? Automobiles are the only product for which you have to pay for transportation costs as an add-on after you've agreed on a purchase price.
It also costs money to deliver a large screen TV to an electronics store, but that cost is built into the advertised price. Ditto for washing machines, dryers, bicycles, and, for that matter, watches.
Yet if you buy a TV, the sales clerk does not say, as you hand him your credit card, "Oh, by the way, it cost a lot of money to lug that big thing all the way from the plant to this store, so we're going to tack on another $250 to the price."
Why do auto dealerships insist on such misleading pricing?
Evidently, because they can get away with it.
(My Andy Rooney rant for the day.)
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Another thing about the addons, that nobody thinks about, is that they get added into the sale price, which nets higher taxes. The sales tax is one-time, but the escalated value will carry over year-after-year, giving you higher license/registration. I wish more people would think about that before adding that in-dash GPS or DVD player or luxury floormat option.
Anon --
You're absolutely right, all those things look appealing on the showroom floor, but virtually none of them are worth it. And good point about how they add to future taxes.
The destination charge should be clearly listed on the sticker price of the car, so they should not be able to add it back after you negotiate. The destination fee is an actual fee charged by the manufacturer , and varied depending on where the dealer is located.
They also get people with the imaginary Doc fee, (documentation fee ), added to the sales contract as part of the registration fee.
The problem is that so many dealers use these techniques, if you don't play the game , the others will always advertise a lower price.
I worked as a car salesman from 1992-1994 and it had been in the same family for 30 years. The owner had always refused to let us charge a doc fee. We did well in the town, and had a lot of repeat business from families in the area. A competitor 6 miles away would advertise their vehicles for $100 to $300 less, but they always charged a doc fee of $250. Funny how the some customers would haggle with me for 3 hours and when they realized I could not go $100 lower they would finally tell me how the other dealer was $100 less. I would explain that we did not have a doc fee, so we were actually less costly. Only twice did the customer come back and admit I was right.
So by not having a doc fee we lost customers, who we might have gotten.
I went back to this dealership to buy a car a few years ago, the owner had passed away and his son was now running it. They now had a doc fee. If you can't beat them.....
It is a very tough business, we made much more from the service department and parts department than selling the new cars. The average sale price was about $400 over the cost, and the salesman gets 30% of this, so the owner only gets about $300 per vehicle. We also made more profit by selling the warranties and doing the financing. I would earn $100 bucks after spending 3 hours with a client, and the finance guy would earn $900 in 10 minutes by selling him a warranty and convincing him to finance for 6 years. The dealers get a piece of the financing.
Anon --
Thank you, that was educational. those are thin margins, but that doesn't make the deception any the less annoying.
I'd heard that most dealerships make most of they money from the warranties and the servicing of the cars. I can believe it. The warranties generally only cover the first four )relatively trouble-free) years of the car's life. And before I switched over to a local mechanic, somehow I couldn't even go in to the dealership for an oil change without paying at least $300.
By the way John--I do miss Andy Rooney. He grew on me over the years. I think you would be a great successor to him and I encourage you to persue the job. It may be pie in the sky, but I do believe you'd be a hit just like he was only better. Think about it? Brian
Brian --
Thank you -- but I have to say, he didn't really grow on me, which is why it's a little strange that some of my recent posts, like this one, have ended up sounding a bit like him.
CBS would never hire me anyway. This blog would be Exhibit A against me.
John--Yeah, I do agree. You have too much of a brain for the general public to handle. Well, it was a thought. Brian
Brian --
Thank you, it's not that I have too much of a brain, it's that it's too off-kilter. (If I were smarter I'd have figured out a way to make money from this.)
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