Advertising Fees

grinchee · June 2003

Believe me I don't haggle for hours but know people that have and I have walked out on more than one salesman. I'm just addressing the issue that customer has the right to negotiate for every dollar in what the car industry designed. I believe that was the rub in previous posts.

Bottom line. I'll get the best deal I can and won't settle for less. But it sounds like the dealers are the one's making the fuss on this post regarding how the customers want the best price. It must be getting rough out there when the dealers are complaining about the consumers. Usually its the other way around.

It's time to move on.....

zueslewis · June 2003

My point wasn't whether anyone knows the cost on the necklace at Zales, but that NO ONE knows the cost, except that I know there's at least 50-80% in there for profit.

People will argue all day long over a trivial amount on a car because YOU THINK you know the cost and go out of your minds until you have robbed a dealer of every possible profit center. Yet, you'll turn right around, after paying $100 over invoice, and working 8 hours to get there because you don't know how to research and negotiate, then go to another retail establishment like lambs at the slaughter and pay 3 times the cost of a product without blinking an eye.

Seems pretty danged foolish to me, in both aspects. First, not doing proper research and not having a clue what your trade is worth in the real world, having delusions where you are "gonna' tell 'em like it is" at the sales desk, and end up spending 8 hours in the dealership, and secondly, not even negotiating for other products with no concern over profit margins for other retailers.

zueslewis · June 2003

there are boards for both "Inconsiderate Buyers" and "Inconsiderate Salespeople". No need to bash the existence of either board, both have valid messages.

masspector · June 2003

"The ford dealers in my area became one in the same and initally went to a one price structure. It didnt work because local customers were going to nearby towns to purchase from the mom n pop stores(and getting better deals) because they still would negotiate."

My take is not that it didn't work because the mom and pops would negotiate. It did not work because the ford "one price" was too high and they did not adjust it down when they saw the mom and pop undercutting their price. If mom and pop are consistently selling a car for $20,000, then ford one price should have been $19,800, period. If mom and pop go lower, then the mega ford dealer goes lower, simple. Kinda like when best buy has an item on sale, you usally see the same item on sale at circuit city.

masspector · June 2003

This camry purchase was the most surreal car buy I have ever made. I do not believe this is the best thread so I will post a synopsis in "Internet Carbuying Part 1" if you are interested.

zueslewis · June 2003

rroyce10 · June 2003

..... "One price shopping" has been tried from Bangor Maine to Sacremento CA on a "on and off" basis for the last 8/9 years by Hundreds of dealerships .. whether it's a BMW store or a Ford store it has failed miserably.

          What most folks forget too consider is, that the guy standing next to them is a different kind of buyer then perhaps themselves - he may "want" more for his trade or "thinks" a sunroof, floor mats, spoiler is a deal breaker, etc, whatever. Believe me, most folks want to negotiate, I see hundreds everyday .. it's not a car thing it's a people thing, that why 97% of the real estate transactions are based on a "offer".

            I tried the "the one stop shop" in 97/98 and my business dropped by 31% in 8 short, Expensive months .. even my closest, longest customers would tell me they disliked it, obviously they didn't, with that new I30 sitting there without my name on the tag - ooooohf.!

        So much for the "stop and shop" routine.

                   Terry.

blh7068 · June 2003

"My take is not that it didn't work because the mom and pops would negotiate. It did not work because the ford "one price" was too high and they did not adjust it down when they saw the mom and pop undercutting their price".

I see what your saying.

However, I cant completely agree(car guys-help me here if this IS wrong) because the original intent of the one price structure was NOT to have the BEST price, but to take the "hassle" or negotiating out car buying, i.e target consumers who wouldnt mind paying a little MORE for a vehicle, but yet not having to play "games".

Doing what you suggested regarding the undercutting the "one price" would have defeated the purpose of the one price idea-though I do remember seeing prices marked lower at the end of the model year, but again this wasn't a function of what other dealers were doing, it was they needed to move inventory as new model year vehicles were arriving.

I was hinting at what Terry actually said- that most people do like to negotiate.

My original post was based on what people I knew told me about why they went out of town to fetch their new ford. The consistent replies were "because I could negotiate to get a lower price, not "because it was cheaper".

grinchee- FWIW I am not a dealer but have always been fascinated with cars/car buying. I am(or like to think anyways)that I am an educated consumer.

isellhondas · June 2003

Everyone wants to pay a "fair" price, whatever that is. They think a dealer should be "allowed" to make what THEY happen to think is "fair".

They want to get the "best" price, whatever that is.

Bottom line is this...they are scared to death that just maybe, someone else may have paid less somewhere else for the same car!

Recently, I sold a car to a couple who had spent TWO MONTHS shopping. They admitted they had spent two Saturdays at another nearby honda dealer. They had test driven an Accord FOUR TIMES with the same salesperson. They told me they really liked the guy too.

I can't imagine the hours of time that poor guy had spent with them but they managed to grind a hard number out of him. He even put the number in writing.

Of course, they shopped his number to death ending up with me.

I beat it by THIRTY DOLLARS and sold them a car after spending ten minutes with them.

Although we got along well, I fear the coming survey.

But...I guess they got the "best price" and I hope they are happy.

After all, PRICE is everything, isn't it?

blh7068 · June 2003

I like to think my own time is worth something
(to me), but I'm just one person...

When I bought my 02 Max SE in 6/02, That might have been one of the easiest deals I have negotiated. My Max stickered for just under 30k...I asked if they would sell it at invoice, no prob- paid 26.5(took financing) I thought(and my research had led me to believe)that was a good price. The doc fee was 249...which was a little higher than what I have paid for previous cars...but I wanted the car.

Point is any remaining 03's equipped like mine are even a better deal than when I purchased. I did fine given the circumstances and I refuse to beat myself up over someone getting a better deal than me. It changes absolutely nothing.

masspector · June 2003

good posts and points

royce--I understand where you are coming from in your post and it makes sense, but if your comment "What most folks forget too consider is, that the guy standing next to them is a different kind of buyer then perhaps themselves" is true, then how does walmart or target or Mcdonalds do it? You walk in, you buy an item, and there is no negotiating. I won't say they are the only businesses that use negotiating but houses and cars are the most famous for negotiating. My take is that it is all based on what people are used to. Remember when you could deduct CC interst on your taxes? When they first purposed that change people were acting like chicken little and they sky was going to fall. After a few years people adjusted to not taking that deduction and acted like it had always been that way. Perception is a powerful tool. If all dealers went to one price no negotiated shopping, within a generation, the buying public would be used to it and negotiating a car would be part of auto history like the Model T.

blh---I take the opposite view. if you offer one price shopping IT HAS to be the lowest price. People do want a hassle free buying experience, but they are not willing to pay more for it. That has been proven by all of the failures we hear about from this pricing model. I find it hard to believe from your friends statements "because I could negotiate to get a lower price, not "because it was cheaper". What if the one price guy was closer and he was cheaper? Would they still want to go to mom and pop because they can "negotiate" even if the negotiated price was higher than the one price guy? My bet is that they would not. They may word it around negotiation, but the bottom line was they wanted the lowest price. Mom and Pop gave them that so they bought there.

rroyce10 · June 2003

... Good examples .. (kinda) .. Walmart has different prices for different items for different regions and sometimes, it just takes an extra 3/4 mile drive to beat that store ..

         In my direct area, Walmart charges $14.95 for a certain sleeve of golf balls, but if I get off A1A and drive over the bridge, that same sleeve of golf balls are $11.99, same for K-mart .. hmmm. .. you go to purchase Marine plywood at Home Depot beach side, and it's $8.98 a sheet for 3/4", you drive 20 minutes west and it's $6.59 a sheet at that Home Depot. You go to the Mcdonalds off of 1-95 by Delray beach and they don't even carry the new "chicken Mcdoodles", but in Savannah Ga they do and they charge $5.79, but in Richmond VA they are $5.25 ...

        I understand your thought process and in the large scheme of things it makes sense .. but when you place the "human factor" in, it all changes .. the couch I have in my Florida room cost me $1,800, the same couch is sitting in a friends home in Raleigh and he paid $3,300, but he paid $2,500 less for his boat than what I paid for mine .. but, when I need service on that "bad boy" they come directly to my home and "take care of business", then clean it when they are done, so whats that worth .?

        This is a Retail business, every dealer has a large, huge investment of material, buildings, personnel, inventory, lights, air and heat, parts and paper work that could choke a Girrafe .. it's their money, it's their investment, it's their time .. if the consumer feels they aren't getting a fair price from a certain dealer they have many to choose from, and they can shop around .. it's their free thinking choice.

            See, with the internet and sites like Edmunds and many others, folks now feel they can email, fax, call, send letters for a price of $50 to $100 over the dealers cost, they feel they have broken the "double handshake, secret squirrel" code .. it's not a code, it what the dealer pays for the vehicle and he has a right to make a profit, rebates come from the manufacturers, but cost is still cost to the dealer ..

          I read alot of the posts from from Edmunds and as a rule I don't respond to the vast majority, but I do get my chuckles from the folks that say they paid $200 over for a G35, or $150 over for a SC430 .. I feel the biggest problem now is, folks really make their car buying experience even harder, because they "expect" to pay a few hundred over, but let's not forget that word PROFIT, it's not a 4 letter word and never has been.

                    Terry :-)

audia8q · June 2003

The Ford auto collection took huge amounts of direct consumer reserach and set up and ran dealerships EXACTLY in the fashion that consumers said they wanted. Of course anyone who sold cars for more than 20 seconds knew this was a disaster from the get-go. Consumers praised it high and low, then proceeded to buy from other dealers....I have always said. Most people will sell out everything they ever stood for to save 5 cents....I guess this applies to all forms of retail.....I wouldn't drive all over town to save $1.00 on a gallon of milk but we all know people who do.

tboner · June 2003

People don't always want efficiency. In America, we are a competative society.

Take lines for instance. McDonalds has several cash registers and customers can choose which line they want. The same can be said for most grocery stores, Home Depot, Lowes, you get the idea.

However, the most efficient way to do this is to simply have one line and as a "checker" has completed the last customer, they call the next at the head of the queue.

However, I believe most folks prefer to shop where they think they have a chance of picking the shortest line.

The only places I can think of where the single queue is used is Fry's Electronics, the Commissary on Military Bases, the Post Office, and at your airport checkin counter.

There may be a few fast food places that do that.

But it seems that customers prefer to try to pick the fastest line, even if in the long run, it is much more efficient and fair for there to be one queue and a number of "checkout clerks"

So why should we expect auto sales to be any different. There will always be those who want to compete to get the best deal, and there will always be those dealers who can cut their price or offer a bit more on trade to get that deal.

I'd like to think we here at Edmunds are the "educated" shoppers, and we can do better than the average joe or jane.

I for one am in favor of negotiation, and letting the buyer and seller haggle for a price, service, etc.

I don't begrudge the dealer his/her profit, and don't really want to get into the costs, etc. I know that if he doesn't make a profit, he can't service my current car or sell me the next one.

The marketplace is speaking, and it says, let the haggling and competition continue 8^)

TB

blh7068 · June 2003

Good discussion...

"if you offer one price shopping IT HAS to be the lowest price. People do want a hassle free buying experience, but they are not willing to pay more for it."

Yes, and thats what was found out. As I stated in my prev. post. that(I believe)the intent was to find who would pay a little more but get the hassle free experience- didnt work.

So, imo that would suggest for the most part people dont mind negotiating to get a lower/lowest price.

"They may word it around negotiation, but the bottom line was they wanted the lowest price."

Your point about the vehicle being cheaper may very well be correct. I was just trying to show that given the option to get the lower price via negotiating vs. the one price from the dealers that were close(in town), all the people who I talked to that bought Fords during this time chose to go out of town to negotiate-which all specifically mentioned to me. Thats all.

isellhondas · June 2003

Is PRICE everything??

audia8q · June 2003

price is everything to some people, You and I may never understand the price is everything mentality ...I'm willing to pay more for quality services. I like to be wined, dined and schmoozed and have no problem paying more for it...To expect higher quality service at the same price as the low rent place seems goofy to me.
We read about people who can't sleep knowing they paid 2 cents more than the next guy...These are always the people who have problems that end up being hashed out on edmunds. I'm not saying I'm paying full list but I rarely shop price alone, I shop retailers and people.

isellhondas · June 2003

It's just hard for me to accept the mentality of some people when it comes to "saving" a few bucks.

I'm as frugal as anyone but, like I said..

Life, is indeed, short.

" Life is too short to be little"

- Disrali

cwjacobsen · June 2003

I think you just answered your own question on why one-price shopping has such a dismal history. If indeed one price shopping has to be the lowest price then you've stacked the deck against its success. If everyone gets the "grinder's" price, then where's the AVERAGE margin to support "grinder pricing" for everyone. Not every car is a brown stick shift stripper taking up space on the lot, or the one more unit the dealer or salesman needs to sell in order to make some quota. So how can you price ALL your units as if they were?

CWJ

audia8q · June 2003

good post....consumers forget that the grinders are being subsidised by people who pay full list or more. so, essentially the price grinder is getting their price on the backs of other people who don't grind as hard.

I would suspect that most grinders enjoy reaping the benefits of other people who pay more.

michaellno · June 2003

...from the posters here. Like isell and audi, I'm not driven to find the absolute best deal and have no problem paying a bit more for what I perceive to be good service.

I bought a Saturn last November; easiest purchase process I've ever been through. Everything that has ever been said or written about Saturn's approach to customer service is true. Even my wife, who likes the car buying process about as much as a good root canal, was impressed.

Next year, we'll be going through the process again when our Explorer comes off lease. This one will be the wife's car, so I'm trying to stay in the background as much as I can. She's debating between a VW New Beetle convertible (though we drove an Audi A4 Cabriolet) or a small SUV, which means we could be back to the negotiation game (she does, however, like the Saturn VUE, so it's not certain).

We try to get the best price, but I think the customer service aspect is just as important. Trying to find a good dealer to work with is pretty important to us.

rivertown · June 2003

I'm grateful.

The negotiated price system was adopted to subsidize grinders like me.
It's a good thing there's something in it for car dealers, like the opportunity to rip off old ladies and the ill informed.

Oh, what a wonderful world.

im_brentwood · June 2003

Who said anything about Rip Off?

I just bought a Rolex Daytona, a Stainless Steel one, BRAND NEW for list.

Does that mean everyone else who paid more got ripped off? No, I did some research, and in the end found a dealer who had one and did not go over list on them.

I mean, here's a great example. National average on an ES300 is $1800 over invoice. About $1300 over in my market.

Does this mean that we won't sell them for invoice if we have to? No. But does that make invoice the market price of the car? No.

If someone is willing to pay more than $1800 over, am I foolish for saying no? Yes.

Welcome to Economics 101.

masspector · June 2003

Its supply and demand and the market...like royce said, I would not expect a grinder price on a new rx330, no matter how many dealerships I try to buy from. Other retailers have no negotiation and they seem to be able to do it fine. the one price guy just has to be the cheapest in the market, not $500 under invoice on every car.

tboner...great post...also off topic, but I think that america's competitiveness is one of the root causes of many of her ills...it permeates every aspect of our lives from litle league, to education, to employment and causes more problems than it solves, IMHO.

audi and isell---yes, to some people money is everything. I probably tend toward that, but try not to be overboard about it. I will shop around for the best price to a point on most any item. The internet has made that much eaiser now a days. I like to be wined and dined as much as the next guy, but most consumers (myself included) cannot afford the extra cost that that involves. That is why i bought a camry as opposed to an es300. I did not see paying $10,000 more for basically the same car. Yes it would have been nice to be oogled over and treated like a king in service, but I cannot afford the extra bucks, probably never will.

I do not mean this as a slam on anyone, so please do not get defensive, but I think it is a perspective thing. Most people that make say under $40,000 cannot afford a "luxury car", or $50 a person dinners at fine restaurants every weekend, or custom built and decorated homes, or a country club membership or any of the other trappings that go along with yearly salaries in the hundreds of thousands of dollars. It is like living in two different worlds. Its like asking the CEO of GE to try to understand why one of his hourly employees in janitorial services buys staple goods at Sam's club. It is probably beyond his comprehension because he does not understand the meaning of living paycheck to paycheck to just pay for the necesiities of life. To that janitor, price is everything because it could mean the difference in whether his family eats of gets new school clothes.

masspector · June 2003

I guess I have to plead guilty with you. Now i feel bad that my getting a good price on my camry caused someone else to over pay. It also makes me proud that they developed a car buying system just for me and you.

rivertown · June 2003

But, we gotta be sweet to those 'cheap sold' cars so they can get over the hit to their self-esteem.

KCRam · June 2003

While the last batch of posts are certainly debated well, we are WAY off topic of Advertising Fees. Let's redirect, shall we?

kcram
Host
Smart Shopper and FWI Message Boards

matthew525 · June 2003

In my business, the consumer price includes my cost, advertising, employee wages, etc. Why does Toyota and other manufactures separate the cost on the invoice? I didn't see an invoice for itemized items for wages, etc. Are ad fees a valid cost that is passed onto the consumer - you bet. Nearly everything you purchase from a store has a percentage included to cover advertising fees (depending upon the number of items for sale and your advertising budget. There are also other marketing costs - such as web site maintenance, brochure, even the paper they use to write up the sale - we pay for that also.

masspector · July 2003

what you said is 100%. If toyota wants to charge $300 for advertising, they should just raise the invoice price by $300.

rroyce10 · July 2003

..... I have to give credit where credit is due, Toyota is very quick to respond to current market conditions .. the massive TV ad's for the $1,200 on the Camry's, 0%, etc, etc, gets dropped in a area or the country in a flash ..

Now that Toyota is in the big leagues, they want to make sure they are pushing products, fast, .. they learned alot from GM/Ford by not waiting for the market, so they make the market .. things are a Whole lot different from the days of dropping 150,000 units a year til now, so if they spend a extra million here or there it's hard for that money to be reflective from the dealer for a vehicle that has been standing for 2/3 months ..

Terry.

mackabee · July 2003

Matthew, this has to do with a class action suit brought against Toyota Motor Sales USA a few years back. It was filed in California and part of the settlement was those $50 dollar or $100 dollar towards the purchase or lease of a new Toyota or used in service. I don't recall the name of the person that brought the lawsuit but I'm sure some one here may recall.
: )
Mackabee

masspector · July 2003

thanks for the info.

Any reason all of the other manufacturers like to list out advertising on their invoices too?

jeepster4 · July 2003

Its not a matter of the manufacturers "liking" to list out the regional advertising fees on the invoice. 1. The invoice is not a consumer document. 2. National advertising by the manufacturer is not itemized. 3. The advertising shown on the invoice is a regional charge to dealers to cover local media expenses and is not the same from area to area. Since the dealers are independent merchants, they have some input on how this regional money is spent (through various forms of dealer councils) and how much is assessed to each vehicle purchased from the manufacturer. Incidently, an itemized charge for fuel to move the vehicle in transit is shown on the invoice...shouldn't this charge be subject to negotiation by the end buyer?

vwguild · July 2003

Dealers have input about what ads to run, but none when it comes to the 'buy'...We are talking about annual or semi-annual contracts with TV, Radio, & Print...And are National purchases...

This is different from LOCAL ads that a Dealer may purchase...

The Ad Fees that appear on an Invoice are for the former and not the latter...And are for ALL cars, the fee is the same...at least it is with VW.

matthew525 · July 2003

Doesn't surprise me that someone filed a suit about "ad fees" and what is not even more surprising is that someone from California filed it. Let's hope that they don't do the same to the retail food business - we would be afraid of the cost of a real cheeseburger.

jeepster4 · July 2003

pay for regional ads such as "this weathercast was brought to you by your St Louis area Ford dealers". It doesn't pay for an individual dealer's ads.

seenit · July 2003

If time was money, then we would all be driving free cars. How many man hours have we spent "looking for the best deal?" Car dealers are not about the monster deals any more, they are about moving product. The easiest mark has always been (and will continue to be) the "let them make their profit off the next guy" routine. As soon as you believe you are spending less money then the "little old lady", you lose...act like the joke's on them and you will become it. They do it every day and we do it once every 5 years. Tell them simply what you want and they will usually achieve YOUR goal...no b.s and no hastle.

lay2 · July 2003

I must say I find it absolutely ridiculous that a consumer should have to pay advertising fee. Let face it you buy a roll of toilet paper are we or should we expect to pay 25 cents for the right to maintain cleanliness. The cost of advertising is already built into the price. My point is Toyota cost and the dealer's cost is already factored in. I had one dealership in LI show me a bill of sale with $299 for Vin Etching which is available from any precinct for Free. Get real Toyota, Be fair, Be honest and make a resonable deal and gimme the keys for god's sake.

zueslewis · July 2003

broken down in the total invoice cost - why, I don't know, but it is.

VIN etching is a dealer issue, and in my opinion, a scam.

landru2 · July 2003

Advertising is charged to the dealership on the invoice they get from the manufacturer. The trouble is when a shopper decides they want pay "invoice" but forget to include everything that is on a dealer's invoice - including advertising. If a dealership throws on an advertising fee after a purchase price has already been agreed to, then yes, that is ridiculous.

Zeus, I've never liked anything about etching either. Didn't someone on here say that in certain states dealerships are required by law to offer VIN etching?

zueslewis · July 2003

yes, but it sounds like bunk - a way that a weak salesman can mandate his sales pitch...

tblazer503 · August 2003

is one of those things that i think is bunk.

1st, most dealerships here get the windows etched anyway. What you are paying for is the "activation" so that if someone calls 1800vinetch or whatever, they will notify the police, etc. I highly doubt that an "activated" etching is more of a deterrent than having an etching.

2nd, you can pay $20 and order an acid etching kit online.

landru2 · August 2003

When activated these things usually get you some sort of insurance-type policy. i.e. pay to get the etching activated and if your car stolen car is not recovered within 30 days we will give you $5000.

bkurtzjr · August 2003

audia8q · August 2003

if you worry about the retail side of things then you never see an advertising fee, just like the toilet paper you mentioned... You want to work from invoice up then you should expect to pay the fees on the invoice.
My friend is a manager of a major appliance/video chain store and they have ad and other fees on their invoices also. It's just that nobody is rude enough to ask them for a copy of the invoice on that new sony WEGA tv.

frulip · August 2003

Seemed to find a decent sales guy, who agreed to a 500 commission over invoice on a 2003 Tahoe. However he now says a mandatory advertising fee of close to $400 is applicable.

Is this normal or can i have this removed with some firm tactics.

Thanks !

landru2 · August 2003

A few things:

Do you know what invoice is?

It sounds like he wants you to pay $900 over invoice. Ask him to show you the invoice and see if the ad fee is included in car's invoice price.

Adding a fee after the final price has been determined (i.e. $26,876, not $500 over invoice.) is dirty pool and shouldn't be accepted.

Everything can be negotiated. If you don't want to pay $900 over (or whatever) then don't.

The $500 over invoice is not "commission." The salesman's commission will generally be a percentage of that $500; likely $75-$100.

rivertown · August 2003

I agree with Landru; it sounds like you're getting terms mixed up.
And like your salesman is exploiting the mix-up.

I have no idea what Tahoe's are selling for; but, given that you're buying an '03, I think sticking with your original offer is reasonable. Edmunds shows TMV to be $500-$1000 over published invoice and doesn't adjust 'invoice' for regional ad fees.

I wouldn't get into a discussion of terms, etc. Try something like, "I can pay $XX,XXX.XX plus tax and license fees."

montanafan · August 2003

The salesperson quoted $500 over invoice and that is what he has asked for. The $400 is the difference between what the buyer thinks invoice is and what the actual invoice is. What the buyer needs to know is that the invoice information they have is not accurate. It is missing the $400 advertising fee that is "included" in the invoice price, not "added" to it.

frulip · August 2003

I had him fax me over the invoice and the advertising fee is written in by hand on the bottom for $448.49, as well as $99 in window etching, $131 Motor Vehicle, and $99.75 in Document fees.

I dont mind the etching or obviously the motor vehicle or DOC but I refuse to pay the advertising fee. Anyone disagree and think I am being unreasonable?

Thanks

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