Advertising Fees

mackabee

Your idea seems good however any manufacturers invoice includes a fee to the dealer for advertising, financial reserve, gasoline, and holdback. The total of this invoice and the msrp is what you as the buyer should be concerned with. You the buyer should try to get as close to invoice as possible while the dealer's objective is to get as close as possible to msrp. What I see here repeated over and over is the buyer trying to "dip" into the dealer's holdback and advertising fee, financial reserve, etc which are legitimate cost to the dealer and just like any other RETAIL BUSINESS, it is passed on to the consumer. You may not like it but that's the way it is. And if you think you don't pay for advertising on everything you buy in this country you are wrong. The automobile industry is the only business that has its prices or cost out there for all to see. When was the last time you saw Macy's or Sears, or Circuit City post their invoices on refrigerators, big screen tv's, or computers on the web or in print? If these companies were to do this you the consumer would be crying "FOUL" when you saw the outrageous mark-ups on these products. Percentage wise an automobile is still the best purchase for your money as far as profit mark-up is concerned. HAPPY NEW YEAR!


: )

Mackabee

plusplus

I guess you and I are one in the same.If he only knew the markup on the shirt on his back! Jc penny and Cathy Lee would go out of business. What do these's people think,that cars grow on trees? plusplus

bnormann

I got out of paying the advertising fee once by telling the Sales Manager that I didn't own a TV! It was/is true. It was ~ $275 on a '91 Honda CRX.

I was really pumped up after taking a Win-Win negotiating course, so I went the extra mile to get them to take it off.

Bruce. Your co-host.

lpines

There is quite a bit of emotion and rhetoric on this string. This issue boils down to this, I think. The dealer INVOICE (of late I'm told) includes one or two line items relating to advertising coop fees. The relevant question is whether this cost is a hard cost to the dealer, ie. a NON-REIMBURSED cost of the vehicle paid to the manufacturer -- as opposed to overhead (like rent, salaries, utilities, insurance, etc.)

By listing these ad charges on the invoice, Chrysler (or GM, as the case might be) is telling the consumer that the dealer must now pay these, and the consumer must, in turn, pay the dealer.

But if Chrysler (or GM) is taking the money and paying for ads/promotion which the dealer would previously had to pay in some other way, then this amounts to a NEW CHARGE to the customer, which the customer never had to pay or talk about before -- any more than any other overhead item.

Does anyone know: ARE THESE CHARGES A TRUE DEALER COST THAT DID NOT EXIST BEFORE THE LINE ITEM(S) ON THE MANUFACTURER-TO-DEALER INVOICE?

Anything else is just smoke and mirrors.

Odds are, this is just a backhanded way to inflate new car profit margins, as the public has ready access to all invoice information through Edmunds, Kelly, Autovantage, etc., etc.

shawnmalone

With very expensive items that most of us buy only every few years, there's bound to be some negotiation. To a buyer, it's worth investing more time in a negotiation over a new car than over a toaster. To be fair, when we go to Sears to buy a toaster for the price advertised in the paper, very seldom are we pressured to buy a four-slice platinum edition turbo toaster instead of the one we came for, and the advertised price is not inflated with dealer prep, advertising or other fees.
According to the U.S. Government Consumer Information Service website at www.pueblo.gsa.com, the dealer invoice price always includes destination and freight charges. At least one car salesman at a Mitsubishi dealership in Austin, Texas read this print-out and agreed that the destination charge IS included in the dealer invoice price. I'd be very intersted in hearing from those of you who work in new car dealerships: Is the U.S. Gov't site wrong?
The cost of advertising is included in the price of doing business. Whether your're buying a toaster or a Toyota, it doesn't really matter what the seller's cost of doing business includes; What matters is what is the bottom line price.

bjk101

Help!!! I need information about the
advertising fee, levied by either the
manufacturer or by regional dealer groups. If the
vehicle is a special order by the dealer for a
buyer is the advertising fee still charged to the
dealer. I'm assuming the fee is not
charged to the dealer, because the vehicle is not
purchased for the dealership, which will not
incurring any floorplan cost and payment does not
come from the dealership but rather the buyer. Is
this assumption correct.

KCRam

Mack,

Even $100 for doc fees seems high - I have never paid more than $75, and that fee was always pre-printed as part of the order form the dealer uses (and always should be - it's a set labor rate, basically). If I had the resources to pay cash-in-full on a new vehicle, I wouldn't even pay the doc fee - I'd register and title the thing myself.

mackabee

I was using $100.00 as an example, actually out here where I do business, doc fees or processing fees are as high as $349.00 dollars! Would you believe that! I have had customers walk out of a deal because of the processing fee which I myself agree it's outrageously high! It's nothing but pure profit for the dealership, and guess what? The salesperson doesn't see a penny of it.
: (

Mackabee

mackabee

All Toyota dealers out here charge $289-299 processing fee.
mackabee

KCRam

wow Mack...

$300+ for some schlep to stand in line at the dealer window of the local DMV office with about 30 sets of paperwork... and he doesn't see that money either - and no one can figure out why it takes 2 weeks for a dealer, when you can do it yourself that day. You're right, pure profit. $300 multiplied by how many cars they might sell in a week, then on Monday, the schlep makes one trip to DMV and waits a few hours.

omar2

If the mfg charges an ad fee, then they will charge it whether special order or not. Its just a fee that the mfg tacks on to recoup some of its advertising. They don't look at each car and decide how much they spent on advertising for that particular vehicle.

You are wrong about buying the car directly from the mfg. You are buying from the dealer. So you pay the dealer and the dealer pays the mfg.

ladyblue

bjk:
That is how I understand it, also. Even though you are special ordering, the dealer still pays the ad fee. It's like saying, "I don't watch the ads on TV, why do I have to pay?"

CarMan@Edmunds

That is the impression that I was under as well. Having to pay an ad fee on a vehicle that you order, is similar to having to pay the entire destination charge on a vehicle that you purchase at a dealership that's right next to the plant that it was manufactured at. It soesn't seem as though you should have to do so, but you do.

Your Co-Host

bjk101

Thank you
Omar2, Ladyblue(A beautiful Lady no-doubt)
& Car_man for set me straight on this issue.

BJ

CarMan@Edmunds

No problem

saabguy

It sounds like some dealerships are playing games with ad fees but they are there. Chances are that if the dealer was "taking off" the ad fee, then the dealer was actually just paying them out of the profit and not telling you that the car or truck was selling at a much thinner profit. They may be willing to do this on an order because an order does not figure into the dealers floorplan - a finance arrangement on vehicles that sit on the lot until they are sold. Vehicles usually dont start accumulating floor charges until 30 days, so there is a better base profit in an order than there is in the same price on a car that has been on the lot for six months.

Ad fees depend on the ad plan negotiated by the dealership with the manufacturer, other dealerships, and some marketing agency. Usually, the manufacturer handles national advertising then sets a cost esimate for regional advertising. They have meetings where the local dealers haggle over who pays what for the local advertising, usually it works out to a percentage of business that particular dealer does with the brand. This means that the manufacturer pays the ad agency then charges the dealer according to the values and prices of what the dealer orders, thus thse numbers are based on the invoices. Dealers that are benefitting from the advertising buy more cars, and thus pay for more of the advertising.

The bundled package is usually called an ad group. Dealers may be mentioned in local ads, and sometimes get some of the money back for their own advertising. Occasionally, an established dealer with a loyal customer base drops out of the ad group altogether. They are a pariah among dealerships of the same brand, but they are in a position to make better gross profits on cars, lower their prices, or both. Delaerships unhappy with the ad campaigns may just opt to back out of the ad group and use the same money for their own advertising.

No matter how the money is divvied up, the salesperson is almost never a player in the ad fees unless they are fabricated by the dealership itself. IF they are a profit in the sale, and the salesperson is paid on the basis of gross profit but bogus ad fees are not counted, then the dealership is also ripping off its own salespeople (which can be common).

dmooney1

A dealer that I am dealing with through Edmunds
has told me that the adversting fee for a 1999
Grand Cherokee is $550 and is non-negotiable. In
the Edmunds tutorial section, Edmunds says to not
pay more than 1% if the dealer is already making a
fair profit. In my case, the car would be ordered
from the factory entitling the dealer to a full 3%
holdback of approx $770 plus $100 over the invoice.
This means the dealer is already making over 3%
and then wants another 2.1% ($550) thereby making a
5.1% profit for doing very little work since I
(through Edmunds) found them and told them exactly
what I want. Please advise.

bobst

Offer them whatever price you feel like. If you don't want to include advertising, then leave it out. If they don't accept your price, then leave. If that happens, you have proof that your offer was too low. If you still want that vehicle, and if there is no other dealer you can go to, you will have to increase your offer. It's that simple.

Don't try to convince the dealer that he should accept your offer. He knows how much he is willing to sell the vehicle for, and nothing you can say will change his mind. Your goal is to determine the lowest price he will accept. The only way I know to do that is to go from dealer to dealer making incrementally higher offers until one accepts. Some poeple find doing this to be a drag, but fortunately I enjoy it.

Bob

omar2

dmooney1
You know, Edmunds is referring to a fee that the manufacturers charge dealers. If this isn't on the invoice, then its just some made up fee used as a tactic to get you to increase your price. It shouldn't even enter into your negotiations.

At least now you know you can get the truck for whatever your offer was plus $550. Try another dealer and see if you can do better.

bnormann

Fee Fi Fo Fum,

We have about twenty topics related to our frustrations with various fees. I feel your pain, but I think it best if we can all get into the same discussion topic. Just imagine the power of all this collective angst in one place. {%^D.

So.... let's all go here:
Document Fees and Other Little Add-Ons
and discuss our discust.

My $0.02 ??? Why do they break out the cost, if it's not negotiable? If they don't want us taking aim at these fees, then hide 'em in the base cost. Don't wave them in front of our noses!


Bruce. your co-host.

bnormann

Fee Fi Fo Fum.

We have about twenty topics related to our frustrations with various fees. I feel your pain, but I think it best if we can all get into the same discussion topic. Just imagine the power of all this collective angst in one place. {%^D.

So.... let's all go here:
Document Fees and Other Little Add-Ons
and discuss our disgust.

My $0.02 ??? Why do they break out the cost, if it's not negotiable? If they don't want us taking aim at these fees, then hide 'em in the base cost. Don't wave them in front of our noses!


Bruce. your co-host.

bnormann

Fee Fi Fo Fum,

We have about twenty topics related to our frustrations with various fees. I feel your pain, but I think it best if we can all get into the same discussion topic. Just imagine the power of all this collective angst in one place. {%^D.

So.... let's all go here:
Document Fees and Other Little Add-Ons
and discuss our disgust.

My $0.02 ??? Why do they break out the cost, if it's not negotiable? If they don't want us taking aim at these fees, then hide 'em in the base cost. Don't wave them in front of our noses!


Bruce. your co-host.

bnormann

Fee Fi Fo Fum,

We had about twenty topics related to our frustrations with various fees. I've linked a bunch of them to here:

Document Fees and Other Little Add-Ons

So, stop by there, although I think THIS is the right topic for the one particular fee that everyone loves to hate. {%^)

My $0.02 ??? Why do they break out the cost, if it's not negotiable? If they don't want us taking aim at these fees, then hide 'em in the base cost. Don't wave them in front of our noses!


Bruce. your co-host.

mf15

In the process of buying a 99 grand cherokee,I am getting it for 100 over invoice+470 add fee here in the Phila area. I don't like the fee but the whole deal is 2.1% over invoice also have to pay 9 for gas. Gee it used to be they gave you a free tank of gas, some dealers still do. With gas so cheap it would be a nice touch and creates good will, even though you probably have payed for the free gas somewhere in the price.
I do believe that with internet invoice price guides that the dealers are loosing profit and have to find some other ways such as the add fee to increase profit. You can always walk. Mike

kaandjo

advertising charges are a legitimate part of the cost of a car. these charges are usually part of a Dealer Association Group that does district or Regional Advertising for dealers. You will usually find these ads on TV or Print you know them when they say " See your XYZ County XYZ Dealer" or " See tour Tri State XYZ Dealer"

will agree that 200 to 400 dollars is quite excessive. unfortunately note all states have laws regarding this. I would say to contact your State Legislator's to address this concern.

sundeep

Did anyone buy a Toyota Corolla LE in Raleigh. How much should I pay for a Corolla.

Thanks

wg2

Hello everyone, well, I just finished reading this thread it it has helped me a lot, I was offered a Toyota Avalon for $500 over invoice, however, when I looked at the invoice pricing, there were the following additional charges that I was not prepared to see: MAF $323,TDA $183, Base Veh. hold back $430, PIO-Holdback $95, DLR-WHL-Reserve $215 for a total of $1,246. I was told by the salesman that these are charges they incur from the Mfg for floor plans, advertising, holdback, etc. I have allowed a reasonable fee of $200 for advertising, however, the dealer would not move on these fees so I walked. I also believe that these are excessive fees to increase profit margins to the dealer. I work in the Mfg business and all charges are rolled up into the cost of the product and not itemized out. I do think the base vehicle price includes advertising cost. this dealer will get to sell the Avalon to someone else. I just got educated by reading these postings. thanks to all. wg2

tommyr

Good for you WG2! Stick to your guns. If you don't get a fair deal from one particular dealer , get up and shop elsewhere. I just sent in my survey from Toyota after buying my 99 Camry. I told them my experience was good but also told them these "Advertising Fees" were a bunch of BS! The fee, if legitimate should be included in the price of the car, not added on after you sit down and begin to negotiate.

chiaoo

the dealer i am dealing with said that they
charge $525.00 advertising fee, which is a fee
the chrysler imposes is that true?

bobst

I advise you to go to the Sedans Forum, find a topic that deals with Chryslers, and ask people how much the cars cost. For example, the new 300M topic is very active, and my friends there will be glad to help you determine a fair price.

Don't believe anything the car salesman tells you. Remember that.

Bob

chas400

$525 sound ridiculous on the face of it. Regional dealer organizations do 'institutional" advertising, the factory or distributor can be involved, and the costs passed to the dealer on a per car basis -- and effectively that adds to the invoice price of the car, so when you negotiate a X hundreds over "cost" deal the dealer will try to recoup this as a cost factor. Invoice and other cost figures ought to be disclosed if this is a cost plus deal -- and yes, don't believe Anything the salesmen tell you. (I was one, and even though I prided myself on being honest, I could only respect those who adopted the "trust but verify" approach. Many salesmen are honest, but they can be wrong, or be repeating something someone else told them which turns out not to be true.)

I'd guess on a domestic that $150-$200 would be at the very highest end of advertising costs per vehicle. Small volume imports are more likely to have higher per unit advertising costs.

waygrabow

I agree that it is the bottom line that counts. I just bought a new SUV and was charged $220 for advertising,$20 for gas and $25 for processing fee. But I didn't complain; the dealer was also subtracting $1000 from the invoice price. So I got a popular model for $735 below invoice after all fees; not a bad deal! The dealer deserves some profit or else he won't be there when I come back next time.

sealinsmil

We worked a deal on a new Dodge Dakota......that was searched on the computer...600 over invoice (that contained 450 ad fee ) - With a 1000 dollar rebate.. we still did better than expected for a loaded vehicle...the catch was buying it sight unseen...on a local search...truck would be here in two days...BUT they called the next day and said the car had been sold...the computer was wrong! The deal was voided... What gives? Should I have not spent all that time and energy without the vin#....

diazodoktor2

I have lived in Florida for over 23 years and have bought over 20 vehicles during that time. I have never encountered a "advertising" fee per se in any of my transactions, but a lot of other gimmicks to "sweeten" the deal for the dealer. I have not bought a Honda or a Toyota product since the early eighties but hear they are the biggest on this rip-off technique. Just refuse to pay it! If the dealer really wants to do the deal they'll do it. If not, go to a dealer that will, period. It's as simple as that.

bobst

My favorite philosophers are Clint Eastwood, Henry Thoreau, and Jesus Christ. In this case I will follow the teachings of Jesus, who said, "If thy eye offend thee, pluck it out".

That is, if you don't want to do something, then don't do it. If you don't feel like paying an advertising charge, a dealer processing fee, or some other fee to cover the wear you caused to the dealer's concrete parking lot, then don't include it in your offer.

Bob

mike170

Just finished negotiating with a NC Olds dealer. He claims invoice pricing.. After talking with him, he added 199 processing(not sure about that one, sounds bunk though) then mentioned a 445 dollar advertising fee...Before I could even scoff at him he said" but we don't actually pay that much, so I'll only charge you half of it. $222.50" I don't know, maybe the set price is only 200 and he's actually taking me for 22.50, but i got the impression that ad charges are negotiable. My two cents.

redmi1

Hi all.
I read here all the BS dealers pull such as ad fees etc etc. Why not pay for their six packs too? Here's what I found that does the job to combat dealer's bilking.
Go to three sites : Edmund's, Kelly's and Cardirect.com. Cardirect will get you the best price. But you buy from a computer and not from a human being, and IMHO you need the dealer's realtionship for a rainy day and even for sunshine.

Prepare to give him a coupla hundreds more than Cardirect's for the
salesman's commission. He also pockets the holdbacks.
Edmund's and Kelly show you exactly how much he scoops on these. These sites will also show you his real invoice, not his fabricated one.
"Knowledge is power".
Tell him you know his real invoice - just say:
"I know it's XXX and not YYY. I saw it on the Net. I can get it on the Net for XYZ but I am willing to give you $300 more so I'll do biz with someone local I can talk to". This will do the job.
Obviously it also depends on the market and the time of the year. If he knows he can move them fast for his price he might not give in.
The solution - try another dealer! Use one against the other, and make sure that everything they promise is on paper. Don't give more than a $100 deposit.
My motto - let them live but don't let them rob you.

That's it folks.

Mike

gervacio

Hello all,
I have been reading up on all great info in Edmonds and believe I am now armed with enough info to actually visit the dealer. I pulled out my contract from my current car 1992 Eagle Talon just to review the flow. I noticed the following:
Registration $10, Transportation $0, Title $20, Lien $10, and Conveyance Fee of $80 pre-printed on the document. What is this conveyance fee all about?
Thanks for all your help

putter5

Next time they want a average fee of $ 200 for advertising present them with a bill for $200 for adv their dealership on the cars tail

ram4x4

I just found this group this morning and started reading from the first post. I've seen a couple of posts about dodge/chrystler dealerships charging $20 for "owner loyalty". Does anyone know what this charge is really for? Do we really have to pay them just to prove we are loyal?

floridian

As bad as CRYCO stuff is I guess that one time is as loyal as it gets so they are gonna get you the first time around. Or, could it be that if you come back for more you get the $20 back ?

Floridian non-loyalist

ram98

Dealership Code (YDH) Owner Communication Program.
This must be so they can bombard you with the new DODGE owners magazine, chuck full of your local dealers maintenance specials or perhaps it pays the postage on the barrage of extended warranty
brochures they send out..Only the "Shadow Knows".

ram98

The Dodge Boys are making their clients see red!

Red Vipers, Red Rams, Red Durangos, Red business cards ahhh.......
Madison avenue is alive and well...

Here in Florida they have 2 invoice fee's that they test your temper with..A42 & T42. Both dealer advertising with the total being a paltry
$400.00. God knows, I wouldn't want to watch a sub standard Dodge Different commercial tonight.

I just purchased a special order 2000 Ram Quad Cab here In Jacksonville. After a 12 hour stand off on that $400 advertsing fee they folded. Bottom line was I purchased the vehicle at 100 over invoice and the fee vanished. I did opt to go with Blue, the red ants were the final straw!

jk111

12 hours standoff? man that is some hard work! I am glad you got that fee off tho. You should not have to pay for what so called "advertise" fee, that is like charging more for a box of cereal because it has "sugar" in it.

mrnuxi

I have been away from the car dealers for a number of years. In the past, the invoice price was the dealer's real cost (not counting destination, of course). I used to negotiate for a price $200 over that, knowing about holdback. Well I received quite a eye-opener when I started looking for a new car recently. I found if they said they would do $X over invoice, that hidden in the invoice was this dreaded advertising fee. The salesman offered to fax me the real invoice. No thanks I said, realizing that the game had changed once again. So how do I handle this? Simple -- just go in with a fixed price in mind (invoice + profit + dest). Tell them you will not pay a penny more than that except for taxes and license. Also tell them you will buy the car right now if they meet your bid, or will try other dealers if not. I ended up walking on my offer for a VW Jetta cause the dealer knew he could sell it for more. But there's probably another dealer around who will take my deal on some rainy night when no customers are around. Best book on buying a car: Don't Get Taken Every Time by Remar Sutton. Even better (by far!) than the advice (mostly good) here on Edmunds.

jmurman42

Looks like you'll be walking fom a lot of dealerships...advertising is a fact of life. What do you know in the business world thats NOT advertised? Guess what, every time...you pay! It's not a game, its for money and it is for real. Having a set price, would be a good strategy...but be prepared to offer the dealer something or you'll do a lot of walking. Good luck!

bobst

I recommend going to the dealer with a set out-the-door price in mind. If they do not accept that price, then leave. After trying a few dealers, you will know if your price is reasonable or if you have to increase it.

Negotiating with the salesman is a waste of time. Either they accept your offer or they don't.

If you don't like visiting a lot of dealers, you can make an offer over the phone. This is easy for Hondas, because the cars don't have many options, and every dealer has the same cars.

MAKE SURE YOUR OFFER IS AN OTD OFFER. Otherwise, you will surprised when they put in extra charges for advertising and wear and tear on the concrete in their parking lot.

ideal50

Mrnuxi:

When shopping for a car and comparing dealer's invoices with Edmund's, I found a discrepancy. After asking the salesman over and over again how could we be so far apart if the base and option prices were the same, finally she mentioned, by name, the dreaded FDAF Assessment fee. This turned out to be the advertising fee I had heard so much about. What an unusual way of saying "we're charging you for what we had to pay for commercials in order to get you in here".

No problem.

Anyway, it wasn't much and since I got a good out-the-door price I didn't care.

Another fee was for US GAL GAS. I guess the factory charges the dealer to gas the car up so they can test it before delivery. Will their be any left in the tank when it's delivered? This charge was about $10. Is that one gal. or a full tank? Either it's a full tank of very cheap gas or one gal. of the good stuff.

No problem.

jbucolt1

your talking about a hundred dollars here and a hundred dollars there. with such small margins in automobiles who really cares. furniture stores make more money on us when we buy a $5000 living room set. let's not be petty. The only real important thing is that you find someone you trust and feel good about doing business with. I know I'll never buy a car unless I feel good about my dealer. forget cost, they don't make any more than they should, more often they make less.

mrnuxi

To follow up on my earler post ("My way or the highway") .... well I checked with carOrder.com after walking on a local dealer who didn't accept my OTD price. Their (carorder.com) price was also higher than I was willing to pay. I called a few other dealers in my region (but over 40 miles away). They were playing the hidden charge game, so I got discourged and was about to give it a rest for a while. One place even bid me a price $500 under true invoice (no adv. charge). I knew it was too good to be true. "How can you sell at that price?" I asked. "Loss leader", he said, "we only have one at that price". Oh man, I thought, and you can bet your bottom dollar it would be sold five minutes before you arrive. So I gave up. Then yesterday I checked carOrder.com once more and they had dropped the price on my car to my desired price. A friend told me to check with a fleet manager he knew of at a not-so-local dealer. He quoted me an even better price, so I zipped down there and bought the car today. Now, why am I rambling on so? Because he showed me the invoice, and THERE WAS NO ADVERTISING CHARGE! The price was EXACTLY the same as Edmunds. So don't fall for it -- just give 'em a reasonable (for both sides) OTD price and stick to your guns.