Advertising Fees

jmurman42

pay the fee...quit whining...and go enjoy your truck...the next time you see a Dodge commercial on TV, smile because you helped pay for it...but dont blame the dealer

im_brentwood

To clarify:

1) Ad Fees are *_GENERALLY_* Regional. That is why they are not just built into the invoice.

2) The Manufacturers separate them because they can (See #1). Also, their attitude is that the customer has no business knowing the invoice (Which, IMHO, they dont.. but that's a WAY different topic) so why should we care if the ad fee is on there or not?

3) The Gasoline charge is charged by Ford. It is not part of the destination charge it's viewed as a joke in the business, but it exists. Destination pays for freight. Gas pays for refined petroleum.

So the dealer has no control over this. Having them waive it is akin to epecting them to waive costs of options.

Also, if both dealers say it's $525.. then it's a pretty good assumption that it's legit and that you'll have to "pay' it.

Bill

navy4

There is a "new" way to buy cars. You are in Florida, take a trip to your local Autonation store and experience the new car buying way.

Then you can make a real judgement if you really want the car buying experience to change.

robvia1

Just went to another dealer today and had a very positive experience. Therefore, I'll post their name to give them credit.
The dealer I visited today is
Monarch Dodge, located in Lauderdale Lakes near Plantation FL (Ft. Lauderdale). I worked directly with the fleet manager, his name is Ed Proffitt (yes, thats his name, and its spelled correctly).
I had called him two weeks ago, he worked up the numbers, and gave me a figure.

I went by myself because the wife was working, I was off early this day. I called to make an appointment, he remembered me and said to come in.

I arrived, we sat down and he asked about my previous deal. I told him what happened, he said sorry about that, and he meant it. Then I gave him my figures and he started pulling up the numbers on his computer.
They matched, and there were no fees inside the invoice. His numbers matched my numbers exactly on the first try.
They charge $100 over invoice with a 495 advertising fee, and thats it. Therefore, I wasn't about to complain about it being an advertising fee, I've made my point here about extra fees. His numbers matched exactly what he told me on the phone, there were no surprises.

The final price of the truck out the door will be 24408, $400 less than the others.

We filled out the buyers invoice with the final price. I failed to mention this in my previous post, but the AutoByTel rep gave us an order form with no figures on it, only what we wanted. This is another reason why we cancelled. How can you have a deal that has no numbers on it? Yes, I'm not lying, we ordered a truck and the signed order form had no numbers on it, only what we wanted, how can this stand up six weeks later. It can't, you must have a signed order form with final numbers on it.

I wrote out a check for $500.
Ed printed the info from the computer and gave me the printout to look at to make sure all the options were in there. Then he printed the actual order form to make sure the color was correct, it was.
I signed the order form, he made copies of the order form, and check, and gave me the computer printout to take home with all the info on it.

And that was it. Too Easy. I was shaking my head, he could clearly see what I had been thru and told me it would be easy this time, and it was, I was in the dealership less than half an hour.

Now Ed will call me after the truck is built to let me know its on the way.

I give my thanks to Monarch Dodge and Ed Proffitt for helping me.

Be back in 6 weeks with the final post.

Talk to you later.

navy4

The issue wasn't the advertising fee, was it?

You were upset that the internet quote you got was incorrect.

Just another example of going to the dealer to get the straight skinny.

Rob, please post you experience on one of the internet buying topics.

hondobondo

Please straighten this out:

Does a dealer pay a regional advertising fee per vehicle in the same way he gets a holdback per vehicle?

im_brentwood

Depends on the Manufacturer. Some use a percentage, some a flat fee. Some regions will do a percentage.. some a flat fee.

No answer to it really other than "yes and No"

Bill

tyrtle

I have a few questions on the ad fees for those in the car business. I have seen it stated that they are charged by the "manufacturer"? Does this mean it comes directly from Ford, Honda, etc? Also, I have seen several salesmen mention that they vary regionally. Does this mean that the "manufacturers" are charging different prices in different states? Does the advertising fee only include that one charge or does it include fees charged to the dealer by regional "associations" that are sponsored by the manufacturer? And is there anywhere I can go to read more on what is included in the fee and by whom?

audia8q

the funds come from the carmaker and usually go directly to the ad association...(tri-state ford dealers, New England Chevy dealers etc...)
the amounts are different all over..simply due to advertising costs and market share.
Advertising in Birmingham, AL is a tiny fraction of advertising costs in New york. so ad fees are higher in some markers than others.
Some car makers use a flat ad charge per unit (mostly imports) and others use a complicated formula based upon national averages and units sold in your partiuclar region agaisnt average etc....

Rich

im_brentwood

They are charged to the dealers by the manufacturer.

And they do vary from regioan to region. Example, the "Delta" Market for Volvo is Kansas City, St. Louis, Lexington and Louisville, KY.

They are charged $400 per car for advertising, and that pays for those idiotic ads Whether it's a total Base $23,895 S40 or a $48K Loaded C70 Convertible.

Toyota regions charge a percentage.. I dunno how that works though.

This info is not on the net. The Manufacturers generally consider it proprietary (Which it is) and will not disclose it. Again, their attitude is that it's nobody's business but theirs and their dealers'

Bill

tyrtle

Thanks for the info, audia8q and brentwood. But I am still a little unclear on who it goes to. Brentwood says manufacturers and audia8q mentions ad associations. Are the ad associations fronts for the manufacturers? Or are the checks from the dealers written directly out to "Honda America" or "Ford"? Or does it vary by manufacturer?

im_brentwood

Yes!



Seriously.. It depends. Volvo does it in Zones.. Some are dealer groups, and some it's direct from the manufacturer. It really does vary an awful lot!

Bill

pc54

Fee: Yes, 1% of MSRP
State: MD
Vehicle: Ford, E150XLT

Purchased at exact invoice cost.

clubnev

If I negotiated a deal for the car and then the dealer wanted to add the advertising fee, I'd walk out. It better be in the invoice price and told to me up front. Advertising fees that the dealers pay go into an "advertising association" and often that advertising association does NOT spend all of the money and often the dealer gets a rebate at the end of the year - sometimes as much as 30%. And often, the dealers own the advertising company jointly in a separate corporation. While it is a legitimate fee in that dealers do have to advertise, and we are only talking a couple hundred or so, to negotiate a price and then tell me that they now have to add $250 and I know they will get part of that back - that is, the owner of the dealership, not the dealership itesef - the salesmen also get screwed because it bypasses their commission - I will walk out because they tried add on tactics at the end of the deal.

Same with the extended warranty companies -they are almost always owned by the dealer - or should I say, the shareholder of the dealer - check with your Dept of Ins.

Dealers can offer prices "below invoice" because of add on's like these. Not to mention rebates direct from the mgr to the dealer that you'll never know about. Again, all legit, but don't tell me at the end about these "mandatory fees" and get me to give the dealer another $500.

garmrift

I see the situation as a "tax" of sorts. Any economist will tell you that a tax on either side of the equation won't result in a total assumption of cost for either party (disregarding item elasticity). It doesn't really make sense, if you ask me, that dealers should just charge the consumer for the advertising that they have to pay for (either manufacturer imposed or otherwise). Even though advertising may be a legitimate cost for that car, why should the burden be solely on the buyer? If the dealer must charge the consumer, I think a "fairer" solution would be to divide the cost in some way.

ccotenj

the fact of the matter is, ALL of a manufacturer costs are borne by the consumer in one way or another, otherwise, that manufacturer doesn't stay in business. whether they are making cars or widgets. it's just in this case, the consumer sees the advertising cost broken out. unlike when you buy a can of green giant peas.

-Chris

little9

I worked for a mobile home dealership that is owned by the manufacturer of the homes sold on that lot. It was common practice to add on a fee labeled FTC (freight transportation charge)although the cost of transporting the home to the lot was already integrated into the true invoice (wholesale) cost to the dealership. No buyer ever objected to this bogus add on because it sounded reasonable. Additionally, no buyer ever mentioned the fact that the "free" delivery & set up of his/her home, skirting, air conditioning, and steps to the front/back door were actually included in the price he/she was paying. Other add on fees similar to car dealer "documentation", "conveyance", & "sales promo" fees also appeared on the closing statement but never was an objection raised. The prime reasons for this was consumer ignorance and emotional attachment to "their home". Are advertising fees legit? Sure, that's why they're built into the factory to dealer invoice. Any such fee on top of a deal is so much dealer greed. So to are those "flooring assist" fees. The proof is in the pudding. If they want the deal, they'll drop these fees...in total...no "splitting the costs". If they won't deal, someone else will. You're the person with the bucks so you're in charge. Remember that the dealer needs us, we don't need them. The only time they have the power is when we are ignorant or have "fallen in love" with a particular car. Also re: posting #l70 by ccoten dated 2l June 2000, yes advertising costs are included in the price of a can of Jolly Green Giant peas but when you check out there's not an additional "advertising fee" added to your grocery bill.

wtd

I refuse to pay extra for advertising fees. On the last three new vehicles I've bought I refused to pay them and still bought the vehicles for what I wanted. On my last purshase I told the salesman that they should pay me advertising fees because everytime I drive the truck, people can see where I bought it from by the badge on the tailgate. After that comment, advertising fees were not brought up again.

kkollwitz

Advertising fees, what a bunch of bull. Why not a fee for the dealer's water bill, power bill, insurance or any other cost of business? And even if you buy into Edmund's notion that advertising is a legit extra charge, how do you know what charge is fair? The answer is you don't know. Here in Greenville SC, I've bought 5 new cars in the last 12 years, and only one time did anyone try to hang any B.S. charges on the sale. I simply said the charges were not part of the deal we agreed to, and I was not gonna pay 'em. Funny how some charges don't show up 'til you're about to sign the papers to take your new car home.

im_brentwood

Depends on where the charge comes from.

If it's printed on the original factory invoice Then it is legit.

An Example would be TDA at most Toyota Dealers.

If the dealer tacks it on and it's on the buyer's order or something, then it is a dealer charge, and not one that I would consider legit.

Bill

kkollwitz

but I haven't shopped for any Toyotas, either. Post 170 puts it well, that the sale should at least cover the seller's expenses regardless of how the costs are named. Re TDA, is this charge like freight charges, i.e., it counts toward the MSRP? Or is it a cost that lies outside MSRP? As a selling tactic, do you think it's better to 'hide' advertising in the basic cost of the car, or break it out as a separate item?

vader4

Costs McDonalds $1.65?? guess what you are paying for Michael Jordan to get on TV and say I Love McDonalds.. What I do with a dealership is after the deal is made I say so where's my $500.00 they say what? I then tell them that's my fee for advertising again confused they say what? Then I tell them if you want me to drive around town with your little dealership sticker on the back of my car I charge $500.00 for advertising.. otherwise please remove it.. :>)

audia8q

According to General Motors they expense apx. $1200 on every car they sell to pay health care cost for it's employees. What if that particular charge was made into a line item on the invoice?

just thinking out loud.

skerbel1

I am assisting a friend with purchasing a '00 Chrysler Sebring Covertible JXi with an all season Package,(understandably, not the best vehicle in the world), and I am a little confused about securing the best available deal. I visited a dealer in Florida yesterday and offered him 24,500 for the vehicle, plus tax and tag, no pdi or other fees. He countered by showing me the factory invoice. Despite any arguments with respect to the legitimacy of the dealer's invoice, it showed advertising fees of about $400, thereby bringing the true price of the car to about $24900; however, his invoice showed $25200. My price of 24,500 was based on the invoice, destination, options + 3% holdback which I deducted from the full msrp. In short, I offered the dealer his exact cost on the car without any advertising fees. To say the least, the dealer rejected my offer. Today, I received an e-mail from another Florida dealer offering me the same car for 24,875. This leads me to believe that the invoice shown to me by the first dealer was false, since a dealer cannot remain in business by losing $325 on a car. Although, the second dealer's price is not too far from my offer of 24,500, this dealer is tacking $375 for fees, albeit advertising ones. Thus, it seems awkward that two dealers in the same region have different advertising fees. Please note that the 2001 Sebring Convertible has been totally redesigned, therefore I am attempting to steal this car, based on the fact that the remaining 2000's are lame ducks. Advice, opinions, feedback, help.

md2002

Does your price take into account there is a $1500 rebate currently running on the convertable JX & Jxi?

Not sure about the numbers, but in about a 2 weeks they will be hip deep in 2001 cars and will be hurting bad. Besides Chrylser is going to record very little and some loss this year due to incentives, costs to introduce products (Mitsubishi stock purchase) so hang tough, you may get a better deal on a 2000 or something close on a 2001.

skerbel1

Thanks for your prompt response. My price did not take into account the $1500 incentive, because my friend wants to take advantage of the 5.9% interest rate on a 60 month loan. Thus, you are only eligible to elect one or the other.

krey

>My price of 24,500 was based on the invoice, destination, options + 3% holdback which I deducted from the full msrp.<

I'm not with you on the math here. Dealer "cost" is the invoice, plus destination, less holdback, less dealer (hidden) incentives. And believe me, there is NO way to know what the hidden incentives REALLY are...in some cases, high volume dealers get cars with no invoices, as in free. In any event, working from MSRP backwards is the wrong way to go about it.

As to the adv. fees: it is not at all unusual to find 2 dealers in the same area that have different advertising costs; yeah, it's a cost they have to pay, IF they elect to participate. You see, Dealers, not the Manufacturer, choose which regional adv. programs they want to participate in. You gotta shop them to find out, because a few don't pay to play because they don't believe it's a benefit to them.

scot98

I am currently pricing 2001 Mitsubishi Galant GTZs and was completely mortified when a salesman produced an invoice listing an Ad cost of $670.00!! I told him to eliminate the cost or I'd walk. He stuck to his guns and I walked. As I have dealt with other dealerships I have noticed that they too have advertising costs in the $600s. Why does Mitsubishi seem to have the highest Ad cost of any manufacturer, does it have anything to do with their current 0-down, 0-interest and 0-payments for 1 year promotion? Should I pay it? Has anyone purchased a 2001 Mitsubishi, taken advantage of the 0/0/0 promotion, and not paid such a high Ad cost?

guest

sysop

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scottcar

Went to Toyota to look into buying a new vehicle and saw they have a $800 advertising fee. Is this a legit fee or is it negotiable? Seems they could sell $400 below cost and still come out way ahead.

CarMan@Edmunds

Scottcar, some dealerships do have legitimate advertising expenses that they are charged by their vehicles' manufacturer. Having said that, I personally don't believe that the advertising that they have to pay is any different than a number of other expenses that dealers incur, such as their electric bill or the interest that they are charged on vehicles that sit on their lot. I really don't see any reason why this expense should be broken out separately and added to whatever price you settle on with the dealership. The easiest way to avoid agreeing to a price for the vehicle that you are interested in and then having dealers tack on all sorts of little fees is to shop for the best out-the-door price for the car or truck that you want. After all, the most important number is the total amount of money that you are going to have to spend to drive off of the lot on the vehicle that you desire. By comparison shopping final out-the-door prices at a couple of different dealers you should be able to see which one is giving you the best overall deal.

Car_Man
Host
Smart Shoppers / FWI Message Boards

im_brentwood

I have yet to see a Toyota where the manufacturer bills the dealership for advertising that's over 1.5% of MSRP (Which is usually the charge).

It's a fee charged by the manufacturer to the dealer, much like destination or the cost of the car. As a dealer I don't like it but it is generally legit.

Umm, what is this? A Land Cruiser? $800 seems high to me. However, if it is a Toyota, it will be printed on the vehicle's actual invoice in the space for "TDA".

If it does not say "TDA" then it is generally not a legit charge.

Bill

snurple

is not "much like destination or the cost of the car." Advertising is one of the dealer's overall business expenses that is not directly tied to a specific car as bought by a consumer.

In this case, I agree with our Edmunds host--why should the consumer pay an add-on fee for advertising? Here we have the manufacturer and dealer colluding to make this objectionable practice seem above board. If the dealer wants to sell his cars for higher prices and the competition down the street will let him, fine. But to tack on these kinds of additional business expenses to the cost of a specific vehicle is not only illegitimate, it is ridiculous.

Out the door negotiation is a great strategy--but you can probably expect your dealer to try to tack on these kinds of fees at every stage of the game.

im_brentwood

Perhaps I was not clear.

Once in a while you hear about a dealer charging their customers a separate advertising fee akin to charging a doc fee. This I disagree with as it is part of our myriad of costs of doing business.

What I was discussing was whether or not it was a charge from the factory to the dealer to cover the manufacturer's advertising costs. These exist, are legit, and are not some wildcat scheme dreamed up by the dealer.

What happens is, a customer looks up their invoice info on the net, and the dealer's invoice cost differs. Often it is because of one or more charges (Such as port prep on a VW that is charged nationwide, yet not listed on the internet sites) from the manufacturer that is not listed on the independent websites. So this is additional money to the manufacturer expressly for the manufacturer's advertising campaigns.

Advertising is a good example of this. And, as a dealership owner, I'm very familiar with these kinds of charges. I don't like having to pay for whatever advertising campaign GM (and now Volkswagen) is doing, but if I want to sell their cars I have to pay it.

Bill

snurple

Advertising costs should not be passed along to the consumer. Such costs are illegitimate if presented to the consumer for them to pay.

"I don't like having to pay for whatever advertising campaign GM (and now Volkswagen) is doing, but if I want to sell their cars I have to pay it."

Great, pay it. It is a dealership business expense. Just don't pass it along to consumers.

im_brentwood

So GM and Volkswagen (Your blood must be boiling.. I have VW Store! gasp!) charge me for their advertising in part of the amount that I have to pay them for the car.

How is that a part of my cost of doing business? I am curious....

Bill

audia8q

if you look at the window sticker there is no ad fee to worry about....but if you want to stick your nose into the dealers business why woudnt you expect to see business related line item charges on the DEALERS invoice? The consumer part is the highly federal regulated Monrony sticker or better known as the window sticker on a new car.

The reason the ad fee is seperated is for a number of reasons...one being different ad costs in different markets. It cost more to advertise in chicago than Fargo. Also, if this was to cause the actual price of the car/truck to change (not broken out)it would violate all franchise agreements which state that all mfg will charge the dealerbody the same prices for the same cars.
nobody gets volume discounts, etc...If it was hidden in the base price of the car, like you want, this would cause the price of the car to be different. now you wouldnt want to violate any laws would you?

snurple

Ad fees are a blanket charge from the manufacturer--it is a general cost of doing business that the manufacturer and the dealer have decided to ask the consumer to pay. Doesn't make sense to me--why should I pay for dealer general business expenses?! Btw, advertising *should* pay for itself. More advertising = increased traffic = increased turnaround. Just as better location = higher rent = increased turnaround. A high cost of doing business should lead to big profits. I assume you guys know knew what you were getting into...

Listen up folks: It all comes down to negotiation--consumers should bring up invoice and holdback because these have to do with the specific vehicle. Advertising fees, on the other hand, do not. If you negotiate an out-the-door price based on your knowledge of the appoximate dealer cost, then you're right audia8q, you won't have to worry about any ad fees--or any other fees for that matter.

The "consumer part" is not the MSRP sticker (!)--the "consumer part" is what we want to pay moderated by what we have negotiated after offering several diferent dealers the opportunity to do business with us.

scottcar

Negotiating for an "Out The Door Price" does me no good if I don't know whether the advertising fee is legit or negotiable. How do I come up with an "out the door price" if I don't know whether the advertising fee must be considered in the "out the door price". In other words, if the dealer is willing to take a hit on the ad fee, I might save $400-$800. On the other hand, making an offer for less than the cost of the vehicle is not going to get me anywhere. Why spend $800 more with an "out the door price" if I don't have too?

CarMan@Edmunds

Scottcar, it doesn't matter if the dealership that you are working with adds a charge to your car for the pizza that they all ate for lunch if you concentrate on the bottom line. Rather than letting all of the little fees cloud the big picture, look at how much money you are going to have to spend to drive off in the car that you want. Let's say that dealer A will let you have the car for a total cost of $20,000, dealer B will let you have it for $19,500, and Dealer C will sell it to you for a total cost of $21,000. You will easily be able to tell that dealer B is offering you the best price, even if they are selling you the car for $18,500 + a $1,000 advertising charge.

Look around in the various boards here at Edmunds.com to see what others have paid for similar vehicles and also check out the Edmunds.com True Market Value for the car or truck that you are interested in to help you arrive at an approximate target price.

Car_Man
Host
Smart Shoppers / FWI Message Boards

mney6

If the fee is on the invoice it is legit.When a customer wants a car I dont have,I locate one.I purchase the car from their inventory and pay the invoice amount. If there is a advertising fee it is part of the amount I have to pay to get the car.

snurple

If the manufacturer enacted a new policy whereby they *did* add the cost of "pizza for salesmen lunches" onto invoices, I suspect many dealers would claim that this was a "legitimate" charge. The fact of the matter is that any advertising fee *is not* a car-specific cost of purchasing the car (from whomever). The dealer should ante up his share of the advertising expenses, whatever they may be--after all, it is the dealer who benefits from a manufacturer-sponsored ad campaign.

scottcar--
In my mind, this translates into one of two consumer approaches--either you negotiate OTD with several different dealers without attention to details, or you haggle with several dealers regarding each and every charge they want to tack on. But there may be a solution in the middle: Start with the first strategy, and then incorporate elements from the second as needed.

Keep in mind that these kinds of fees are an attempt by the dealers and the manufacturer to "legitimize" a higher asking price. The more that consumers can chip away at the supposed "legitimacy" of such charges, the lower their OTD price will wind up being... It is important for consumers to "send a message" back to the dealers and manufacturers.

audia8q

snurple...your just plain wrong.
no further discussion is required on this topic. Your filled with half truths and some near fiction on this topic.
When you get the facts straight, Im sure anyone in the auto business would be glad to have an educated debate with youon this topic.

navy4

My advice is simple, but I'm an ex-car salesman, find the car you want for the price you think is good for you and buy it. Car Man is right, don't get wrapped around the axle on each individual charge. Like others have said, if it is on the invoice (printed) then it is legit. If it is stamped on or typed later it is merely the dealership breaking and assigning it's cost of doing business to each individual unit.

Snurple, every business passes it "cost of doing business" on to the consumer. You cannot name one business that doesn't. Even the charitable contributions businesses make are passed on to you and me. And you know what, we have to live with it and accept it. I have, when will you?

snurple

There is a little saying that applies here--

"If you give them an inch, they will take a mile" or the German version--

"If you give them a finger, they will take your whole arm."

Many consumers are fed up with this unbridled stampede toward so-called "legitimate" fees and they are choosing to put up a fight. You can advocate your approach of "pliant resignation" all you want, but that doesn't mean that others will.

mney6

All cars were sold at one price,MSRP,then it really wouldn't matter about the fees on the invoice.