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Still this is a secret dealer fee that the general public doesn't know about.
I discovered it by reading
www.carbuyingtips.com
Regardless, the fact that these costs are built into every product was exactly my point. The cost of the car should include all of those items. The poster who raised these issues asked IF THESE ADDITIONAL FEES ARE NORMAL (sorry about the caps but I don't know how to italicize). Therefore I think it's reasonable to suppose that he negotiated a price, then was given a sales agreement with these fees added on. That would not be very kosher, in my book. Those costs should have been added in to the original price as a line item, as part of the price of the unit (just like things like paying for electricity at the dealership).
Adding that line item in AFTER negotiating the price of the vehicle reeks of deceptive intent. I agree with the poster who said that all that matters is the final price, the rest is just conversation. But a customer is entitled to know all of the elements he's discussing before being hit with "fees" for things that are normally included in the cost of the car.
(Scipio, you're brushing up against the strangest culture you'll find outside an anthro class.)
What is the meaning of the word "troll"?
2014 Malibu 2LT, 2015 Cruze 2LT,
Rivertown - you may be right. I'm perplexed, since car salesguys seem to be coming out of the woodwork to accuse me of trolling, when I think I've argued some fairly reasonable points based on my own business experience. I get the feeling I've violated some sacrosanct holy law against questioning dealer sales practices. I get the feeling I'm being told to just shut up already and let us use whatever tactics we need to to make a buck.
Obviously, I'm not the only one who thinks some of these practices are shady, but I guess we're not allowed to carry on an open dialog in a forum with a heavy population of car salesmen.
The other thing is that the car biz is a lot different than most other businesses. What other business do consumers regularly go into and haggle over the listed price. Very,very few. So the dynamic are different. You negoatite mergers for a living. Therefore you are probably more savvy than 99% of the people out there at negoatiting. Most people aren't going to do their research and will pay more than they should. Is that shady or capitalism?
Do you try and get the best deal possible for your clients possibly at the expense of the other party? If you are good at your job (and I bet you are) then you do. How much different is that from a car dealership?
Lastly I've found that the vast majority of car pros here are VERY reasonable and willing to engage in discussions with people with open minds to their ideas & explanations (sorry river:-).
They get turned off by posters who they perceive of telling them how to do their business if they are not in it. Sort of like you might if they told you how to handle a merger or if they told me how to represent someone in my line of work.
Sorry for the length but I just feel you got off on the wrong foot and it just snowballed.
Just my .02.
LOL, we're 'allowed'; but any suggestion that dealing in the car business is sometimes/often/more-than-rarely shady tends to provoke extreem reaction.
The truth of the ad fee thing is that they are common, that they show up on the invoice, that they don't show up on nationally published info, that some dealers negiotiate (from the get-go or in response to a customer) from 'invoice price' leading the customer to expect a lower price. Thus, Car_man's advice to negotiate an all inclusive price (on which I agree with him and you, BTW).
The discussion devolves quickly, IMO due to misunderstandings like this. The carguys don't understand why they're perceived as shady while they do stuff as common practice that most folks see as shady.
Just my take on it. It's very, very interesting.
(DB, no apology necessary, if that's what that was.)
dbgindy - on the contrary, what I said is that I found it offensive that dealers use that tactic, simply because it's a design to rip off the unsuspecting. Informed buyers will disregard or walk, but the uninformed fall prey. A $20,000 sticker on a Civic is equivalent to a sly way of asking a customer "Are you a sucker I can take advantage of?"
When I work for a client, I am paid to negotiate the best transaction possible. This is not the same as the least expensive deal possible. In mergers you always have to work with the guys on the other side when the deal is done, and the investment bankers who realize this do their clients a service by remembering that. Our role is not to rip off the other side. It is to come to the best possible "fair" transaction, that will best preserve the combined company's ability to realize synergies and achieve the best possible result in the long term.
Likewise, I never claimed to be the "best" negotiator around. As I said, my dealer makes plenty of money from me, and he should. I don't try to rip his profits down to zero, and as far as I know he's never tried to charge me an exorbitant fee.
The question was whether or not we would walk away from a dealer who stuck ADMs on every car, well knowing that the average "market price" for that car was in fact well under MSRP. My answer was an unqualified yes, because that ADM sticker, in my opinion, constitutes an aggressively extreme opening offer that is intended to see if I am uninformed enough for him to take advantage of.
Our current negotiated purchase system works in favor of those who are "better" at negotiating (which is primarily preparation rather than ability). They are subsidized by those who are "bad" at it. My beef is not with people who don't negotiate well, it's with the people who prey on those people, by using underhanded tactics throughout.
Re: Ad fees - Dealers are now required to list all of their costs out because their "invoices" are listed for the world on the internet. They used to hide these fees when they used to be able to get more than invoice for their cars. I feel your pain but know that it is invetible when buyers know as much about the costs as we do. However, in this arguement, we are assuming that the "invoice" that we can find on the net IS the true cost. Is it? I don't think we truly know.
Just do like I do. Compare prices from about 10 dealers, pick the best one and go in and do some hard negotiating, walk out at least twice and then buy at the end of the month when they are trying to meet quota.
Ya never see that in any advertisement.....
Only when they get ya in the F&I office.
My cousin (toyota guy) had a stroke when they tried to charge him that! He bought a Pontiac Vibe instead of the toyota clone. Same vehicle anyway. But with GM family discount, NO adv. fees
or DOC either.
He should have known better. He went thru the same thing a couple years back and bought a Prism instead of a corolla............LOL
Scripio1 - you're at a fork in the road.
One path leads to understanding of the car business.
The other path leads to Rivertown.
My point is : we can certainly agree to disagree, but you'll end up in Rivertown if you don't try to see it from both sides of the desk. Everyone who is in the car business who posts here is helpful providing insight to those who are not.
Then again, ignorance IS bliss.
BTW : This isn't meant to slam Rivertown I just consider his ideas to be far out and way off base in many many cases. WAAAAY off sometimes
Dealer adv should be part of the overhead, and recouped through sales like their utilities, mortgage, etc.
Cut these guys some slack! You can go somewhere else for a car but they can't, so if GM or Toyota wants to hit them up for an ad fee they have to pay up.
(Not in the Auto business in any way except as a buyer)
The point is consumers can't have it both ways, you can't dig into my business and expect the costs of doing business to vanish because you don't feel you should pay an ad fee or whatever fee......if you want to pry into my business then I assume they are bright enough to expect to pay the costs associated with selling the product...stay out of my business and I will gladly work you a deal and you will never know anything about any ad fees or co-op fees...
I don't care which way a consumer goes...but generally the people who haggle downwards get better prices quicker than the people who want to haggle upwards...
I've been around these forums since the beginning. I enjoy answering questions and the interchange of ideas.
I don't mind the adverse comments that are directed toward our business. Most are well deserved.
What I don't like is a new person who bursts on the scene, sleeves rolled up, looking for a fight.
I also don't like the newcomers who, at first, ask a lot of questions and then become self-proclaimed experts that really don't have much of a clue.
These forums have lost a lot of good contributors recently. People that didn't always agree with us "car people" but were willing to listen and just maybe temper their feelings.
There is always hope that some people will leave and be replaced with new posters who enjoy a interesting conversation.
We can only hope...
And back to the ADM stickers, every piece of new price announcements I have ever received plainly states; "MSRP is a suggestion only,dealers are free to sell for any price or margin of profit they see fit" Now I don't agree with marking up every unit on the lot, but if there is limited supply or a high demand for somthing, then sure....mark it up. The same principle works the other way too, if there is a product that is over-stocked.... mark them down!! Anyway thats just my opinion.
It's like pricing on gas. Tell a guy he has to pay a higher price to use a credit card and he'll explode, but if you offer him a discount for paying cash, he'll be just fine with it. In my experience people make an assessment on what they believe a final price is, and tack-ons just infuriate their sense of fairness.
I doubt anyone really knows whether a car should invoice at $15,000 or $15,500, and so if it's a legitimate expense to the dealer you should roll it up in the invoice. Tacking that $500 on as a surprise afterwards may seem like the same thing, but it isn't to the customer.
There are some fees that you know you have to deal with - destination charges, taxes, titles, licenses, etc. But shouldn't the other stuff be lumped into the invoice? Honda advertises just as much as Toyota, right? So why do you have to pay a tack-on fee with Toyota and not Honda or GM? At the very least, it should be displayed prominently (if it is, my bad, like I said I haven't bought a Toyota in a while). It shouldn't be something they ambush you with as you're getting ready to sign the paperwork.
afk: As I said, my interpretation was based only on my reading of the post, and I could be very wrong about what he meant. *shrug*
I am interested in hearing what the salespeople have to say, which is why I asked the questions. In my experience there's very little that works better to resolve misunderstandings than spirited discussion, so long as everyone can get over the semi-pathological fear of confrontation that seems to be ingrained in us as part of our cultural make-up.
I've simply questioned ideas and practices as appearing "unseemly" to a skeptical observer (many observers have said much worse things about Wall Street and M&A, my stomping grounds - I am not offended by it and am happy to discuss the topic with anyone who cares to). So far as I know, I have not attacked anyone personally or professionally, nor have I dismissed them out of hand.
Some people have responded with arguments I buy (like the restrictiveness of California law and its implications on pricing flexibility) at least in part, and with some points I'd contest. It's been mostly the other side that's come out with personal attacks and "troll" calls which I've interpreted as calls to "just shut up and go away".
You may or may not interpret my position as being basically "anti-dealer/anti-salesman". If so, that's your perogative. I'd argue that as a banker, I think I'm far more sensitive to protecting a person's right to make a living and a sustainable profit than most people. What I do take issue with is the fast-and-loose gunslinger approach to sales where any tactic that gets a deal done is considered fair game.
stevestein - yes, I agree. My opinion is that if it's a real cost to the dealer, put it on the invoice and build it into the cost. Nobody wins if the dealer can't make money in the long run. If its a dealer cost, put it on the sticker and let the customer negotiate it. Either way, it's not something that should come as a last-second surprise.
jratecliffe - 76% is higher than I would have guessed, had I taken a WAG. That's very interesting in all the things it implies. Is that an HBS case? If you still have it lying around handy, no hurry but can you drop me the case number at some point? I'd love to look that one over. Unfortunately, most of the automotive cases I've seen recently have been ops focused - Toyota JIT/TQM and such. If it's part of the Saturn set, I think I may have that. As for M&A, we have no shortage of "bridge-burners" ourselves, but thankfully the field is small enough that you see the same guys and the same firms on the other side of the table repeatedly, and that helps curb the most egregious abuses.
The question was whether marking up every car on the lot regardless of demand would cause any of us personally to walk away.
As a side note, in some places in Canada, it's illegal to add dealer mark-up. So instead you get overcharged through the roof for accessories and options. Rediculous laws have rediculous outcomes.
The place I work for does give Great Deals. But I come here every day for 2 reasons.
1. make $$$$
2. Make $$$$
If it wasn't for that i'd stay home.
Sure I'll sell one for invoice. But it's only b/c the guy's up the road will. I think the industry as a whole would do better if we could just work together and sell for a decent profit.
EDIT: I think the "new" has worn off the incentives anyway. What once was somthing to create a sense of urgency has now conditioned people to expect it.
See http://www.jmfamily.com/ and http://www.hoovers.com/cgi-bin/gate.cgi?serv=inkto_403&t=180&- amp;file=free/co/factsheet.xhtml%3FID%3D40193 for the 2 of them.
IIRC, services like Edmund's can't keep up with many of the local advertising charges included on the invoice by the manufacturer or distributor so they have their disclaimer on the pricing.
If advertising is on the invoice, it is a valid part of the cost of the vehicle IMHO.
Sounds like "Do as I say, not as I do."
If you're not willing to stand up and not follow the guy up the street, why do you think manufacturers should do so?
"Sure I'll sell one for invoice. But it's only b/c the guy's up the road will. I think the industry as a whole would do better if we could just work together and sell for a decent profit."
You know what you're mama used to say "If they jumped off of a cliff, would you follow them?" Someone has to stand up and do what's right.
My parents also used to say "I don't care what everybody else does, they're not my child."
Every dealer in the country says to himself "I wish the other guy wouldn't sell for invoice so I don't have to." That just goes in circles.
The real issue is the overproduction by the manufacturers. When there are millions of cars sitting on lots not moving, they have to be discounted. Can you just tell the manufacturer "I will take half of what I took last month."? Do they make you take a certain number of vehicles?
If you only knew how hard it is to explain these charges to people who have research on edmonds,cr,kbb ect. I wish these sites would have to provide accurate info per zip code, that would be "FAIR" to everyone.
LANDRU2:
Ok I'd like to make a profit on every car I sell but when someone comes in with a invoice price from the guy out of town I HAVE to match it order to sell it. Not to mention provide better service.
BIGO:
Yes we acutally can "turn down" units. Buy then they sit at the distributer untill someone else needs them. But that hurts our earn ratio. With toyota, you can only earn what you sell. If you want 30 sienna's and have only sold 10 in the last few months you won't get them. Also pay attention to the 2nd paragraph in this post, I don't send shoppers out with an invoice figure, I tell them the best deal in writing and I'll do what it takes. Often I can show someone the value of buying from a dealer that DOES privide great service before,douring,and after the sale and they seem to understand that WE GOTTA EAT TOO.
Back to the profit deal. The govt tends to make more off each sale than the dealers do, now days anyway. And they don't even do anything for you. We have to be here to service the car,fix any problems,dispose of the trades and so on. Most states its what 5-9 % If we made 10% real profit per car we'd be selling for sticker or higher on each car...and I'd retire in a few years.
"government of the people, by the people, for the people"
Abraham Lincoln - Gettysburg Address
You have roads to drive on don't you. You have police and firemen to protect you. You have the military to fight for you. I think they do a lot. It may not be what I want or they way I think but it is the best in the world.
Landru2
I can't match incentives. only prices on the exact same toyota model,equipment,trim level. If I tried to match incentives that would be like bringing a knife to a gun fight. The difference is those rebates aren't there for nothing. What I have against them is people don't understand that you can get 6000 off the sticker of a Ford but not a toyota. The reason is YOU GET WHAT YOU PAY FOR. And if you bought a ford when it was the HOT item, two months later when there are a million on the lots, the 4500 rebate pops out and drops the value of all those "hot items" by the same.
Bigo.
I was talking about direct service. Don't you think the Govt makes enough on us? And I wish I could see exactly how every penny of my tax $$ are spent. I bet I'd be pissed. But this isn't about politics. When I say they don't do anything I meant why pay them 9% or whatever it is when you are too stingy to pay the little man a few bucks?
Is it OK to want to dig around and find out where every little penny goes that you give to the government and not expect us to want the same from you as a car salesman. Maybe I want to know where every little penny that I pay you for a car goes.
Don't you research the different taxbreaks that are being given and try to take advantage of every one you can to make your taxes as low as possible? That is similar to researching and trying to figure out what is the lowest amount I can give a car dealer. If you (or another dealer) will take less, why should I pay what your asking? If your willing to lose money, I'm willing to let you.
BTW: I pay $300 tax on any vehicle I buy as long as it is less than $50K (where the luxury tax kicks in I think).
The govt takes their share when you make $$ (income tax) Takes their share when you spend it.(sales tax) Takes their share if you keep it (more income tax) And if you save up and pay for a car with greenback (real cash $$$$) Then you get an audit by the IRS. Seem unfair to me.
BigO:
The difference is I HAVE NO IDEA HOW THE $$ I GIVE THE GOVT IS USED. If you buy a car at least you know what you got for that $$.
How do you manage that?! yow.
regards,
kyfdx
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1f its 40000 thats 1400!!! there is no cap!
Thats why I was complaining, and as a whole 3.5% is low!!!
So that $40k car would get you a $3200 tax bill.
To make matters worse, The state will probably raise sales taxes (again) to balance their spending this year.
In calitaxifornia there is no sales tax credit for trade-ins
Is the luxury tax the only thing you pay beyond the $300? I'm intrigued. The guargantuan sales tax savings on the car I'm looking at would make it more than worthwhile to rent myself a place and keep the car there for the requisite period...
Why doesn't everyone do this? Exotic car dealers must make out like bandits in your state...
kyfdx
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OK, I am going to buy a lot here in SC and charge all of you $1000/yr each to store your exotic cars here. I wonder if I could make a living at that. If I could get a 100 cars, I could make 100 grand/year - the cost of the lot, security and advertising.
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Of course, just because the market has turned its back on the dot-coms doesn't mean there aren't some ideas that will come back when investors get some perspective. Not every dot-com was a Kozmo, and I think we'll see that some companies were just ahead of their time and caught by a rapidly moving sea-change in the capital markets.
Remember decision analysis? Don't confuse bad outcomes with bad decisions.