Stories from the Sales Frontlines

lrguy44 · March 2009

By the way, our doc fee is $199. Most metro dealers here are $249-$499

deltheking · March 2009

Again,I don`t think doc fees should be such a big issue.
You should always negotiate the final OTD price including TTL+fees+charitable donation+sense of great achievement fees etc etc..
So if a dealer has a dealer package of say $600 which includes pinstriping,etching,cleaning,shining,honest guy fee,doing a favor to you fee etc,etc, etc,,,it should not matter.You agree to a final OTD price .So when he pulls up the contract and you have already agreed to this final OTD price then it should not matter how he puts numbers in it.He can charge me a doc fee of $10k with the sale price of $ 10k--so that the final OTD price is $20k-then it should not matter to you.Whether u agree on $20k OTD is important.How he arrives at 20k --that`s his business,,not your problem-- the final price is important.
I have done deals wherein we agreed to final OTD difference after my trade in-- but when the contract came up the sale price and trade in prices were so different from what we negotiated but the final OTD difference was the same price we agreed to.

jipster · March 2009

In what other business, do you pay unspecified overhead expenses that should properly come out of the gross after you agree to a deal?

I just got back from taking the Buick into the dealership for an oil change. Took a coupon for a $29.99 oil change. The total bill was $36.18!!! There was a .75 charge for "waste disposal"... I didn't even use their restroom. :P And there was a $4 charge for "shop supplies". Which I guess would be for one sheet of Bounty Towel and a squirt of hand degreaser... all of which should be included in the price of an oil change. I don't understand why they have to operate like this, not like people are out "grinding" prices on oil changes. Even if they were... :sick:

morin2 · March 2009

Its not only new car dealers that are "dropping like flies"- look around at other businesses.

The doc fee problem to me is that the fee is not specifically charged for a particular service. I never question charges for shop supplies on a repair bill because there is a description of the little things needed to get the job done in addition to the parts & labor. If the doc. fee was for time, labor & expenses to deal with the bank, MVA, etc. then it should be specified. But as you say, its just ADM. BTW, other people also work in sales where the business overhead is considered actual overhead, not an opportunity to squeeze out a few more dollars.

Customers appreciate business models (such as Saturn's) that treat them like customers, not the enemy, suckers or marks. People dread going to new car dealers more than they dread going to the dentist. Its not the absolute amount of dollars involved but rather the fear that the dealer will take advantage of them. That is the first thing about selling new cars that must change.

lemko · March 2009

I always know how much I owe on my current vehicle come trade-in time: $0.

lrguy44 · March 2009

Jip,
I do not like "shop fees" either But it was implemented by dealers, independents and some lube shops to cover costs. Uniforms, shop rags, etc. are rented. The rentals fee includes cleaning, name tags, dealer tags, and pick-up and delivery.
The disposal charge is for the cost of oil disposal. By charging this as a fee, they can advertise lower prices. Also, they may pocket a little extra.

lrguy44 · March 2009

Obviously you have never been to a LR, MB, BMW, Porsche, etc. store. We treat people right (repeat customers are over 50% of my biz) and still charge a doc fee. Of course, it is disclosed up front - as are title fees and taxes.

dino001 · March 2009

In high-end stores it's usually not such a big issue, because as you said it - the disclosure is usually upfront, the customer is more sophisticated and the word profit somehow has less "evil" connotation (most of your customers are much closer to the business themselves). But I do agree with Morin - "regular" car stores persist to have a business model treating customers like marks.

There is another part of those high fees that is so evil to me - and it should actually be evil to most of salesguys as well. This is part of the owner's profit that is usually not shared with the salesperson - it is outside of commission base. So now let's see: assuming 20% commission (of course it is a simplification): Corolla sold $500 over invoice w/ $500 fee = $100, sold "$1000 over invoice and no fee, commission is $200. In other words, high doc fees in Florida are a scheme to squeeze salesforce more even than customer. Customer got same OTD so they don't care, but salespeople get screwed.

morin2 · March 2009

We have dealers who do not charge doc fees and that is where I choose to go for sales and service. The car sitting unsold at a dealer where I would not pay the doc fee is also not coming into the dealer service bay for maintenance, repairs and parts.

boomchek · March 2009

You're right Dino, dealers make money off customers and in some cases salespeople, depending on how numbers are shown on paper.

If you want to find a dealer that treats their staff well, look for a store with a low turnover. Not number 1 in sales, or number 1 in awards, but low turnover.

qbrozen · March 2009

In what other business, do you pay unspecified overhead expenses that should properly come out of the gross after you agree to a deal?

Are you a homeowner? Do you remember "closing costs"? Those make a doc fee seem like a cheap cup of coffee.

And, really, seems to me most loans have a fee of some sort. My bank charges $100 closing fee on a Home Equity loan. When I got a private loan for a car, I had to pay a fee to cover the FedEx charges.

You ever bought anything over the internet where they charged "shipping & handling" that easily exceeded to actual cost paid to ship the item? Happens all the time.

hp6130 · March 2009

I agree 100%. Call the fee what it is, pure profit. Don't tell me it's for filling out paperwork that goes with the job of running a car dealership. That's like the guy who cleans my oil furnace charging me extra because his clothes got oily. I know all those fees are not going to the dealer or salesman such as; sales tax, registration transfer, tire tax, on line processing fee. But when I bought my last new car in Mar. 2008 I paid for all those fees because I knew what they were for. What did I get for the doc fee? Why didn't the dealer go in my wallet and take what he wanted. Hell if I have to pay it, I'd rather give it to the person who sold me the car. They did not have these fees 20 years ago.

morin2 · March 2009

Apparently you missed the word "unspecified". I know about closing costs - they are ridiculous - but not because of the nickle and dime charges but because of the high taxes charged by county and state gov't. There is no option - its required by law that if you buy, you pay those transfer & recordation taxes.

My only HE loan had a total bank fee of $25 so I was either lucky or a better shopper than you. And if you must finance a car, then you could not afford it in the first place so don't complain about the FedEx charge. The only good reason for an individual to finance a car is if his savings can earn more for him than the interest paid on the car loan.

The shipping & handling can exceed actual apparent cost - but it is specified & upfront.

What is the definition of doc fee? Could it be: "We charge this unspecified junk fee because the law does not currently prohibit it and we can get away with it. Sufficient numbers of foolish customers who only care about the amount of their monthly payments finance it anyway."

lrguy44 · March 2009

Dino, when you desk an OTD deal, you look at gross profit, just as you do when you desk a normal deal. If I have to make a $XXX profit, I will do so including or excluding Doc Fee, title fees, taxes, etc.
Now, Dealer Pack is a different story. Every deal has a Dealer Pack deducted from gross profit. The amount will vary from store to store ad model to model. So a sales force is paid on gross profit - pack. The pack money is used for write-downs, customer satisfaction items, etc.

lrguy44 · March 2009

look for a store with a low turnover
Funny you should mention that - our store has been open for 9 years and our junior guy has 5 years here - but 9 years of LR experience.

As far as pack, etc. goes, it is all part of the pay plan. I remember that when I worked for Xerox in the 70s, you were paid a commission when you placed a machine. When a machine came out, you were charged back the current commisson even if you made less (old pay plan) putting it in or another salesman sold it. It is all part of a pay plan. The bottom line in the bank at the end of the day is all that matters.

driver100 · March 2009

But most of that money goes directly to the dealership's administration. there is a lot of paper work that happens when you buy a vehicle. Someone has to pay those pretty little ladies in the office.

But most business's pay that as a cost of doing business. I am happy to pay for any government and licence fees and the time involved to type up the papers and go to the government offices if need be....at about $20 an hour. Since these fees should come out to the same amount each time they just should be included in the cost of the car.......then we are all on a level playing field.

Seems the sales guys would like to sell you a car in 20 minutes, then corner you with add ons and extra fees that will take another hour of your time!

isellhondas · March 2009

You have me beat. I've only owned three RX-7's

You took your business elsewhere and they didn't care because they knew the next person would snap up that RX-7.

That was the market for those cars at that time. Same with Miatas when they first came out.

driver100 · March 2009

What about building mortgage, property taxes, cost of parts inventory, special tools, admin people, furniture, computers, benefits, furniture, software, coffee for the waiting area, resurfacing the parking lot, and the list goes on and on. If all fees are a rip off, how come so many dealers were working on such a small net profit that they are now dropping like flies

Boo Hoo!
If they got into a business where they can't make a profit legitamately, but have to add on extra fees just to make a profit, they didn't get into a very good business.

Maybe GM should charge the dealers doc fees too, might get them turned around.

dino001 · March 2009

I think I understand what you are saying. My point is owners invent new ways to squeeze not only their customers, but also their workforce. Even here, on this forum, I read several stories about "new and improved" pay plans that were constructed in such a way that you technically could make more money than before, but practically it was not really possible. Hearing about those inventions I just have a strong suspicion that the fee structure is part of them, too. I'm sure things vary from place to place, also it depends on the context (e.g. mini deal that makes low/no gross ultimately is paid from those "non-commissionable" allowances).

You also write from perspective of a high-end store with low turnover, which tells me your owner compensates his people enough to keep them. There is no such record in a local volume Toyota/Honda/Ford/Chevy dealer. They could not care less if that kid they just hired for no money upfront is going to stay one day or twenty years - and their pay structure also reflects that.

isellhondas · March 2009

Customers must not appreciate Saturn too much given their dismal sales.

I treat my customers in the same fashion I would like to be treated myself and it's worked for 14 years now.

lrguy44 · March 2009

Boo Hoo!
If they got into a business where they can't make a profit legitamately, but have to add on extra fees just to make a profit, they didn't get into a very good business.

I hate to tell you this, but there is nothing illegal about Doc Fees, in fact, they are regulated in many states.

isellhondas · March 2009

I agree but most people simply don't care. They are afraid that they just might have to pay for a quality store experience.

I've been here 14 years and otheres have been here longer than me.

I have the same owner, same General Manager, same General Sales Manager and the same Used Car Manager who were here when I started.

And, we just happen to be the Number One Honda Dealer in 9 states for the past 28 years in a row and multiple President's Award winner.

So I guess you can have both?

And we don't charge more for this!

Asking a family member or freind for a referral is always best!

dino001 · March 2009

The customers did appreciate Saturn. Consumer Reports place them at similar levels to Lexus and Cadillac dealers when it comes to a transaction satisfaction scores (not product, just the process).

Their dealerships were also know for being quite profitable (local monopoly for the brand). There just wasn't enough of customers overall to support the brand itself - which was fault of the product, not the dealers.

lrguy44 · March 2009

What you say is very true. However, you will find true professionals at some Honda, Chevy etc. stores. it really depends on the ownership and management philosophies. The true professional sales person in any business (and I also has 25 years of corporate sales) wants to make the process as easy as possible.

boomchek · March 2009

Asking a family member or freind for a referral is always best!

Actually that is ther best way to not only get a good price but also a great experience buying a vehicle.

dino001 · March 2009

Oh sure, no doubt. But there is also quite a bit of "race to the bottom" attitude around. Those good people are often in spite of the place, not thanks to it. They also gravitate towards certain operations so at the end you see them in places you expect them to see. For me one of the giveaway is advertising. When I see obnoxious guy screaming at the camera about "blowout deals" you can almost smell the place through the TV screen.

I must tell you - I'm owning my second Subaru right now. In Florida Subaru dealers are situated in between "popular" and luxury segments. I got used to certain treatment - so, when I have ventured couple of times to a "popular" brand place, I ended up wanting to run from the place screaming. Pretty much the moment I stepped into them I felt uncomfortable, five minutes in my skin was crawling. Ten minutes and I needed a hot shower

. You just can see it in their eyes

I did meet some better people there, too but overall experiences were quite negative.

lrguy44 · March 2009

Advertising phrases to avoid:
All credit applications accepted
Push pull or drag
We will pay off your trade no matter how much you owe
If we can't finance you, nobody can

Also, if a store stays open to midnight, stay away - it is a slam store

boomchek · March 2009

Hate to break it to you LR, but we deal with a lot of sub prime customers and the phrases you described (except the push pull or drag one), is what we use.

And no we're not open till midnight. We don't run screamer ads either.

qbrozen · March 2009

Apparently you missed the word "unspecified"

Yes, you are right ... but it doesn't affect some of what I stated.

My only HE loan had a total bank fee of $25 so I was either lucky or a better shopper than you.

I think you've made a perfect example for me. You don't think a "bank fee" is as nebulous as a "doc fee"? What's the difference? And the range of what banks charge for this fee, as you have pointed out with your $25 quote, only supports the point. If it were for something "specified," it wouldn't vary so much.

By the way, no need to get all high and mighty. Nobody said I paid it, I only stated what it was.

so don't complain about the FedEx charge

I never complained.

The shipping & handling can exceed actual apparent cost - but it is specified & upfront.

Sorry, but "handling" is no more specific than "doc fee." Additionally, the doc fee is just as up front as the handling fee companies charge. In both cases, you don't see it until after you've chosen what you want and are checking out. (Although, at least in the case of a car deal, I KNOW its coming. Not ALL companies charge a handling fee.)

And if you must finance a car, then you could not afford it in the first place

I think I'll ignore this. But I'll say I'm very happy for you that you are able to buy everything with cash. I'd love to not have a mortgage. (yeah, i know you said car payment, but the same reasoning must apply for a house, especially since mortgage interest exceeds car loan interest by leaps and bounds ... way beyond any tax benefits ... damn! so much for ignoring it! now I must go and loathe myself)

lrguy44 · March 2009

Sorry if I offended you - I did not mean to. All the stores in this area that use those advertising lines are in screamer ads and are known as slam stores. Again, I was wrong to generalize.

morin2 · March 2009

Once again, you choose to ignore my actual words. I was very specific. I didn't say that I always pay cash for every car but rather that the decision to finance it is mathematical. Does it make sense to pay interest on a loan & keep the savings to maintain liquidity? My last loan was a 2 year loan at 1.9% (amazingly included the rebate) - taking that loan was a no-brainer and not worth paying cash. I think my interest for all of 2008 was $95. Taking the loan allowed me to "invest" my cash in the stock market - OOPS (the result was poor but the decision was correct). My point was that if someone could not pay for the car, then he could not afford it and should look for cheaper (used) alternatives.

Since you brought up mortgages, one of the reasons why the economy is in the toilet is because people could not show self-discipline and buy what they could afford with a financial instrument that made sense. For most people, a 15 year mortgage was the way to go, not 30. A 30 year loan builds equity far too slowly for the risk of market corrections. And the real estate market for the past decade was obviously not sustainable. A 15 year loan is more likely to build equity at a rate closer to the rate at which the property value declines. All people had to do was spend a little more for the 15 (and 15 y loans carry lower rates) or buy slightly less house.

Its time to get back to basic, old-fashioned financial common sense. The really tough part of that is that the economy now requires consumer spending that is not in the consumer's long-term interest.

Sorry to get off-topic.

morin2 · March 2009

You were correct about the mortgage interest exceeding the tax benefits - especially as the standard deduction increases each year (not to mention the extra bonus to the standard deduction this year).

I hope you get to enjoy paying yours off early - its a great feeling.

golic · March 2009

... one of the reasons why the economy is in the toilet is because people could not show self-discipline and buy what they could afford with a financial instrument that made sense.

The lending institutions played a major role in this as well. Check out this fun video that explains the lending crisis http://vimeo.com/3261363

There is good debt and bad debt. I do consider housing, education and even auto as good forms of debt. Yes, each of these can be used improperly. But I won't categorically state that someone should not finance a new car. Buying a $15,000 car may not be the most economical choice over using that same $15,000 as a down payment on a new $30,000 car, when you factor in repairs, maintenance, fuel economy and length of ownership.

morin2 · March 2009

push, pull, or drag - How else do you get used Land Rovers in to appraise them as trade-ins?

jimbres · March 2009

And, really, seems to me most loans have a fee of some sort. My bank charges $100 closing fee on a Home Equity loan.

That reminds me of a charming little real estate custom (yes, I'm being sarcastic) here in downstate NY: if the title insurance company sends their guy to a closing, the grateful home buyer is expected to tip him $100 - in cash, if possible.

boomchek · March 2009

No, don't worry, no offense taken.

I know what you're saying though. We have people that come from slammer stores usually upset, offended, and feel like they've been violated.

Usually the storeis you hear from sales people working at those stores make you shake your head too.

We had a few yahoos that worked with us at one time or another, but didn't last long just because of the heat and drama they caused.

fezo · March 2009

I can only see a subject heading with baby seals so long before......

A seal walks into a bar. The bartender asks "What'll you have?" The seal replies, "Anything but a Canadian club on the rocks."

boomchek · March 2009

Thanks for the video link. That was a neat video that explains things in plain language.

cdnpinhead · March 2009

"Anything but a Canadian club on the rocks."

Well done!

From a Canadian, who's carried a club, but for a different purpose.

driver100 · March 2009

but there is nothing illegal about Doc Fees

illegitimate has a few meanings; One is "unlawful".

Another means unethical;
in accordance with established rules, principles, or standards.

I don't want to be sued for saying doc fees are illegal. Like I say, I would gladly pay to have the license plate and government forms filled out and filed, but it sure doesn't cost $200+ to do that. I should not be responsible for paying the staff to do their work.

Also, how many people come to their supposed final price, and once they have filled out the forms etc., see the doc fee and by then it is very difficult to question it...and some people might not even notice it was added in....just another line like taxes.

dino001 · March 2009

I know what you mean, but you need to re-read and redo your post.

driver100 · March 2009

A seal walks into a bar. The bartender asks "What'll you have?" The seal replies, "Anything but a Canadian club on the rocks."

From another Canadian....that was funny lol!

qbrozen · March 2009

I didn't mean to make you think I was ignoring your words. I understood all of what you meant. I, too, have taken advantage of low rates when possible. But it is unreasonable to think everyone should have cash on hand that equals their loans. I'm not thinking of me, in particular, but of a couple of single mothers I work with.

yes, we're way off topic.

We were discussing doc fees, right?

Lemme ask this ... what if they called it something like "title transfer fee" or "ink and paper fee"... I dunno ... any number of things. Would you view that any differently? Or, to bring it back to that online purchase thing, what about "Handling fee"? They do have to drive the car off the truck, onto the lot, into the detail bay, etc.

driver100 · March 2009

I know what you mean, but you need to re-read and redo your post

Did I catch it?

fezo · March 2009

Thanks. A Canadian told me that one actually.

Doc fees. The one that kills me is "we have to charge it. It's printed on the form." I've heard that one several times. I find it doesn't take much to get them to either cross that out or more recently deduct the same amount off the price we agreed to.

I don't grind hard so getting to "I'm not going to let a deal walk for $x" isn't difficult....

dino001 · March 2009

Yes, you did.

qbrozen · March 2009

I'm pretty sure I told this story here before ... but that "its preprinted on the form" garbage fell to a whole new level of BS when a Dodge dealer I visited with my sister had all their forms preprinted with the destination charge.

In other words, once you agreed to a price, they THEN wanted to add the destination charge ... you know, that number that already appears on the car's sticker. Salesman told me I was the first person he ever dealt with who complained about it. Makes me feel very sad for all those who came before me who paid the car's destination charge TWICE!

morin2 · March 2009

Re: doc fees: I realize that everyone pays it to do business with a dealer who charges it and it can't be waived because people talk, the internet, etc. The problem is that I have never been given a satisfactory explanation why it is necessary to charge for what most businesses consider to be overhead costs. It should be built into the final price if that extra amount of profit is needed for the dealer to remain in business. And I also understand that new car margins are not great. But, I have walked over a very last minute doc fee. I have also discussed this issue with some asst AGs and with state legislators. It is regulated by states for good reason - because it has been abused.

There was probably just as much work for my boat dealer to complete the sale to me (maybe more since there were 2 registrations - the boat and the trailer) - but I was not charged a doc fee and it is not the practice in that industry.

I'll pay for actual services received, but not "we can charge this because the dealership requires it and we're allowed to get away with it".

hp6130 · March 2009

Hey isell the last 2 were turbo's, what a blast. Those were the days. Here's a sales story with an ironic twist. I always try and sell my cars privately so I get more money and than do a courtesy trade to take advantage of the break on the sales tax. When Mazda came out with the turbo I knew I wanted one. I had a black 85 GSL-SE at the time, I advertised it in 2 newspapers, the Allentown Morning Call and Phila. Inquirer. The first weekend it was advertised I get a phone call. Turns out the guy calling me is the saleman who sold me the car. He didn't even come to look at it because he knows how I take care of my cars. We agree on a price, make arrangements to meet at the dealership to pick up my new turbo and everyone is happy. Me, him and the salesman who sold me the new car. He wasn't selling cars when he bought mine and the turbo came from a different dealership than the one he used to work at. Hope everyone enjoyed the story.

driver100 · March 2009

Yes, you did.

Thanks, took me awhile to find it. It's been a rough day, not and too many posts here today, I think we are close to 100.

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