Advertising Fees

isellpotiac · October 2001

If you get to see the invoice the line item(dealer invoice) will be line 310. Ads do change from area to area. I understand your trepidation and I see this all the time. It is discussed on edmunds on how to buy a car. My ad cost on my invoice is 1%, if you get near major metropolitan areas I think they can get as high as 2%. You can find small town stores that do not belong in an ad group and won't have advertising charged towards thier invoice. It is possible to avoid this charge but you may have to travel and be limited to selection and how a small store might deal with a located vehicle.

mney6 · October 2001

The dealer showed you the invoice and you don't beleive it!The invoice comes from the manufacturer to the dealer.
The manufacturer puts it on the invoice.
You basically called the dealer a liar and protested because you either ignored the part on edmunds about add fees or you just chose not to read that part.
When I show a customer a invoice and they call me a liar,the car deal is off.
It is a Federal Offense to tamper with a invoice.It's not worth 280.00 to lose my franchise over that.
Check out Carsdirect.com they tend to have true invoice.

montanafan · October 2001

I think what maybe holding you back is the fact that it is a seperate itemized charge on the invoice and not included in the cost of the car. Because it is a percentage of the list price of the car, that total has to be determined first. That is the way the system is programed to calculate it. Then the amount becomes a seperate listing.

artwis · October 2001

Carsdirect includes dest. charge and ad fee in their invoice price. I presume it's pretty accurate for the zip code you enter. It gets confusing when the car sites give an invoice price but do not include the ad fee but it varies so much around the country that it is probably not feasable and the fee may change. Edmunds does explain that it is a legitimate charge but doesn't give an approx. price. Some sites don't even seem to mention it and then as we have seen many times on these forums the customer thinks their being lied to because "their" invoice price taken from the net doesn't include it. Too bad it isn't just averaged out like the dest. charge and the same everywhere but it's not and we customers have to deal with it for now.
Art

mney6 · October 2001

I'm totally on your side.I have been arguing,and sending everyone's complaints about this.
It would be so simple for the manufacturer to do.
I would be happy and the consumer would be happy.

sonjaab · October 2001

Yup, its the real deal. It is on the invoice
and the dealer will show it to you.
As I am a GM employee buyer I do not have
to pay it. Isellpotiac can explain why
better that I cuz he is a GM dealer.
Not sure about ford x plan or chrysler
employees having to pay adv fees.
Beware of some of those web site prices
SOME do not say anything about adv. fees
Good luck......Geo

frankrichards · October 2001

Bob, if they showed you the invoice and everything matched up, their invoice is their invoice.

now if you saw a 'copy' that was altered in anyway slanted or white out or or or then that's another storyyy, another topicccc.

CarMan@Edmunds · October 2001

Bob, rather that wondering about the legitimacy of certain charges that dealers try to pass on to you I personally think that you should concentrate on the big picture, that is the total amount of money that you will have to pay to drive off in the car that you want. I suggest that you shop around at several different Chevrolet dealerships in your area for out-the-door prices. Once you have several quotes for the total amount of money that it will cost you to drive off in the truck that you want, it will be easy for you to see which dealership is offering you the best deal.

Car_Man
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hiwaysanity · October 2001

"It would be so simple for the manufacturer to do."

Really? How simple? It's a regional fee that varies by market region. So you want te invoice price of a car to be different from one region to another? That makes no sense.

Maybe you picture a region as an entity unto itself? There are boundaries between regions, where one region meets another, and inevitably there will be a dealership just down the street from another - right across the state line - where the ad fees are different. You want these dealers to show different invoice prices? Why?

Makes much simpler sense to me to have one national invoice price, and regional and dealer costs are added to that. Period.

You know, they DO have the right to sell the car at any price they choose. You did know that . . .right?

Car_man's right - offer an OTD price, and let them decide. It's much simpler. I wish this invoice baloney had never been exposed in the first place. Just talk buying price. Forget invoice.

landru2 · October 2001

Related to this, I keep reading about "overhead" and "costs of doing business" that shouldn't be passed on to the customer as if a business owner pays for this stuff through a government grant or something.

Every expense that a business has is paid for by its customers one way or the other.

isellpotiac · November 2001

you sir have hit the nail on the head. The customer arguing he won't pay for my cost of doing business is the most illogical statement I have ever heard and I have heard it a thousand times. Bob does not want to pay advertising so I told him what he must do. I have told people in my office the same thing as soon as the became unruly about ad fees.

mvargo1 · November 2001

The advertising does not go towards the dealers overhead. The advertising fee is part of the invoice that varies from region to region that the manufacturer charges to offset the cost of national advertising on TV and other media.

Actually even the $287 you offered does not even come close to covering the cost of bringing that car to market, but if that is what the dealer is willing to pay great for you.

rroyce10 · November 2001

........... Just about all manufacturers are charging their dealers "Ad fee's" -- and it's right on the invoice.

Do you think, when you see all those slick ad's on TV and radio, about 0%, lease programs, special vehicles etc, ... and it's free ..? Oooooh No -- they slap it to the cost of the vehicle, which the dealer pays.. and by the way is not reflective on our holdback --- they charge us -- we charge you .... nothing personal here, it's just business ..

Terry.

cupholder1 · November 2001

Reminds me of an article I read about some large New York law firm that billed its clients for the air conditioning bill.

mauislick · November 2001

don't worry they have many other "legitimate " fees to nail you on such as the infamous doc.fee, port prep fee. license fee..the fee for charging you a fee......fee, fee fee.......
almost as bad a real estate.....

cupholder1 · November 2001

As far as I am concerned, there are only a few legit fees: Destination, tire fee (in California, the Democrats passed a tire tax!), doc fee (if no more than $50) and license/registration.

I'd love it if the manufacturers had the cajones to put "advertising fee" on the window sticker.

frankrichards · November 2001

The "invoice" includes the "wholesale price" (what the dealer pays) and the "retail price" (MSRP). When I buy a car, my price is somewhere in between (I'll save more time and money if I work the deal right).

...of course it depends on if I really want the Cabrio Bug, then I have to smile and say "thank you" at 5k over. :-)

claywaterfill · November 2001

The whole world knows that invoice is not what the dealer pays for the car. If you don't believe that, just a wait a few weeks. Being the end of the year, that Chevrolet dealer will start the big "End Of The Year, Every Car $500 Below Invoice Sale!!!!" Do you really believe the dealer is LOSING $500 every time a car rolls off of the lot? Of course not. The radio ads always have that low-talking disclaimer at the end of the shouting that says--among other things--"Invoice does not represent actual dealer cost." They have hold backs, line rebates, total rebates, kickbacks from the extended warranty they will try to stuff down your throat, etc. You did exactly the right thing, you left at the first sign of trouble. They will sell to you since you know you offered a fair price. Advertising is definitely a cost of doing business, not your responsibility! It's like when they write ADM (Additional Dealer Markup) on the window sticker and think your dumb enough to pay it! Go to another Chevy dealer. With this the last year of the Prism (and Corolla), they would love to sell one to you! Go to a Toyota dealer and check out a Corolla. Exactly the same car off the same assembly line but the Toyota has better resale because it's a Toyota and not a Chevy. Whatever you do, don't let the salesman bully you and don't reward them for treating you poorly. They don't get paid until you buy the car, so act like they work for you! Good luck!

vwguild · November 2001

Though protest too much...The Dealer does pay
what is on the Invoice, and the illustration
you offer regarding the Chevy Dealer sheds light
on the fact that Manufacturers do offer Dealers
Incentive Money in an effort to assist the Dealer
move older Inventory so that they can buy newer Inventory...And this benefits the Customer!!!

The real problem here is the fact that by using
this type of language in an Ad..."$500 Below Invoice"...they invite criticism such as yours.

rroyce10 · November 2001

......... How many axes do you have to grind a day ...?

Terry.

frankrichards · November 2001

#22 of 24 invoice by claywaterfill

the dealer invoice is what the dealer paid for the car otherwise it won't be called the dealer invoice. what happens later on down the road is Accounting 404.

...that's why, when I want to buy a car, I go to edmunds and search dealer cash, etc. then work the deal accordingly.

Hey, hey, hey, VWGUILD, wazzzuuup?! Does anybody know what VW Guild stands for?

millerro3 · November 2001

frankrichards · November 2001

Does anybody know what VW Guild stands for?

claywaterfill · November 2001

First, it is your job as an auto salesman ( I assume since your name includes VW) to perpetuate the myth of invoice being anything other than a reference figure to begin negotiating. Since nobody argued advertising is a COGS (cost of goods sold per Accounting 101) I'm glad to see we are in agreement there.Second, I don't have many axes to grind. I just get worked up when people criticize Hyundai for no reason other than "they sucked in 1988, so they must still suck now even though the auomautomotiveia thinks otherwise."

claywaterfill · November 2001

It's automotive media, not automovedia.

isellpotiac · November 2001

ran a radio ad this week and the ad was wrong. It stated something like "5 year, 600,000 mile bumper to bumper warranty" You would not believe the traffic that the store had for 4 hours when the wrong ad was running. I could not believe that people would think this possible.

mauislick · November 2001

I think it is a membership or a reward for selling x amount of units during some period of time ....you become a VWGUILD member...peter was just the first or the only one to grab it a a handle......like a "top sales" club

eharri3 · November 2001

People knew it wasn't real, but when they hear mistakes like that many people want to try to call it false advertising and take advantage of the situation to see if they can get something for free.

claywaterfill: You sound like someone I'd hate trying to sell a car too.

A) Why is it that in every other business the customer is expected to pay enough to cover the 'cost of doing business' and then some, whereas the car dealer is expected to eat the advertising fee and pass the savings to you. Paying employees is also a 'cost of doing business.' Should the dealer start doing that out of his own pocket and pass the cost to the customer? In fact ideally maybe they should cover all costs of doing business so they can sell you the car for a dollar and then pay all the overhead themselves. Oh wait, I forgot, they would probably go bankrupt in about 5 minutes doing this. A profitable business means customers cover your cost of doing business plus profit.

b) I am always amused when people act like car dealers don't deserve a healthy profit and want to cut into every source of profit on a deal rather than just gettin your ideal out the door price. But then they still think the dealer should be kissing their behind to win an unprofitable sale. I get the impression holdback is not a true source of profit but something to defray the cost of the dealer's financing on a vehicle. It's not free money for him, it's a way to keep him from loosing even more money.

Dealers, I know you get sick of explaining this but could someone define holdback one more time please?

rroyce10 · November 2001

........... Ok, for the 127th time ..

Holdback is nothing more, or nothing less .. than a percentage of monies the manufacturer will release to the dealer to help cover "floorplan expense" ...

All dealers -- depending on inventories, stores, product lines..etc, receives 2/3% (sometimes a little more.. or less) to help "offset" some of cost of "floor planning" inbound..or.. vehicles already sitting on the ground --- I pay 1/4 point over prime, for my inventories.

This all starts the day I receive the invoices -- not the day they hit the ground. I receive invoices on vehicles sometimes that are 1/2/3 weeks away ... and I'm paying for them.

The whole basis for "holdback" is to at least try to "offset" some of the cost of a 2/4/$6 million dollar inventories .... and the Key word's here being -- try to offset -- ... It's not a profit center .. or even close, kinda remember that I spend my monies first .. then wait, til I'm reimbursed in part, for vehicles I didn't particulary want or need ... and sometimes, the dealers are Kinda "black mailed " so to speak, to get our holdback ...

I hope this makes some sense ...

Terry.

eharri3 · November 2001

Question: About how many customers have you encountered asking to share the holdback? How do you respond?

rroyce10 · November 2001

..... I will be quite frank with you, about 30% ---- If a consumer try's to make an issue out of it, I have no problem with one of my managers or sales staff ( in a very nice and professional manner ) rejecting the consumers offer ... and recommending they visit another store .....

My grandfather told me a long time ago ... " A little information is very dangerous --- and, too much information is not enough --- sometimes it's the consumer (including my-self) ... that has a little information -- and whether you are buying a boat, a watch ..or a home, just make sure you have the right information ...

Terry.

claywaterfill · November 2001

You probably would hate selling me a car because I refused to get screwed. In the 10 years I've been out of college, my wife and I have bought 8 cars, and I have not been unhappy with any deal yet. I get what I want or the dealer down the road gives it to me. Either you get paid or the salesman at the next dealer gets paid. I don't care which one of you gets paid, either. I have a degree in Finance, so I understand all too well that a business must make a profit to stay operational. I know that there are plenty of "little old ladies" who pay whatever it is that it says on the window sticker. I know that the service department is where you get rich at your $60-$80/hr labor rates. I know that you make more money off used cars than off new cars. I also know advertising is a cost of doing business. It is figured into the cost of the car and it is your responsibility. Think about your argument. "It can cost more to advertise in some regions so the only fair thing to do is to pass along the advertising costs to you, the customer." It was that ad that got me into your store to begin with. Now, you want me to pay you back for the ad because it worked? If it costs Chevrolet more to advertise in Atlanta, then it costs McDonald's and Best Buy more as well. When you order a #1 value meal for $2.99, they don't add an additional quarter to offset their advertising costs. When you buy a TV at Best Buy they don't tack on another $20 at the register to help offset their costs involved in printing the circular that was in your Sunday paper. Why? Because advertising is a cost of business and figured into the price tag, that's why. You need to make a profit, but you don't need to make it all on me.

mney6 · November 2001

That's because you are paying MSRP for McDonalds and Best Buy.

eharri3 · November 2001

"You probably would hate selling me a car because I refused to get screwed"

isell didn't say that I did, and not because you don't like being screwed. I'm guessing you're the jaded, cynical type who walks into a showroom looking to go to war, whereas if I were a car salesman I would avoid such adversarial customers and probably tell you to take a hike after I got a taste of your attitude. Also, if you'd spoken to isell for any length of time you'd know he's not the type to 'screw' people.

"I have a degree in Finance, so I understand all too well that a business must make a profit to stay operational"

A degree in something doesn't mean you know every single thing there is to know about it. Your simplistic view of holdback as free money for dealers is proof of this.

"Now, you want me to pay you back for the ad because it worked? If it costs Chevrolet more to advertise in Atlanta, then it costs McDonald's and Best Buy more as well. When you order a #1 value meal for $2.99, they don't add an additional quarter to offset their advertising costs. When you buy a TV at Best Buy they don't tack on another $20 at the register to help offset their costs involved in printing the circular that was in your Sunday paper."

You can bet the quarter or the twenty dollars is added in there in whatever the manufacturer charges the store for the product, it's just not a line item. Also, best buy is not required to pay a separate fee to the manufacturer of that TV above and beyond just the basic cost of the unit just to cover Sony's cost for advertising it. They pay a certain amount for the TV itself, then sell it at a markup.

On the other hand, dealers get charged by the manufacturer seperately for advertising by region. To just include that fee in the price of the car would mean invoices would vary slightly by region. How long before someone complains about being charged more just because of where they live? Since it's goign to be there whether we like it or not, does it matter whether it's really seperate? Or maybe some customers want it rolled into the price of the car so they know there's more room for grinding. If you have a problem with it, it's probably something to complain to the manufacturer about.

"You need to make a profit, but you don't need to make it all on me."

Very interesting statement. I'd lovee to know where else the dealer makes profit other than from selling cars to the customer. The profit fairy?

claywaterfill · November 2001

I don't believe Best Buy sells anything at MSRP. I buy all my stuff there because of price. Even if they did sell at MSRP, they don't add on any charges on sale merchandise. Isn't that the same thing? If a Panasonic TV is 20% off, they don't tack on extras and say that I owe it to them because I'm paying less than MSRP. Cars work the same way. Best Buy marks a TV down, but not to the point where they lose money on it when taking all costs into consideration--and so do car dealerships. Nobody is making you advertise. You advertise to get me in the store. Don't make me have to pay you back for the successful ad that got me there. See how many cars you sell if you don't advertise.

eharri3 · November 2001

"Best Buy marks a TV down, but not to the point where they lose money on it when taking all costs into consideration--and so do car dealerships. Nobody is making you advertise. "

Nope, car dealerships have to deal all day long with customers who want an additional mark-down on top of what's there, no matter how much it already is. This happens in Best Buy, but not as much. Also, best buy does not have to deal with people coming in claiming to know precisely how much they paid the manufacturer for the television, and demanding that they get it for that amount or slightly less because they must have some secret free money they get for selling the TV that gives them more than a sufficient profit.

"Don't make me have to pay you back for the successful ad that got me there. See how many cars you sell if you don't advertise."

Something to tell the manufacturer, not the dealer. If anything advertising fees are a case of a manufacturer screwing the dealer and the dealer refusing to simply swallow that extra cost and let it eat away at their profit margin. Maybe if the MANUFACTURER could figure out some way to average it out and come up with a standard fee for each car and then roll it into their invoice it might not be a bad idea. OF all the things I'd classify as unethical or unreasonable on the part of the dealer, that is not one.

Also, I'd think a finance major would know better than to make analogies between sellng TV's and selling cars. Two different businesses.

claywaterfill · November 2001

I never said isell is the type to screw people. I have read his posts and he seems like a nice enough guy. I am very easy to get along with at the dealership. I don't get irate or even upset. I go about my business until the pressure into a bad deal for me (remember I'm looking out for me because you're not) comes along, then I leave. About seven times out of ten I get a phone call from the dealership saying they could go the way I wanted to go and we do business if I'm still interested or in the market. I am about the easiest to get along with customer there is until things go sour on your end. Your need to sell always outweighs my need to buy, so things usually end up well in the end. As far as pricing goes, people in different regions are being charged different amounts--whether the invoice says it or not. A guy in "Region A" may not have any advertising added on. A guy in "Region B" may have $200. A guy in "Region C" may have $400. We do get charged differently, it's just not reflected on "invoice." I guess a team of lawyers in Michigan figured out how to do this and stay out of federal court. Lastly, I never said I won't pay profit. Of course I will. I said you don't have to make it all on me.

eharri3 · November 2001

If not making profit from a customer, where else? Or do you mean just you personally?

mney6 · November 2001

If I take a percentage off my MSRP I am not adding the add fee on top of it.

claywaterfill · November 2001

I only compared Chevy dealerships to Best Buy because it made for a quick analogy that most people could pick up on quickly. I know they are not the same business or commodity. Point is, this thread is whether or not it's fair to add on advertising. Customers obviously feel it's the dealer's right to advertise--and to pay for that ad. Dealers want the customer to reimburse the dealer for their successful ad. If you stopped to think about it as a person, you would know we're right. If you only think about it as a dealer's representative, then of course you think I should probably pay you back for the electricity you use to light you your road sign at night, too.

audia8q · November 2001

if you looked a the "dealer invoice" at mcdonalds and at best buy you would see all kinds of fees you don't like....like ad fees, franchise fees.

When was the last time you walked into mcdonalds or best buys and told the guy you would buy that sandwich or TV at $5.00 over invoice and you want to see the invoice?

Rich

mney6 · November 2001

The advertising is charged by the manufacturer not the dealer.When I floor plan my cars I floor plan the invoice or amount charged by the manufacturuer.

claywaterfill · November 2001

Apparently there are of few of you who believe we have to pay for advertising and only me who thinks we don't. It's safe to say that we'll always disagree. so I'll let you guys talk about it for a while so I can get on to more important things. Thanks.

isellpotiac · November 2001

I don't have proof but I imagine you pay more for a happy meal in Atlanta than you do in Ogdensburg NY. The reason being the cost of doing business is vastly different. I don't screw people. I have actually given advice freely on this topic of adverising and how you can avoid it. Find a store that is not in an ad group. I talk most of my customers out of extended warranty for time being if they are buying a new car. I offer rustproofing and paint protection to everyone. Depending on how much interest you show in what I am saying is proportioned to how long the pitch will last. When the company paints any defect however many times it happens for 5 years most people are glad they purchased it. For customers that trade often I never push to hard on this stuff but I chuckle when people on this board refer to it as "worthless" BTW I charge $488 for this stuff and the average claim is above that. Used car extended warranties on used cars are like insurance. If you ever use them you always come out ahead, again a product most on here think as worthless. Tell that to the 23 year old mother of 2 who just had a tranny replace for 0$. If she did not have the extended warranty she was looking at either a repop or bus token. There is an exception to every rule, I was into holdback on the last 3 Aztecs I sold. I have noticed that my competition has been using the ad fees as a delivery bump. What this means is i will quote $200 over invoice(my invoice includes ad fees) My competition will strip out ad fees and then quote $200 over. I have had people call me from other stores and ask if this is legit. Do you know what the lowball offer got? A sale. So to answer your question I would not hate selling you a car but if you wanted $200 on a car and refused to pay part of my invoice your offer was not $200 over. I try to minimize my time with customers that think this way but I try and do it in a nice way.

frankrichards · November 2001

should there be a list that defines terms used in auto sales in Edmunds? Something semi-offical that most could agree on? Like what is a 'due bill', a 'write-up', a 'four-squre', etc, etc. It seems a lot of time is wasted going over the basics all the time.....

mney6 · November 2001

I was great at four square.I even got a trophy for being the best player.
Oh how I loved that game.
I play with my kids now ( their 3 and 8 years old)
man can I smoke that ball by them

isellpotiac · November 2001

that was a lot of fun.

vwguild · November 2001

I have read back through this thread and although one aspect of this charge has been addressed, due
to the continuing misunderstanding...Let me try
another tact...

The Ad Fees that appear on Dealer's Invoices have
absolutely nothing whatsoever to do with their
local advertising efforts. The Dollars that we spend on LOCAL print, LOCAL Radio, and LOCAL TV
do not appear on any Vehicle Invoice...We are not
passing along to our customers this aspect of our
marketing & merchandising efforts...

These Ad Fees are from the Manufacturer, and only
hold meaning for the Dealer...

If the customer would concentrate, as has been
rcommended by many, on the price of the car, and
not the Dealer's Internal Costs; this topic would
not exist...

isellpotiac · November 2001

A point that I completly overlooked. If I divided my monthly radio bill on my projected sales figure and add that sum on every sale I am sure I would open some eyes!

robsmith · November 2001

Why does the automaker break out the ad fees?

If they were to simply increase the cost of each vehicle by a set amount the consumers would not even be aware of it. Therefore problem and questions goes away.

Is there some reason the automakers break this cost out?

Advertising Fees

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