Well, guess what? Although the invoice did have the advertising charge and a port fee, the line item for the car itself was less than Edmunds listed price and the net price was almost the same. So it certainly is a bit confusing.
well, as long as you pay the car around invoice, you shouldn't care less for the type of fees they are charging you. But a 400 dollar advertising fee is just too damn much. I recently purchased a mazda, and I paid 100 above invoice, without advertising fees. But that was with a rebate tho.
My goal is to buy the kind of car I want for the lowest price I can.
When we bought our 1999 Accord EX 5-sp, I offered $20100 OTD to one dealer, and was turned down. Then I offered $20250 somewhere else, and that offer also got refused. A week or so later, we offered $20300 to another dealer, and it was accepted. So I had a good idea that I got the car for about the lowest price I could. I was around $300 over invoice.
When the person wrote up the bill of sale, I noticed that it included a $200 'dealer service charge' or something. I think they did that so the listed price of the car would be less, and that would reduce the taxes they would have to give to the state. As long as the final cost was $20300, we didn't car how they juggled the numbers.
I've heard about some really funny contrived itemizations in this forum. I'm so glad I don't have them at my dealership ... I wouldn't know how to keep a straight face telling a client they need to pay $200 for washing the car.
I recall from my Toyota/Cheverolet days that factory invoices had legitimate itemized charges for national advertising. To know that some of the local dealers tacked on an additional charge for their own regional marketing (which is indeed expensive considering a full-page ad in the Sacramento Bee is over $10000 for a weekend even before you add color!), I was amazed at first. I'm not amazed anymore, but to know that I was amazed initially means that customers are very surprised.
Now I specialize in three brands with incredibly cut-and-dried invoices which itemize only destination charges and options, but it must be said: National advertising is a legitimate cost, and it shouldn't be negotiable no matter what your site says.
When we buy a case of Pepsi at the supermarket for a dollar more than the store brands, no one complains about the cost of advertising. You don't wanna pay for a cute little curly-haired girl lip-synching an Aretha Franklin-crooned jingle? Too bad, it has already been paid for. Go buy Safeway Select ... you don't have to pay for celebrities.
Included in the invoice of every car and truck is the manufacturer's cost to print and distribute brochures and produce 30-second TV ads. You must be expected to pay for it. When you buy a Chevrolet, you must pay for Jennifer Jason Leigh no matter how annoying she is. When you buy a Toyota in Northern California, you must pay for Steve Young no matter how past his prime he is. When you buy a Volkswagen Golf from me, you must pay royalties to Styx for one heckuva annoying song. The same things that almost repel you from buying the car you want are part of the price!
If a dealer charges an extra 2% for advertising, it's just hot air. Edmunds says you should negotiate to pay none or part of it, and I agree. It seems the dealers with the lowest overhead are not the mega-dealers or the sleepy small-town stores ... they are well-located mid-sized dealers who recognize their place in the market and are content with it. We hardly have to advertise at all! If you live in a non-competitive market (Reno?), you'll have to pay the piper anyway, I guess.
Another thing ... About these Dodge Ram commercials offering the "air conditioning at no charge", that's really quite laughable. AC from free? My dad said "there's no free lunch", but I know I've had several free lunches. Free AC from Dodge ... now that deserves to become the new hackeneyed father-to-son expression. AC is not an itemized cost, but you can bet it's worked into the price of the truck. You'll probably see more of this from Daimler-Chrysler; all Mercedes Benzes have no-charge air--all standard equipment is "no-charge"--and that's why their base MSRPs are so high. C'mon Dodge ... d'ya take Americans for idiots?
Sometimes the manufacturer's advertising is really problematic for us. I remember a national TV ad for the 1997 Toyota Tercel which advertised a price of $11180 with the words "starting at" in teeny little letters. Since I worked in a college town, we got a lot of Tercel shoppers, and many of them went home discouraged when they found nothing on the lot below $12700. And there was only a measly $600 profit in those things, so a big discount wasn't possible! What a cruel trick Toyota played on it's dealers. Imagine the futility of trying to convince a shopper to pay an extra $1500.
I know what you're thinking ... "Boo Hoo!" Yeah, well, I guess I lived through it ... and I sold plenty of Tercels anyway.
I would like to know if anyone has had experience with advertising fees from VW dealers. I am currently in the market for a 2000 New Beetle and have gotten quotes from several dealers at $$ over invoice and their invoice price is always higher by a couple of hundred then what I total from Edmunds. Has anyone NOT paid ad fees to VW dealers? Thanks
There is a fee for your geographical market area. I am not sure how they differ, but all of my VW's have $75 charged by the factory; they itemize it on the invoice as "San Francisco Bay Area Association." This is a legitimate charge (we have to pay it, and the cost is passed onto the consumer) but it is not itemized on the Edmunds or Kelley websites because the fee is different for every area.
Two other fees appear on the invoice. Volkswagen does not have holdback unlike most other manufacturers, but there is a "floorplan interest reserve" of $92 and a "port prep fee" of $25. Neither of these charges appear on the invoice sites either. The total of these amounts in Northern California is $192, and that amount is added to the invoice only; there are no corresponding amounts added to the retail side.
Generally, invoice and MSRP information on the internet is precisely correct, and when it is slightly off, you can usually rest assured that the information is valuable insofar as it lets you now how much profit is in a car ... except for VW. It often gets in the way at the dealership when a customer asks us to present an offer of x-amount above invoice ... the customer often feels that we are tacking the $192 on arbitrarily or just to make more money, but they are legitimate charges.
There are dealers, however, who assess their own advertising fee. Strangely, it works pretty well for some dealers because it is easy to prove that we don't receive holdback. Some customers feel we have a right to charge where other dealers don't because none of our operating costs are subsidized by VW holdback. Well, we don't charge any extra here.
I bought a 2000 Jetta in NJ last October. No such fees stated anywhere, although I did an out the door deal and the dealer had to back into the price before tax and tags.
For every car the dealership buys from the factory, (Take Jeep for instance), there is a charge to the dealer for the ads you see on television and so on, it is on the invoice and is posted on the order sheet when when a vehicle is direct ordered , is this not a part of the invoice price ?
Here's what I did when I negotiated with dealers. I simply asked them for their best price including ALL fees (destination, advertising, prep, etc) except tax and license. It doesn't make sense to me to get into senseless discussions with a dealer over whether a particular line item on an inoice is "justified". All that matters to me as the consumer is the total, all-in cost, I really don't care what the dealers does with the money. I think this is the best way to handle it.
Excellent message, David. That is the same advise that I often give to people when they post questions asking which fees are legitimate. I personally wouldn't care if the salesperson tacked a fee onto my deal for the turkey sandwich that he ate for lunch, as long as he gave me the lowest out-the-door price and I felt comfortable buying from him.
Your price was indeed $600 over dealer invoice. Holdback is an itemized portion over invoice. Lincoln dealers I've spoke to have remarked that they have never seen anyone in the marketplace sell a Navigator below invoice, so holdback shall remain untouchable. The A Plan invoice only applies if you are an employee of Ford Motor Corporation, so that does not apply.
a 1.5% gross profit on a $39768 vehicle--especially a popular vehicle--is a great, and friends at Lincoln dealers told me this is extremely unusual ... at least here in Northern California.
After making a deal for a 2000 Sonata at invoice and 8k for my trade in, I got the shock of a $480 advertising fee added on. The salesman says this is part of the invoice. So now we're playing on words. Is this really on the invoice or on only his copy. Has anyone successfully avoided this fee. Thanks
There are still a few dealer's out there that do not have advertising "built into their invoice". Southern GM is one of them. My husband and I just purchased a 2WD Extended cab truck from them for $200 Below Invoice with NO DEALER ADDED CHARGES! They sell General Motors products. You can view their complete inventory including prices on line completely hassle free at:
Go to Edmunds...they will tell you that advertising is a legitimate fee.
Abdo1...GM has advertising as part of their invoice...it's not a 'dealer additional' markup...you will pay for advertising.
Folks, ALL companies charge you for advertising...think about it for a minute. What if you went into the Gap to buy a shirt...and the cashier says... that'll be $35...PLUS 2.50 for our advertising...no they just say...that'll be 37.50....car manufacturers are different in that they show the charge separately, but it's all there.
The salesman wouldn't budge on the ad fee. When I offered to pay invoice there sticking to there guns that advertising fees are part of the invoice. I know its reality that we ultimately pay for advertising, but at least they could sugar coat that pill before we have to swallow it.
When advertising is added to an invoice, it is generally correct. Volvo charges us $400 per car for "Supplemental Advertising". I feel that it ought to be included.. but the manufacturers feel otherwise. Since it's regional in nature.. it's rarely shown on the net.
abdo1 it's not a dealer added charge. it's a factory added charge. Same way destination is. Same way Ford charges for 4 gallons of gas (at like $2 a gallon if I recall!)
I just walked out on a deal for a used 1999 Chrysler Concorde LXi because of a "dealer conveyance" fee. We had negotiated a good price including trade (two different processes) and had asked twice if the price included anything else other than taxes and registration. Both times the answer was no. When the paperwork finally was completed it had this dealer conveyance fee on it. I got up and walked out - they wouldn't negotiate it at all.
Has anyone else run into this fee? Is it legit or all dealer profit? - Thanks!
The fee was $250. Not a back breaker but maybe a deal breaker because of how they handled it. Actually, we never expected to reach the door without them doing something about the fee - boy did we get a surprise!
First, to the poster who says, "Go to Edmunds...they will tell you that advertising is a legitimate fee" I would say that of course Edmunds is going to support the ad fee--they charge advertising for space on this web site.
Second, the dealer better put the advertising fee into the invoice, because I flat won't pay it otherwise. Most dont, though, so when it comes time to buy an auto in a few weeks, I'll tell the dealer "no" when it comes to the ad fee.
Yeah, I know that many will say they must charge it. Well, if that's more important than a sale, then so be it. I live in a huge market (Houston) and I'm sure that I can find a dealership who will forego it. The dealer can eat the advertising it in their profit...and I don't care if it comes from their parts, repair or sales department. If they want to keep putting 10K ads in the Sunday paper, that's their choice (but I'll bet they dont have a problem coming up with the cash.)
What I was discussing was a MANUFACTURER'S Advertising fee. This is the fee that the MANUFACTURER charges the DEALER for the MANUFACTURER'S advertising. Sort of like a destination fee, it is the manufacturer passing on transportation to the customer, or an acquisition fee on a lease it is the bank charging the fee.
OK, I see the difference. BUT I'M STILL GOING TO REFUSE TO PAY IT. (Sorry, I couldn't resist!) Thanks for the clarification.
Too bad the manufacturer has to bill the dealer--you would think that advertising is just a cost that they (mfg) have to incur. But I know, the way business is run, costs get passed on.
But, hey, anything is negotiable. I am sure that the dealer doesn't like the extra charge anymore than I would. And why shouldn't I have my own financial interest in mind and be businesslike, too?
I went shopping for a 2000 Nissan Sentra a couple of days ago, and my dealer told me that an advertising fee of $300 would be added. He said that all 2000 Nissans have this fee and it is charged by Nissan, not by the dealer.
If thats true, I don't mind paying it. Is it true that every new Nissan has an advertising fee? Or was the dealer just trying to con me into shelling out more cash? I'm a student with a limited budget, and this is my first car buying experience. Could someone with more knowledge about this please advise me? Thanks!
1) it is indeed a legit fee. Many manufacturers have been adding them to the invoice of a vehicle much like destination (freight) charges or option costs. We dont like it and they are not on websites like Edmunds so may buyers who get their info from sites like this dont trust them as legit. Also, they can be very regional in nature and can come and go.
2) It's a "glom". The dealer is using your assumption of Possibility #1 as an exuse to get you for $300. This is a bit less likely but I wouldnt be surprised. You may try shopping it a bit.. if all the other dealers in the area pay it then it's likely to be legit.
asking about advertising fees. thought an informal survey would help us find out if there is some common ground here. please list if you paid advertising fees, what state you are in, and type of vehicle and year. might also mention if the dealer added on any other type of fees.
fees: none state: Missouri vehicle: 99 Grand Caravan
on the sticker price. If they are indeed a MUST PAY fee then why aren't they listed on the sticker. I don't mind paying for something that is legit, but come on advertising is teh cost of doing business, not my cost THEIR Cost.
They don't appear on the sticker because the only thing that matters to the manufacturer is the invoice amount they receive from us dealers. Destination fees are uniform for entire regions, so it is easy to print them on the MSRP, but advertising fees can differ from county to county.
My Volkswagens for instance ... Dealers to the southwest pay $75 for the San Francisco Bay Area Association Fee. Dealers to the northwest pay a $100 Sacramento Area Association Fee. Thankfully, we were neglected, so we don't pay any kind of fee except a $25 "Port Fee" which appears on all invoices on every VW in California.
on a Toyota 4Runner for the Ad Fee? What should they be trying to charge me (and is this negotiable) in the upstate NY area?
Thanks for the info, it certainly makes it hard to make sure you know what your costs are and what isn't known until the last minute. I want teh dealer and salesperson to make a profit, but I don't want to give up a kidney to do it.
You may try asking them.. or if you're shopping around see what the other dealers are at. If they're all, say, $400 or 2% of MSRP or Base Invoice.. then that should be a pretty good sign. And advertising is part of a dealer's invoice cost so while I suppose it's negotiable. It's as negotiable as any other cost. Best thing to do is try and get their bottom line (Plus TT+L) price.
If a vehicle is special ordered, is the dealer still charged an advertising fee on the invoice for that vehicle? I've heard that the dealer isn't charged if the vehicle is ordered although two dealers I have spoken with have included this fee and won't budge on it.
But I don't prefer Pepsi because of that little curly-haired girl lip-synching the Aretha-crooned jingle. But, thanks to the little girl, Pepsi costs more than RC Cola. There is no way around this.
If it's itemized on the invoice, then it is a legitimate charge. Some dealers add their own fees for regional advertising or preparation ... in fact, you said that the dealer had in fact done that, but you didn't have any disgust for that, which I find peculiar.
In any event, I hope you can peacefully come to terms with reality ... a truck like that is certainly one to enjoy.
You would be willing to pay $450 over invoice for the vehicle. By reducing that to $0 but keeping the advertising fee, the dealer effectively offered you $525 over invoice. Is it really worth all the fuss over $125? If they eliminated the ad fee but told you they would sell the vehicle to you for $525 over invoice, would you do the deal?
Advertising fees are charged by the Manufacturer to the dealer. They do not show up on the Sticker. Edmunds does not post them.
Why? Several reasons.
1) They generally vary quite a bit from region to region and time to time so they are very difficult to keep track of. Ex: Volvo charges $200 now in St Louis, But it was $400, but it's $0 in NYC Metro, but $500 in chicago..etc... But then the NYC Dealers dont get Value Pkg cars.. and they have less advertising co-op money..etc..
2) The manufacturers/banks wont residualize an ad fee on a lease. Since the MSRP is what the residual is based on...
3) This does NOT Pay for a dealer's advertising directly. While some dealers who are in co-op programs WILL get advertising money from the factory, they'll pay that ad fee regardless.
4) The manufacturer's attitude generally is (To the dealers) "Well, we dont care what they read on the internet, and it's not our problem that they know these invoice costs".
Ford, for example, charges for gasoline (4 gallons if I recall) on their invoices (At $2 a Gallon!) and that's not on the MSRP either.
I live in South Florida. A few years ago, Florida thought they could raise more money for the state by charging a luxury tax on expensive cars and boats. I don't remember the exact percentage, but any high priced vehicle was taxed, the thinking being that rich people would pay it. The exact opposite happened, the rich people didn't pay it, they stopped ordering boats and fancy cars. The boating industry almost went out of business. Car dealers ran ads claiming they would "eat" the tax. Of coarse, the tax was repealed.
I feel the same way about paying an Advertising Fee.
Next point that has me completely frustrated. I called my AutoByTel rep and told her my numbers from Edmunds. She told me there would be $250 over invoice plus a $199 dealer fee and thats it. I asked over and over if there were any other fees, any advertising. I even told her we were coming to her because the other dealer wanted to charge an advertising fee. Her answer was repeatedly no, no more fees. She lied to me by not telling me the advertising fees were "IN" the invoice, she knew it, and didn't let us know. Any AutoByTel rep or fleet manager knows the prices of the cars. When someone calls in on the phone, they know what the invoice price will be. This information was purposely withheld from me until the last minute.
Here's another problem. How do I know the advertising fee is Legit? How do I know I'm not being ripped off? I don't, until I come on this board and the news groups and talk to everyone. I called Dodge and didn't get an answer, they told me to call my local dealer and talk about it. So now I think I'm being ripped off. How do I know there may be gas charges? I don't, until I go to a dealer and see it. Then is it legit? Most of you paid it because it was only a couple hundred. In my case, its not, its $525. And the dealer only offered to reduce the profit to 0 at the last minute when she knew the deal was falling thru. This is not how cars should be sold. And its too late at this point, the trust has been blown.
The Gas fee is part of the Destination fee and should not be broken out as a seperate fee. The Advertising fees need to be handled a different way, add them into the base price and make it the same in all states. I'm sick of all the car commercials on radio/tv. So I'm not going to perpetuate them by giving a dealer money to keep doing it. I'm going to prove my point by not buying the vehicle until I do it with my numbers, with no surprises. If the AutoByTel reps want to continue, then they need to disclose advertising fees in the invoice when someone calls. Not when they are sitting in the office trying to match up the numbers.
I won't buy the car until I see all the numbers, and I know they are legit. Don't blame me for this, blame the car industry. I just gave my answers as to what I feel should be done.
We called the dealer above and cancelled, I can't trust her. Now its on to another, where I will personally fill out the order form with MY numbers, and make that my final offer. Of coarse, the dealer will say no, but eventually they'll come around. Win, Win, Win, I get the price I expected, the dealer gets 3% holdback, and the salesperson will get a perfect score on the review card.
Here is a different twist on your advertising fees....
The big 3 car makers tell us that apx $1200-1400 per car built (varies per company) pays for nothing but health insurance for the car companies employees....
If we can eliminate that, since it dosnt do anything to add value to the car or to me as a consumer then it should go...why should I pay for the exployees health insurance?
I have read your posts sevreral times...the internet buying services are just what your looking for. they would be perfect to deal with you and your buying methods.
Rich Floridians can huff and puff and repeal tax laws with a boycott, but you will not be able to avoid paying the manufacturer's advertising fees no matter where you buy or how you buy.
If the cars and trucks weren't advertised, how would you ever notice which one you want. See it pass you on the freeway? Walk into a Chevy dealership and say, "I saw a truck pass me on the freeway yesterday ... it was big and red with an extended cab ... I wondering if it was a Chevy. Here, let me draw what the front end looked like."
You pay advertising fees everytime you buy a carton of orange juice, but since the cashier at the grocery store never mentions an advertising fee, you don't think about it. Heck ... grocery stores even get "slotting allowances" which are similar to dealer holdback, but that's not paid much mind either.
Basically, the dealer messed up by accidentally omitting it from thier quote, but haven't they apologized? Accept the apology and buy the truck ... you're getting a great deal on a popular truck, made popular in large part by national advertising.
i wonder if any of these people who "demand" the holdback from the dealer also go into the grocery store and "demand" the slotting fee from the grocer???
Believe it or not, thats exactly how we saw the truck, on the road. We wanted the truck because of its looks, sounds crazy, but its the truth. At first it was the Chevy S-10, and I was doing research on it. Asked the wife about the Ford Ranger because of its outstanding performance record, wife said no, doesn't like its looks. Then my wife comes home one night and says, "I just saw the truck I want on the road, its a Dodge Dakota Sport". Yes, its her truck, instead of an SUV, people are buying trucks with 4 doors, because an SUV is basically a truck with a small back end. So I say, ok, I'll start looking, and off I went to the web. Once you see a vehicle you like, you start to notice them on the road more and more. Then you find out the vehicles in that same class and compare.
I didn't pick the dealer because of their ads. Maybe thats the case with most people who are not on the net, but with us, it was all because of seeing the truck on the road and the internet. I picked the dealer that was closest to me on the assumption that I would bring the truck back to them for maintenance.
Ads are not what make me buy a vehicle. I buy when it is needed. I know where all the dealers are, and what is available. I think dealers over advertise, but they'll probably say no to this and bring out a bunch of stats to prove me wrong. Its almost as if the ads are there to prompt people into buying, it may work, but its overkill. With the internet, all of this will change. More people will do their research online, like me, so dealers don't have to advertise as much. But they don't realize this because the marketing people at radio/tv stations are probably telling them to do more, so they can make more money.
The car buying process needs to change. The problem is that the price on the vehicles start at MSRP for those who have no knowledge (walk ons). And for people who get the knowledge, its starts at Invoice and works its way up to a point where a deal can be made (me). With regular products (groceries), this does not happen, everyone is charged the same price. So whats the answer to buying cars? I don't have it right now, this would lauch another debate that probably can't be answered right now. But something needs to change, because there will be more internet buyers, and we'll know the prices and expect to match numbers when we visit a dealer.
If the way dealers sell cars ever greatly changes, I don't foresee the eradication of manufacturer's advertising fees as part of that change. It will always be there because most buyers, unlike you, are influenced into considering cars with the help of advertising.
I know because I work for a dealer group that includes Volkswagen, whose critically acclaimed commercials have probably been the singlemost important factor increasing new VW sales. Three times in as many days, I received emails from customers who wanted a new Cabrio on account of the fact that the new commercial (with four kids joyriding under a moonlit sky whilst a long-forgotten Nick Drake song plays) has so great affected them ... each said "I can't get that song out of my head."
Previous to this commercial, the Cabrio was one the only VW's that wasn't a hot seller. Now, customers are practically lining up for them, and it can be the weather because this didn't happen last year when there no Cabrio spots on TV. Now if they would only make a great commercial to help us sell EuroVans. Er, on second thought, I'm not sure that would help too much for that van.
Dodge spends money to get the word out about their trucks, and they have every right to reclaim that money. Heck, do you think UNICEF gives all of their donations to starving children without paying one cent for its television and print ads? In the business world, you've gotta pay to play, and the costs are passed on to the consumer.
Concerning dealer advertising, I think I agree with you ... dealers overadvertise, and much of the advertising is counterproductive to the buyer/seller relationship because most advertised price specials have the effect of creating expectations of drastic discounts available to any and all customers which in turn help create price-wars between dealers.
The vast majority of car shoppers will shop their local dealer first on account of proximity rather than advertising. However, since you didn't mention that the dealer asked for their own "regional advertising fee" (which is pure dealer mark-up charged by some dealers), that is not what we're discussing here.
Many people are turned off to car advertising that is high on hype, but the mere repetition is more effective than you will give advertisers credit for. Mere repetition is how top 40 hits are created out of songs that are otherwise soulless, uninspiring pablum or just plain sucky altogether. Repetition breeds familiarity, and for products such as cars, housewares, or recording artsits, that breeds product recognition, a key cog in achieving significant market share.
The increase in the number of shoppers who research car purchases on the internet--or even buy on the internet--will not do anything to diminish the cost of advertising. There is plenty of advertising on the internet, too, and it is quite expensive to place banners on sites with high traffic. Furthermore, TV will still be considered a much more effective avenue for advertising because it is subjective while the internet is more interactive. Basically, TV viewers, lulled into complacency and largely detached from critical thought, are more susceptible to advertising messages than people on the internet; people on the internet usually have information to find or people to meet, and pop-up banners are just obstacles that are X'd out more often than not.
Considering that you are not satisfied with top-down or bottom-up negotiating, I'm curious to know what ideas or solutions you have about the car-buying process.
Perhaps this debacle would be over for you if you were buying a Honda ... Hondas have base invoices plus destination charge ... the advertising fee is not itemized, but you can bet that it is in the bottom line.
Advertising really is something that is hardly worth mentioning.
Seems to me the problem here is not the ad fee, which is legitimate, but that the fee was not disclosed to robvia until he got there. Sounds like an inconsiderate dealer story to me.
Although why they can't just build the advertising fee into the invoice is beyond me...
Comments
home -- there was an advertising charge on the invoice ($100). I didn't notice it before. Sorry.
When we bought our 1999 Accord EX 5-sp, I offered $20100 OTD to one dealer, and was turned down. Then I offered $20250 somewhere else, and that offer also got refused. A week or so later, we offered $20300 to another dealer, and it was accepted. So I had a good idea that I got the car for about the lowest price I could. I was around $300 over invoice.
When the person wrote up the bill of sale, I noticed that it included a $200 'dealer service charge' or something. I think they did that so the listed price of the car would be less, and that would reduce the taxes they would have to give to the state. As long as the final cost was $20300, we didn't car how they juggled the numbers.
Bob
I recall from my Toyota/Cheverolet days that factory invoices had legitimate itemized charges for national advertising. To know that some of the local dealers tacked on an additional charge for their own regional marketing (which is indeed expensive considering a full-page ad in the Sacramento Bee is over $10000 for a weekend even before you add color!), I was amazed at first. I'm not amazed anymore, but to know that I was amazed initially means that customers are very surprised.
Now I specialize in three brands with incredibly cut-and-dried invoices which itemize only destination charges and options, but it must be said: National advertising is a legitimate cost, and it shouldn't be negotiable no matter what your site says.
When we buy a case of Pepsi at the supermarket for a dollar more than the store brands, no one complains about the cost of advertising. You don't wanna pay for a cute little curly-haired girl lip-synching an Aretha Franklin-crooned jingle? Too bad, it has already been paid for. Go buy Safeway Select ... you don't have to pay for celebrities.
Included in the invoice of every car and truck is the manufacturer's cost to print and distribute brochures and produce 30-second TV ads. You must be expected to pay for it. When you buy a Chevrolet, you must pay for Jennifer Jason Leigh no matter how annoying she is. When you buy a Toyota in Northern California, you must pay for Steve Young no matter how past his prime he is. When you buy a Volkswagen Golf from me, you must pay royalties to Styx for one heckuva annoying song. The same things that almost repel you from buying the car you want are part of the price!
If a dealer charges an extra 2% for advertising, it's just hot air. Edmunds says you should negotiate to pay none or part of it, and I agree. It seems the dealers with the lowest overhead are not the mega-dealers or the sleepy small-town stores ... they are well-located mid-sized dealers who recognize their place in the market and are content with it. We hardly have to advertise at all! If you live in a non-competitive market (Reno?), you'll have to pay the piper anyway, I guess.
Another thing ... About these Dodge Ram commercials offering the "air conditioning at no charge", that's really quite laughable. AC from free? My dad said "there's no free lunch", but I know I've had several free lunches. Free AC from Dodge ... now that deserves to become the new hackeneyed father-to-son expression. AC is not an itemized cost, but you can bet it's worked into the price of the truck. You'll probably see more of this from Daimler-Chrysler; all Mercedes Benzes have no-charge air--all standard equipment is "no-charge"--and that's why their base MSRPs are so high. C'mon Dodge ... d'ya take Americans for idiots?
Sometimes the manufacturer's advertising is really problematic for us. I remember a national TV ad for the 1997 Toyota Tercel which advertised a price of $11180 with the words "starting at" in teeny little letters. Since I worked in a college town, we got a lot of Tercel shoppers, and many of them went home discouraged when they found nothing on the lot below $12700. And there was only a measly $600 profit in those things, so a big discount wasn't possible! What a cruel trick Toyota played on it's dealers. Imagine the futility of trying to convince a shopper to pay an extra $1500.
I know what you're thinking ... "Boo Hoo!" Yeah, well, I guess I lived through it ... and I sold plenty of Tercels anyway.
Two other fees appear on the invoice. Volkswagen does not have holdback unlike most other manufacturers, but there is a "floorplan interest reserve" of $92 and a "port prep fee" of $25. Neither of these charges appear on the invoice sites either. The total of these amounts in Northern California is $192, and that amount is added to the invoice only; there are no corresponding amounts added to the retail side.
Generally, invoice and MSRP information on the internet is precisely correct, and when it is slightly off, you can usually rest assured that the information is valuable insofar as it lets you now how much profit is in a car ... except for VW. It often gets in the way at the dealership when a customer asks us to present an offer of x-amount above invoice ... the customer often feels that we are tacking the $192 on arbitrarily or just to make more money, but they are legitimate charges.
There are dealers, however, who assess their own advertising fee. Strangely, it works pretty well for some dealers because it is easy to prove that we don't receive holdback. Some customers feel we have a right to charge where other dealers don't because none of our operating costs are subsidized by VW holdback. Well, we don't charge any extra here.
Hopefully this clears some things up for you.
Know the BOTTOM line before you agree on a deal.
Car_Man
Smart Shoppers / FWI Host
a 1.5% gross profit on a $39768 vehicle--especially a popular vehicle--is a great, and friends at Lincoln dealers told me this is extremely unusual ... at least here in Northern California.
You must REALLy be a friend of the dealer! That's a very cheap deal on a Navigator. $2,000-2,500 is what I understand the market to be on them.
It's a hot selling vehicle... And dealers dont have to sell them "cheap"
You got a hell of a deal on that truck!
Bill
They sell General Motors products. You can view their complete inventory including prices on line completely hassle free at:
http://www.autos-at-cost.com
If you see something you like, call and ask for Amy Shoemaker, she was our salesperson and very professional! Good Luck!
Abdo1...GM has advertising as part of their invoice...it's not a 'dealer additional' markup...you will pay for advertising.
Folks, ALL companies charge you for advertising...think about it for a minute. What if you went into the Gap to buy a shirt...and the cashier says... that'll be $35...PLUS 2.50 for our advertising...no they just say...that'll be 37.50....car manufacturers are different in that they show the charge separately, but it's all there.
abdo1 it's not a dealer added charge. it's a factory added charge. Same way destination is. Same way Ford charges for 4 gallons of gas (at like $2 a gallon if I recall!)
Bill
Has anyone else run into this fee? Is it legit or all dealer profit? - Thanks!
Second, the dealer better put the advertising fee into the invoice, because I flat won't pay it otherwise. Most dont, though, so when it comes time to buy an auto in a few weeks, I'll tell the dealer "no" when it comes to the ad fee.
Yeah, I know that many will say they must charge it. Well, if that's more important than a sale, then so be it. I live in a huge market (Houston) and I'm sure that I can find a dealership who will forego it. The dealer can eat the advertising it in their profit...and I don't care if it comes from their parts, repair or sales department. If they want to keep putting 10K ads in the Sunday paper, that's their choice (but I'll bet they dont have a problem coming up with the cash.)
This fee is not bogus. Dealer advertising is.
That is a cost of doing business.
Bill
Too bad the manufacturer has to bill the dealer--you would think that advertising is just a cost that they (mfg) have to incur. But I know, the way business is run, costs get passed on.
But, hey, anything is negotiable. I am sure that the dealer doesn't like the extra charge anymore than I would. And why shouldn't I have my own financial interest in mind and be businesslike, too?
If thats true, I don't mind paying it. Is it true that every new Nissan has an advertising fee? Or was the dealer just trying to con me into shelling out more cash? I'm a student with a limited budget, and this is my first car buying experience. Could someone with more knowledge about this please advise me?
Thanks!
1) it is indeed a legit fee. Many manufacturers have been adding them to the invoice of a vehicle much like destination (freight) charges or option costs. We dont like it and they are not on websites like Edmunds so may buyers who get their info from sites like this dont trust them as legit. Also, they can be very regional in nature and can come and go.
2) It's a "glom". The dealer is using your assumption of Possibility #1 as an exuse to get you for $300. This is a bit less likely but I wouldnt be surprised. You may try shopping it a bit.. if all the other dealers in the area pay it then it's likely to be legit.
Bill
informal survey would help us find out if there is
some common ground here. please list if you paid
advertising fees, what state you are in, and type
of vehicle and year. might also mention if the
dealer added on any other type of fees.
fees: none
state: Missouri
vehicle: 99 Grand Caravan
I am not sure if this is true in all cases.
Please see my post 167 under Dodge Grand Caravan Sport (Topic #803).
Also they vary so much and so often from time to time and state/region to state/region that it would be tough to do.. Dealer transfers..etc..
And as it's been said before.. you really DO pay for advertising.. Coke is what, 50% more than Store brand cola..??
Bill
My Volkswagens for instance ... Dealers to the southwest pay $75 for the San Francisco Bay Area Association Fee. Dealers to the northwest pay a $100 Sacramento Area Association Fee. Thankfully, we were neglected, so we don't pay any kind of fee except a $25 "Port Fee" which appears on all invoices on every VW in California.
Thanks for the info, it certainly makes it hard to make sure you know what your costs are and what isn't known until the last minute. I want teh dealer and salesperson to make a profit, but I don't want to give up a kidney to do it.
Thanks again.
You may try asking them.. or if you're shopping around see what the other dealers are at. If they're all, say, $400 or 2% of MSRP or Base Invoice.. then that should be a pretty good sign. And advertising is part of a dealer's invoice cost so while I suppose it's negotiable. It's as negotiable as any other cost. Best thing to do is try and get their bottom line (Plus TT+L) price.
Bill
As far as ordering a car for a customer goes.. It's just like most other cars in inventory.. It's just that that particular car is "specced" for you.
Bill
State: NY
Vehicle: Chevy Venture LS Extended
Purchased at $300 over invoice, no other fee's added.
blame them. not the dealer for the fee.
before you go off half cocked pehaps you should know what your talking about.
Rich
If it's itemized on the invoice, then it is a legitimate charge. Some dealers add their own fees for regional advertising or preparation ... in fact, you said that the dealer had in fact done that, but you didn't have any disgust for that, which I find peculiar.
In any event, I hope you can peacefully come to terms with reality ... a truck like that is certainly one to enjoy.
Why? Several reasons.
1) They generally vary quite a bit from region to region and time to time so they are very difficult to keep track of. Ex: Volvo charges $200 now in St Louis, But it was $400, but it's $0 in NYC Metro, but $500 in chicago..etc... But then the NYC Dealers dont get Value Pkg cars.. and they have less advertising co-op money..etc..
2) The manufacturers/banks wont residualize an ad fee on a lease. Since the MSRP is what the residual is based on...
3) This does NOT Pay for a dealer's advertising directly. While some dealers who are in co-op programs WILL get advertising money from the factory, they'll pay that ad fee regardless.
4) The manufacturer's attitude generally is (To the dealers) "Well, we dont care what they read on the internet, and it's not our problem that they know these invoice costs".
Ford, for example, charges for gasoline (4 gallons if I recall) on their invoices (At $2 a Gallon!) and that's not on the MSRP either.
Bill
I live in South Florida. A few years ago, Florida thought they could raise more money for the state by charging a luxury tax on expensive cars and boats. I don't remember the exact percentage, but any high priced vehicle was taxed, the thinking being that rich people would pay it. The exact opposite happened, the rich people didn't pay it, they stopped ordering boats and fancy cars. The boating industry almost went out of business. Car dealers ran ads claiming they would "eat" the tax. Of coarse, the tax was repealed.
I feel the same way about paying an Advertising Fee.
Next point that has me completely frustrated. I called my AutoByTel rep and told her my numbers from Edmunds. She told me there would be $250 over invoice plus a $199 dealer fee and thats it. I asked over and over if there were any other fees, any advertising. I even told her we were coming to her because the other dealer wanted to charge an advertising fee. Her answer was repeatedly no, no more fees. She lied to me by not telling me the advertising fees were "IN" the invoice, she knew it, and didn't let us know. Any AutoByTel rep or fleet manager knows the prices of the cars. When someone calls in on the phone, they know what the invoice price will be. This information was purposely withheld from me until the last minute.
Here's another problem. How do I know the advertising fee is Legit? How do I know I'm not being ripped off? I don't, until I come on this board and the news groups and talk to everyone. I called Dodge and didn't get an answer, they told me to call my local dealer and talk about it. So now I think I'm being ripped off. How do I know there may be gas charges? I don't, until I go to a dealer and see it. Then is it legit?
Most of you paid it because it was only a couple hundred. In my case, its not, its $525. And the dealer only offered to reduce the profit to 0 at the last minute when she knew the deal was falling thru. This is not how cars should be sold. And its too late at this point, the trust has been blown.
The Gas fee is part of the Destination fee and should not be broken out as a seperate fee.
The Advertising fees need to be handled a different way, add them into the base price and make it the same in all states. I'm sick of all the car commercials on radio/tv. So I'm not going to perpetuate them by giving a dealer money to keep doing it. I'm going to prove my point by not buying the vehicle until I do it with my numbers, with no surprises. If the AutoByTel reps want to continue, then they need to disclose advertising fees in the invoice when someone calls. Not when they are sitting in the office trying to match up the numbers.
I won't buy the car until I see all the numbers, and I know they are legit. Don't blame me for this, blame the car industry. I just gave my answers as to what I feel should be done.
We called the dealer above and cancelled, I can't trust her. Now its on to another, where I will personally fill out the order form with MY numbers, and make that my final offer. Of coarse, the dealer will say no, but eventually they'll come around. Win, Win, Win, I get the price I expected, the dealer gets 3% holdback, and the salesperson will get a perfect score on the review card.
More updates to come.
The big 3 car makers tell us that apx $1200-1400 per car built (varies per company) pays for nothing but health insurance for the car companies employees....
If we can eliminate that, since it dosnt do anything to add value to the car or to me as a consumer then it should go...why should I pay for the exployees health insurance?
I have read your posts sevreral times...the internet buying services are just what your looking for. they would be perfect to deal with you and your buying methods.
Rich
Rich
If the cars and trucks weren't advertised, how would you ever notice which one you want. See it pass you on the freeway? Walk into a Chevy dealership and say, "I saw a truck pass me on the freeway yesterday ... it was big and red with an extended cab ... I wondering if it was a Chevy. Here, let me draw what the front end looked like."
You pay advertising fees everytime you buy a carton of orange juice, but since the cashier at the grocery store never mentions an advertising fee, you don't think about it. Heck ... grocery stores even get "slotting allowances" which are similar to dealer holdback, but that's not paid much mind either.
Basically, the dealer messed up by accidentally omitting it from thier quote, but haven't they apologized? Accept the apology and buy the truck ... you're getting a great deal on a popular truck, made popular in large part by national advertising.
-Chris
At first it was the Chevy S-10, and I was doing research on it. Asked the wife about the Ford Ranger because of its outstanding performance record, wife said no, doesn't like its looks. Then my wife comes home one night and says, "I just saw the truck I want on the road, its a Dodge Dakota Sport". Yes, its her truck, instead of an SUV, people are buying trucks with 4 doors, because an SUV is basically a truck with a small back end. So I say, ok, I'll start looking, and off I went to the web. Once you see a vehicle you like, you start to notice them on the road more and more. Then you find out the vehicles in that same class and compare.
I didn't pick the dealer because of their ads. Maybe thats the case with most people who are not on the net, but with us, it was all because of seeing the truck on the road and the internet.
I picked the dealer that was closest to me on the assumption that I would bring the truck back to them for maintenance.
Ads are not what make me buy a vehicle. I buy when it is needed. I know where all the dealers are, and what is available. I think dealers over advertise, but they'll probably say no to this and bring out a bunch of stats to prove me wrong. Its almost as if the ads are there to prompt people into buying, it may work, but its overkill. With the internet, all of this will change. More people will do their research online, like me, so dealers don't have to advertise as much. But they don't realize this because the marketing people at radio/tv stations are probably telling them to do more, so they can make more money.
The car buying process needs to change. The problem is that the price on the vehicles start at MSRP for those who have no knowledge (walk ons). And for people who get the knowledge, its starts at Invoice and works its way up to a point where a deal can be made (me). With regular products (groceries), this does not happen, everyone is charged the same price. So whats the answer to buying cars? I don't have it right now, this would lauch another debate that probably can't be answered right now. But something needs to change, because there will be more internet buyers, and we'll know the prices and expect to match numbers when we visit a dealer.
Talk to you later.
I know because I work for a dealer group that includes Volkswagen, whose critically acclaimed commercials have probably been the singlemost important factor increasing new VW sales. Three times in as many days, I received emails from customers who wanted a new Cabrio on account of the fact that the new commercial (with four kids joyriding under a moonlit sky whilst a long-forgotten Nick Drake song plays) has so great affected them ... each said "I can't get that song out of my head."
Previous to this commercial, the Cabrio was one the only VW's that wasn't a hot seller. Now, customers are practically lining up for them, and it can be the weather because this didn't happen last year when there no Cabrio spots on TV. Now if they would only make a great commercial to help us sell EuroVans. Er, on second thought, I'm not sure that would help too much for that van.
Dodge spends money to get the word out about their trucks, and they have every right to reclaim that money. Heck, do you think UNICEF gives all of their donations to starving children without paying one cent for its television and print ads? In the business world, you've gotta pay to play, and the costs are passed on to the consumer.
Concerning dealer advertising, I think I agree with you ... dealers overadvertise, and much of the advertising is counterproductive to the buyer/seller relationship because most advertised price specials have the effect of creating expectations of drastic discounts available to any and all customers which in turn help create price-wars between dealers.
The vast majority of car shoppers will shop their local dealer first on account of proximity rather than advertising. However, since you didn't mention that the dealer asked for their own "regional advertising fee" (which is pure dealer mark-up charged by some dealers), that is not what we're discussing here.
Many people are turned off to car advertising that is high on hype, but the mere repetition is more effective than you will give advertisers credit for. Mere repetition is how top 40 hits are created out of songs that are otherwise soulless, uninspiring pablum or just plain sucky altogether. Repetition breeds familiarity, and for products such as cars, housewares, or recording artsits, that breeds product recognition, a key cog in achieving significant market share.
The increase in the number of shoppers who research car purchases on the internet--or even buy on the internet--will not do anything to diminish the cost of advertising. There is plenty of advertising on the internet, too, and it is quite expensive to place banners on sites with high traffic. Furthermore, TV will still be considered a much more effective avenue for advertising because it is subjective while the internet is more interactive. Basically, TV viewers, lulled into complacency and largely detached from critical thought, are more susceptible to advertising messages than people on the internet; people on the internet usually have information to find or people to meet, and pop-up banners are just obstacles that are X'd out more often than not.
Considering that you are not satisfied with top-down or bottom-up negotiating, I'm curious to know what ideas or solutions you have about the car-buying process.
Perhaps this debacle would be over for you if you were buying a Honda ... Hondas have base invoices plus destination charge ... the advertising fee is not itemized, but you can bet that it is in the bottom line.
Advertising really is something that is hardly worth mentioning.
Although why they can't just build the advertising fee into the invoice is beyond me...