Bucketboy, advertising charges are tacked on to the price of the vehicle by the manufacturer or regional advertising groups and have nothing to do with luxury tax charges.
OK I see what you are saying, Bucketboy. Hmmmm this is a good question. Unfortunately, I think that you are supposed to calculate the luxury tax using the $50,500 price, but I'm not sure. You should probably check with your area's Department of Motor Vehicles just to be positive.
In addition to the wholesale invoice price in the Edmunds book, does Chrysler charge an additional $300 to $400 per vehicle sold for its advertising campaigns? For instance, Edmunds wholesale invoice price is $10,000 on a new vehicle, and in addition to this price the dealer tacks an additional $400 for its advertising campaign that the dealer says goes back to Chrysler for its advertising. I have never heard of this before. Is this a legitimate cost? or is this a dealer ploy? I was under the assumption that all costs other than destination, state taxes etc. was built into the base invoice price?
Just offer list price minus advertising and whatever else you don't want to pay for. They'll make you a counteroffer. If they think they can sell the item with an additional fee for advertising (and whatever else you don't want to pay for), their counteroffer might not interest you much.
On the other hand, if it's not an item that's selling like hotcakes, and if you're serious and ready, and if the advertising fee is the only thing holding you back, I'll bet you can make it disappear. Show em a nice down payment to let em know you're not just there to kill time.
Talk about a great internal marketing solution to all those "pesky" consumers who now, thanks to Edmunds and others, have all of our pricing.
(I would not be in my current position if I had thought of this, but think about the possibility...better call Mulder and Scully!)
I should also stress that I made this up, I have no facts to back it up. Just experience as a corporate marketing professional that would have loved to come up with an idea like this... It's a good story.
Q from dealer to HQ: We can't gouge consumers anymore, so how can we be creative and make more money? It's not fair.
A from HQ: OK, why don't we give YOU an incentive to sell more cars. Here's how it will work: We'll create a 'slush' fund, called 'advertising fees and assessment charges.' Yeah, that's it. We'll charge you, the dealer the cost we determine -- this will help us advertise more, legitimately, while keeping budgets trim. You probably can pass it along to the customer. But, if you are a prize dealer -- and you'll want to be -- and you sell a certain quota of cars, we'll reward you by rebating an additional amount from the advertising and assessment fees bank, in addition to the standard holdback. The more cars you sell, the greater the rebate and the more money you make on cars you sell even at below cost. Everybody wins...we (HQ) get more advertising from the fees we charge you. You the dealer are unaffected if you pass it on to the consumer (after all, it'll be on your invoice!). And you the dealer stand to gain big if you sell more cars, which by the way makes us happy, too.
i am currently shopping around for a '98 GMC Jimmy. i went to the local dealer who works with autovantage and rec'd a quote on a Jimmy....much to my surprise the salesman added on $277.51 to the price he quoted me for "advertising costs". i thought that was ridiculous. why should the consumer pay for advertising....as if they don't jack up their prices enough to cover this already !!! so....should i just make some allowance for the holdback (which @ 3% would be $777.15) and try to recover the "advertising" fee that way ? this new car-purchasing thing is new to me .
I wouldn't get so bogged down in the details of the price...look at the final figure and bargain down from that...doesn't matter if the dealer's price includes advertising or pizza delivery...you know the basic dealer cost and options, subtract whatever incentives and rebates are in order, add destination charges and a fair profit for the dealer. Advertising costs are often shown in the invoice, and are quite legitimate, but add-on advertising may or may not be so legit...but regardless, just set yourself a target price that's realistic for both parties and go for it.
Advertising fes are just another way to rip off the consumer. We should not have to pay for the manufacturer/dealers cost to do business. They would be able to save a fortune if they cut down on the advertising or limited it to just giving the dealer location and the makes/models they sell without all the bogus "deals" and prices. Does anyone really bother to read the dealer ads with all the fine print? They take out color full page ads in newspapers and tease people with all kinds of low prices that are impossible to get. Then they want us to pay for it! I got a laught the other day. A Nissan dealer had an ad for a new 1999 Altima GXE. The price was super low with an asterik*. Untill you hunted through all the fine print at the bottom of the page and found out the details you discovered that the price was only good if you financed through the dealer at 9.9% apr and financed at least $10,000 for at least 3 yrs! What a joke!
True, these charges are an attempt to get reimbursed by the buyer for things that they've already been reimbursed for, or will be reimbursed for, by the distributor; or for expenses that are simply, as they say, "the cost of doing business".
You could just as well deduct from the bill all of your expenses incurred during your car search: fuel, time, aggravation,... Take off an extra $25 for every wad of chewing gum you see in the dealer's lot; $125 if you step on one. $50 for every paper towel on the floor in the men's room (could have saved you a bundle at my last place of employment).
It doesn't matter how they list their bogus charges. Just figure out what the car is worth in today's market and offer it. If they decline your offer, say thanks, I'll see ya.
Guys, lets be real here! When you buy a six pack of budweiser, $1.50 of that $3.00 is probably to pay for advertising! The only difference in buying a car is that at least you know how much the advertising costs. As with any retail item, the price covers manufacturing, distribution, advertising, and retailer profit. Why would cars be any different. I think if you go into a dealership with a realistic approach: I want a good deal, but the dealer deserves to make a reasonable profit as well, you'll be much better off. If I can buy a car for $500 over invoice, I'm done. It's not worth my time or aggravation to spend another couple days trying to save another 1-2 hundred dollars that amortized over the cost of the loan is about $2 a month.
I can see where you both are coming from, sunbumbill and C13. But I think a lot of the problem people have with the advertising fee is simply because it's listed separately, instead of being just part of the invoice price. If it were part of the invoice, we'd never know about it. Let me illustrate my point with the six-pack of beer; I hope it's not too much of a stretch. How would we feel if we walked into the supermarket to buy our six-pack, and saw a sticker on it that looked like this:
I think we'd be more than a little distracted! Certainly I'm a little tongue-in-cheek here, but just my opinion. -- Now when I paid 8-9% over invoice for my first new car (not a hot seller at all; I just got rooked), you can bet they didn't mention advertising. However, if my next deal is "slimmer", they may bring it up. Maybe it's like you say, sunbumbill: as long as the out-the-door price is reasonable compared to what other "educated" shoppers are paying in the free market, I shouldn't worry. Nevertheless, it seems to me that until carmakers simply absorb the advertising into the invoice price, we consumers will continue to complain, and the reason we do so is, if not defensible, certainly understandable.
It costs manufacturers a lot more than the $200 or so advertising fee that dealers try to pass on to consumers to advertise their vehicles. There is already hundreds and sometimes even thousands of dollars of advertising baked into the cost of every vehicle. I believe that General Motors spends more money on advertising than any other company in the United States! That's some serious cash. Even though the manufacturer only passes a small portion of these expenditures on to dealers in separate charges, the fact remains that we are all going to pay for their advertising one way or another.
Even with the less-filling discount, though, I'll stick with the premium product. I don't want just to get from point A to point B. I want to savor the quality and enjoy the ride.
I have ordered a vehicle with a price of $400 over dealer invoice the dealer now wants to charge also a $450 advertising fee, assuming I agree that I should pay this is this fee something that should also be residualized? After all even the delivery charge is residualized. thanks
Tedklein, you don't have to pay the advertising fee if you don't want to. You can always shop around and see if you can get a better deal at another dealership. I don't think that the advertising fee can be residualized, unless the dealership pays this fee on its own and just increases the cost of your car by $450. The delivery charge is essentially part of the price of the car, so I can see why that can be.
I supposedly had a $300 deal until I went in to make my order. Suddenly there was approx. $245 advertising fee. He and I compromised and I ended up with a $445 deal. Overall I originally wanted a $500 deal so I was pretty pleased.
Car_Man: I'm a bit confused on the advertisment fee. Can this fee be negotiated.Is it ligit for dealers to charge you this extra fee? Can an upside down be negotiated, and can it effect the trade in? Thanx you, William
Salvation, dealers often do have to pay advertising charges for the vehicles that they sell. However, this does not necessarily mean that you have to pay them. Dealerships frequently waive these charges or don't even mention them at all. I generally advise shoppers to look at the big picture rather than worrying about all of the little fees that dealers tack on for extra profit. Find the dealership that is going to give you the car that you want for the lowest total cost, including all of the fees that they add on.
The price of your used vehicle can always be negotiated. If you are upside down on your current vehicle you may want to look into selling it privately. This is usually the best way to get the most that you can for your used vehicle. If you sell it on your own you probably won't be as upside down as if you had traded it in.
The term residualize is usually used in association with optional equipment and leasing. For instance, if the lending institution that you are leasing your vehicle through allows you to residualize a spoiler this means that you will only have to pay for the portion of the spoiler that you use rather than purchasing the entire thing. I'm not really sure how the true definition of residualizing something applies to an advertising fee though.
I was lucky enough to find a dealer willing to let me have a copy of their invoice for the car I was interested in buying. It was a '97 leftover and the dealer was eager to sell the car, but not too eager. They tried to charge extra for the ad and floor (showroom space) fees! I ignored these fees, made them an offer and wouldn't budge even one dollar. I flat out refused to pay for those extra charges and walked out into the parking lot while the salesman talked with his manager. Not looking anxious always helps. I have never been so well informed when buying a car and having that info helped me to secure a good deal. The sticker price on the car was $27,000+ and I got the car for an even $23,000 which was about $500 below dealer invoice.
Advertising fees are a crock. Dealerships charge you this fee in order to reap yet more profit, and they easily can achieve this due to the fact that consumers often fail to look at the big picture once they are satisfied with the agreed price of the automobile.
Dealerships are able to write these expenses off, take it from me because I'm an accountant, so by you paying these fees that just increases their profit line because they will include these costs as a part of business.
C'mon get a grip. The "advertising" expense is just a gimmick. It's about as valid as the dealers expense for their private planes, multiple homes, yachts, etc. You didn't go to their dealership because of advertising, you went because of the info you found on the web.
I think if some dealer really wants to charge you an advertising expense, make the dealer prove that such advertising brought you in. I know the first thing I toss out of the Sunday paper is the auto ads, and I change the channel when car commercials come on.....
Hsup, destination charges are not fake fees that are fabricated by dealerships in order to generate additional profit. All manufacturers charge their dealerships for destination. Even though it is slightly deceptive that this charge isn't included in the base MSRP of vehicles, this is still a legitimate charge.
Hate to break this to you Hsup, but all dealerships pay a specified destination fee to the manufacturer to ship the car to the dealership. As long as you got what you think is a good deal, why would you care about dealers advertiseing fees. Maybe if you are within a few hundred of your target price, you might bring it up and ask them to waive the charge (they may very well). But if one dealer offers you a price of invoice plus $200 advertising fee plus $200 profit and another offers you a price of $800 over invoice and no advertising fee, I would not quibble over whether the 1st dealer called it advertising as long as his (or her) deal was better.
By the way, I do not think more regulation is the way to go. More often than not (almost always), more regulation tends to drive up prices. You can't blame a dealer for trying to get as much profit as he can. However, armed with his pricing structure, you can use this information to negotiate a better deal.
Ultimately, the market will decide the price of the vehicle anyway as certain vehicles you may be able to get near (or even below) invoice where the dealer will be able to get more of a premium for other in demand vehicles.
Can anyone explain why these "advertising fees" suddenly appeared only in the last year or so? They never existed before, so why now? What are dealers and automakers doing different now? It's a rip off plain and simple. Perhaps dealers don't like the fact that more and more consumers are armed with invoice prices and inside information thanks to websites like Edmunds, Autovantage, Car Point, etc. So they come up with these extra fees that never existed before to combat that. Maybe consumers should charge the dealers for the name plates they put on their cars and provide free advertisement for the dealership every time they drive around. Most auto advertising is a waste of money anyway. Do the dealers really think that consumers believe those large full page newspaper ads and prices and gimiks. The amount they would save if they stopped advertising like that would feed a country with the population of China for a decade or more.
Tommyr, I actually think that you had a valid point in your post when you mentioned that internet pricing services, like Edmunds, have something to do with the recent popularity of advertising fees. The fact of the matter is that dealerships and manufacturers have always paid for advertising. This is why General Motors spends more money on ads than any company in the United States. As on-Line price guides have become increasingly popular, the knowledgeable consumers who use these sites have been able to purchase cars and trucks for less money. This erosion of profit has forced dealerships to separately break out and charge consumers for items such as advertising, which were once easily paid for by the larger profits that they were getting on every sale. This is just my personal theory, but it seems to make a whole lot of sense.
I purchased 2 new car within the last few months and was not charged "advertising" fees. I bought two very popular and heavily advertised cars ('98 Accord & '98 CR-V), both for more than $2000 off the MSRP. The profit on the Accord was barely $100 and they actually lost money on the CR-V (way under invoice). But both times they never charged me "advertising" fees. They never even mentioned it.
But maybe they hid those fees in the aftermarket alarms I bought and in higher than usual finance rates. I'm sure most people would fight over the advertising fee if it was directly mentioned rather than being "hidden". I would have fought it if they weren't so sneaky. My response would be "but advertising fees are the cost of doing business and it's not my responsibility!" Oh well.....
In response to ad fees, I only have to say that in any business venture advertising is the cost you have to pay to drum up business ANYWHERE. This cost is passed on to the consumer of course but it is hidden in the actuall cost of the product ALWAYS so if they tell you they have to charge you an advertising price on top of your so called good deal, take my advice and WALK AWAY!!!!!
I don't think I would personally walk away from a deal because an advertising fee was posted. If the total deal is good, it's just another number to deal with, I don't particularly care if it's for "Owner's Hot Tub Repair"...what's the difference, in fact, between a deal that's $500 over invoice, or one that's $200 over invoice + $300 advertising fee? Why should one appeal any more or less than the other?
One possible explanation for the separate charge for the advertising fee is as a negotiating tactic called "Nibbling". You bargain, and think you have reached a deal. Then the salesman whips out this extra charge, and you start having to negotiate again. The salesman has not introduced anything for which you are gaining value (such as window tinting or a car alarm). However, you are now forced to bargain some more, and many people end up coughing up more money. As a bargaining tactic, it is employed to make sure there wasn't any "money left on the table".
Does anyone know the name and address of the Texas Regional Dodge sales manager? I just want to let him know that I won't be buying a Dodge because of this stupid practice. If enough people complain, it may make a difference.
The dealers may not admit it but they do receive money from the manufactures for advertising. The proof is in a GM press release just a couple of days ago announcing plans in the upcoming year of changing the way they pay dealers for advertising.Currently they pay 1% of the msrp. This comes directly from GM's own mouth.
As long as the Durango is selling more than they are building (they might be close to the point where dealer inventories start to fill up, I haven't looked close since I got low-balled trying to tracde my wife's Tahoe for one...wound up buying and extended warranty on the Tahoe, it's a great SUV) you will have to put up with this crap.
If you go back in a while, you can insist that they take off all the "adds" and give you a discount. If you want something while it's still new and hot, you will pay the price!
The dealer accepted my offer today for a special order Silverado. My target was 2% over invoice, no fees. Since the vehicle is not in stock, there is no actual "invoice" for him to show. So instead, he does a computer print out. On the left column is MSRP, on the right is Invoice. The numbers are exactly as the Edmund but the bottom line was different by $270. This was shown as an adjustment to the invoice column, but not the MSRP. I asked what it was, they explained it was advertising that they have to pay to the manufacturer, and gets passed on to the consumer. It was then I remembered reading about it at Edmund, but couldn't remember if had to accept the charge or not. So what the heck, I objected, and they took it off. In the end, the charge turned out to be negotiable, just like everything else. I was prepared, but this still caught me off guard.
I as well have been hit by the "Advertising Charges". This is only the second car I have purchased new so am still a novice at this...
The car in question is a Toyota 4Runner SR5 4x4...
The dealers first offer was invoice + $1,200. I told him that I prefered to pay 1% above invoice so we met in the middle at 3%. I figured that the 4Runner is probably fairly popular and thus 3% was a fair profit.
However he had previously said that Toyota had a 2% advertising charge that went directly to the dealer and was non negotiable. I did not have the facts to be able to question this charge so I said I would investigate and let him know. After havin g read this thread I have some questions...
1. Is 3% reasonable for a 4Runner?? I am probably committed to 3% (morally not legally) as this is what we agreed on.
2. However, if the advertising charge is just a ploy to trip a novice like myself I do not think that I am committed to pay this morally or legally. Especially since the profit margin of 3% is fairly adequate. What do others think??
I am starting to think that 3% above invoice is adequate regardless of what the dealer wants to call it (profit, advertising fee, pizza delivery etc). I would appreciate any comments.
My approach is to offer a higher profit margin to begin with, but I don't want to hear about any other fees. By the same token, I won't hassle them about holdback, to which I figure they're entitled.
If you said you'd investigate and let him know, it seems to me that you're not bound to accept the deal even ethically, let alone legally. You could say "thanks but no thanks, advertising's gonna have to come out of the 3% profit margin or I'm afraid the deal's off", or you could offer to split it, giving him invoice plus 4%. Even if the negotiation ends up at 5%, as he would like, to me that's not terrible, though it also might not be necessary.
I don't know what the market's like for 4Runners. Probably fairly hot. 3% over invoice sounds like it might be a pretty good deal. '98 or '99?
Yeah, as I say, to me a total of 5% over invoice sounds decent. Others here might disagree. If it were me, I'm sure I'd be willing to go that high even if there's the possibility of getting it a little cheaper someplace else.
If they've treated you well so far, I'd offer them the split (4% over), then when they say that's impossible (which you should expect them to say), either say "Sorry. I'm pretty sure I can get that from another dealer." or continue dealing with them. It'll fall somewhere between 4 and 5, and that ain't bad, as long as you don't then proceed to throw away money on aftermarket and financing.
If you haven't already arranged your own financing, you should at least get pre-approved for the lowest rate you can from a bank. Then the dealer may beat or may not. Either way you're covered. Otherwise, the dealer might try to make back on finance what they lost in the deal.
So I called toyota to verify these advertising charges and they told me that there are no such charges that originate from the manufacturer and that this must be a dealer charge. Good ploy if you ask me... It makes a lot of sense for the dealer to attempt to add a quick two percent to the invoice price before any negotiation has even begun!
I also called another dealer who confirmed that this is just one trick a dealer can use to hide profit and make the deal look better than it actually is.
I agree with some previous comments in this thread from fisher100 that you should not loose sight of the 'big picture'. After all, it's the $$ that matter rather than what the dealer cares to label each individual charge.
I just tried to buy a Chrysler 300M today from a dealer that I have bought 3 vehicles from in the past. They tried that advertising fee deal to the tune of $440, plus $85 doc. fee, plus $ 20 for owner loyalty? plus $ 9 for gas (7 gallons). I told them that I had bought 3 vehicles from them for invoice and a trade-in that was over book and had never paid any of the above fee's so I saw no reason to start now. Their final deal was about $300 over invoice and straight trade-in for my vehicle and I walked. Guess I'll have to shop around a little, never felt like I had to in the past because their first offer was always lower than what I was willing to pay.
When you say you called "Toyota" what do you mean? Toyota motor sales in Torrance California? Toyota's 1-800 customer service number? There IS an advertising charge to the dealer that shows up on the invoice, this is know as TDA for Toyota Dealers Advertising. However as was posted before your only concern should be with the bottom line. I have called Toyota's Customer Service number in California and talked to a few persons who had no idea what I was talking about. (Called to inquire about the new PLATINUM EDITION AVALON) They eventually called me back to tell me to call a dealer in my area. I told them "I am a dealer in my area! I have these preview brochures on this car that customers are asking what it's going to retail for and I can't give them an answer as you are in the blind as much as we are" Sorry to run off on a tangent, 3-5% over invoice on a 4Runner SR5 is a heck of a deal. don't know what area of the country you are in but here at my store we sell those for no more than 1000-1500 off MSRP.
The toyota number I called was the 800 number that can be found on www.toyota.com. I also called a second car dealer (both dealers are located in Connecticut) for verification of these charges and he was also skeptical about them.
I guess the problem I have is that this particular car salesman at best attempted to mislead me (my wife was present at the time and describes his statement as an outright lie!) by stating that the advertising charge was separate from dealer profit and was non negotiable. I think that he probably thought that this way he could sell me the vehicle at 5% above invoice but disguise it as 3% above invoice thus I would think I had a great deal... Just my personal theory.
Anyway, I decided to take my business elsewhere. Tonight I signed for a fairly loaded Toyota 4Runner SR5 for invoice + 4% with no additional charges for advertising etc. A great deal I think.
Just as with any other business person who attempts to deceive me, I'm generally inclined to go ahead and do business anyway. The sale is not my reward to him for being a nice guy, even though he may try to portray it that way. If service was good, bad or indifferent, I'll just say so in my survey.
I am in the market for a Dodge 3500 Quad Cab. My location in LA and I too encountered the "advertising fees" add-on. Plus: fuel-diesel 2 gallons, $9; customer one owner loyalty mailing, $20; etching (applying vin # to glass areas, $119. I was actually told by one of the salesmen at the dealership that etching only costs $10 but he had to charge me the $119 because they had to get the truck from another dealership and that is what the dealership was charging them.
I balked at the advertising fees and other add-ons but was told that they had to pay it so they passed it on to the customer. Does anyone know where in LA you can get a good deal on these trucks and not be charged these outrageous fees for items we are not responsible for? I offered them 3% above invoice but they held out for 4%, which I agreed to until they tacked on the above charges.
I agree with the above consensus, that these charges are the automakers/dealers way of getting around internet pricing. We as consumers need to band together and object by not giving our business to these dealers. If we do business with these dealers, the internet pricing will do us no good because the dealers/automakers are getting what they want anyway
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Haggle haggle haggle. But you only have power when you are ready to buy, not "just getting a quote."
When price is no longer an issue, ask for a freebie! But by all means, get something better than those "floor mats" that they always give.
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For instance, Edmunds wholesale invoice price is $10,000 on a new vehicle, and in addition to this price the dealer tacks an additional $400 for its advertising campaign that the dealer says goes back to Chrysler for its advertising.
I have never heard of this before. Is this a legitimate cost? or is this a dealer ploy? I was under the assumption that all costs other than destination, state taxes etc. was built into the base invoice price?
Just offer list price minus advertising and whatever else you don't want to pay for. They'll make you a counteroffer. If they think they can sell the item with an additional fee for advertising (and whatever else you don't want to pay for), their counteroffer might not interest you much.
On the other hand, if it's not an item that's selling like hotcakes, and if you're serious and ready, and if the advertising fee is the only thing holding you back, I'll bet you can make it disappear. Show em a nice down payment to let em know you're not just there to kill time.
(I would not be in my current position if I had thought of this, but think about the possibility...better call Mulder and Scully!)
I should also stress that I made this up, I have no facts to back it up. Just experience as a corporate marketing professional that would have loved to come up with an idea like this... It's a good story.
Q from dealer to HQ: We can't gouge consumers anymore, so how can we be creative and make more money? It's not fair.
A from HQ: OK, why don't we give YOU an incentive to sell more cars. Here's how it will work: We'll create a 'slush' fund, called 'advertising fees and assessment charges.' Yeah, that's it. We'll charge you, the dealer the cost we determine -- this will help us advertise more, legitimately, while keeping budgets trim. You probably can pass it along to the customer. But, if you are a prize dealer -- and you'll want to be -- and you sell a certain quota of cars, we'll reward you by rebating an additional amount from the advertising and assessment fees bank, in addition to the standard holdback. The more cars you sell, the greater the rebate and the more money you make on cars you sell even at below cost. Everybody wins...we (HQ) get more advertising from the fees we charge you. You the dealer are unaffected if you pass it on to the consumer (after all, it'll be on your invoice!). And you the dealer stand to gain big if you sell more cars, which by the way makes us happy, too.
How about that, guys?
so....should i just make some allowance for the holdback (which @ 3% would be $777.15) and try to recover the "advertising" fee that way ?
this new car-purchasing thing is new to me
I wouldn't get so bogged down in the details of the price...look at the final figure and bargain down from that...doesn't matter if the dealer's price includes advertising or pizza delivery...you know the basic dealer cost and options, subtract whatever incentives and rebates are in order, add destination charges and a fair profit for the dealer. Advertising costs are often shown in the invoice, and are quite legitimate, but add-on advertising may or may not be so legit...but regardless, just set yourself a target price that's realistic for both parties and go for it.
Does anyone really bother to read the dealer ads with all the fine print? They take out color full page ads in newspapers and tease people with all kinds of low prices that are impossible to get. Then they want us to pay for it!
I got a laught the other day. A Nissan dealer had an ad for a new 1999 Altima GXE. The price was super low with an asterik*. Untill you hunted through all the fine print at the bottom of the page and found out the details you discovered that the price was only good if you financed through the dealer at 9.9% apr and financed at least $10,000 for at least 3 yrs! What a joke!
True, these charges are an attempt to get reimbursed by the buyer for things that they've already been reimbursed for, or will be reimbursed for, by the distributor; or for expenses that are simply, as they say, "the cost of doing business".
You could just as well deduct from the bill all of your expenses incurred during your car search: fuel, time, aggravation,... Take off an extra $25 for every wad of chewing gum you see in the dealer's lot; $125 if you step on one. $50 for every paper towel on the floor in the men's room (could have saved you a bundle at my last place of employment).
It doesn't matter how they list their bogus charges. Just figure out what the car is worth in today's market and offer it. If they decline your offer, say thanks, I'll see ya.
Budweiser Light, 6-pack $0.80
Aluminum cans @ $0.10 $0.60
Polyethylene can holder $0.29
Wide-mouth openings @ $0.05 $0.30
Advertising $0.85
Cashier's salary fund $0.35
ADM $0.25
** "LESS FILLING" DISCOUNT ** -$0.45
-------------------------------------
MSRP $2.99
I think we'd be more than a little distracted! Certainly I'm a little tongue-in-cheek here, but just my opinion. -- Now when I paid 8-9% over invoice for my first new car (not a hot seller at all; I just got rooked), you can bet they didn't mention advertising. However, if my next deal is "slimmer", they may bring it up. Maybe it's like you say, sunbumbill: as long as the out-the-door price is reasonable compared to what other "educated" shoppers are paying in the free market, I shouldn't worry. Nevertheless, it seems to me that until carmakers simply absorb the advertising into the invoice price, we consumers will continue to complain, and the reason we do so is, if not defensible, certainly understandable.
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Even with the less-filling discount, though, I'll stick with the premium product. I don't want just to get from point A to point B. I want to savor the quality and enjoy the ride.
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I'm a bit confused on the advertisment fee. Can this fee be negotiated.Is it ligit for dealers to charge you this extra fee?
Can an upside down be negotiated, and can it effect the trade in?
Thanx you, William
What is meant by the term residualize when applied to dealer advertising?
The price of your used vehicle can always be negotiated. If you are upside down on your current vehicle you may want to look into selling it privately. This is usually the best way to get the most that you can for your used vehicle. If you sell it on your own you probably won't be as upside down as if you had traded it in.
The term residualize is usually used in association with optional equipment and leasing. For instance, if the lending institution that you are leasing your vehicle through allows you to residualize a spoiler this means that you will only have to pay for the portion of the spoiler that you use rather than purchasing the entire thing. I'm not really sure how the true definition of residualizing something applies to an advertising fee though.
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Dealerships are able to write these expenses off, take it from me because I'm an accountant, so by you paying these fees that just increases their profit line because they will include these costs as a part of business.
Chris
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By the way, I do not think more regulation is the way to go. More often than not (almost always), more regulation tends to drive up prices. You can't blame a dealer for trying to get as much profit as he can. However, armed with his pricing structure, you can use this information to negotiate a better deal.
Ultimately, the market will decide the price of the vehicle anyway as certain vehicles you may be able to get near (or even below) invoice where the dealer will be able to get more of a premium for other in demand vehicles.
Your Co-Host
But maybe they hid those fees in the aftermarket alarms I bought and in higher than usual finance rates. I'm sure most people would fight over the advertising fee if it was directly mentioned rather than being "hidden". I would have fought it if they weren't so sneaky. My response would be "but advertising fees are the cost of doing business and it's not my responsibility!" Oh well.....
One possible explanation for the separate charge for the advertising fee is as a negotiating tactic called "Nibbling". You bargain, and think you have reached a deal. Then the salesman whips out this extra charge, and you start having to negotiate again. The salesman has not introduced anything for which you are gaining value (such as window tinting or a car alarm). However, you are now forced to bargain some more, and many people end up coughing up more money. As a bargaining tactic, it is employed to make sure there wasn't any "money left on the table".
$525 National Advertising
$350 Regional (Houston) Advertising
$ 20 One-time owner Loyalty Mailing
Does anyone know the name and address of the Texas Regional Dodge sales manager? I just want to let him know that I won't be buying a Dodge because of this stupid practice. If enough people complain, it may make a difference.
money from the manufactures for advertising.
The proof is in a GM press release just a couple of days ago announcing plans in the upcoming year
of changing the way they pay dealers for advertising.Currently they pay 1% of the msrp.
This comes directly from GM's own mouth.
As long as the Durango is selling more than they are building (they might be close to the point where dealer inventories start to fill up, I haven't looked close since I got low-balled trying to tracde my wife's Tahoe for one...wound up buying and extended warranty on the Tahoe, it's a great SUV) you will have to put up with this crap.
If you go back in a while, you can insist that they take off all the "adds" and give you a discount. If you want something while it's still new and hot, you will pay the price!
Don
I as well have been hit by the "Advertising Charges". This is only the second car I have purchased new so am still a novice at this...
The car in question is a Toyota 4Runner SR5 4x4...
The dealers first offer was invoice + $1,200. I told him that I prefered to pay 1% above invoice so we met in the middle at 3%. I figured that the 4Runner is probably fairly popular and thus 3% was a fair profit.
However he had previously said that Toyota had a 2% advertising charge that went directly to the dealer and was non negotiable. I did not have the facts to be able to question this charge so I said I would investigate and let him know. After havin g read this thread I have some questions...
1. Is 3% reasonable for a 4Runner?? I am probably committed to 3% (morally not legally) as this is what we agreed on.
2. However, if the advertising charge is just a ploy to trip a novice like myself I do not think that I am committed to pay this morally or legally. Especially since the profit margin of 3% is fairly adequate. What do others think??
I am starting to think that 3% above invoice is adequate regardless of what the dealer wants to call it (profit, advertising fee, pizza delivery etc). I would appreciate any comments.
Thanks,
KiwiKen.
My approach is to offer a higher profit margin to begin with, but I don't want to hear about any other fees. By the same token, I won't hassle them about holdback, to which I figure they're entitled.
If you said you'd investigate and let him know, it seems to me that you're not bound to accept the deal even ethically, let alone legally. You could say "thanks but no thanks, advertising's gonna have to come out of the 3% profit margin or I'm afraid the deal's off", or you could offer to split it, giving him invoice plus 4%. Even if the negotiation ends up at 5%, as he would like, to me that's not terrible, though it also might not be necessary.
I don't know what the market's like for 4Runners. Probably fairly hot. 3% over invoice sounds like it might be a pretty good deal. '98 or '99?
Thanks,
KiwiKen.
If they've treated you well so far, I'd offer them the split (4% over), then when they say that's impossible (which you should expect them to say), either say "Sorry. I'm pretty sure I can get that from another dealer." or continue dealing with them. It'll fall somewhere between 4 and 5, and that ain't bad, as long as you don't then proceed to throw away money on aftermarket and financing.
If you haven't already arranged your own financing, you should at least get pre-approved for the lowest rate you can from a bank. Then the dealer may beat or may not. Either way you're covered. Otherwise, the dealer might try to make back on finance what they lost in the deal.
So I called toyota to verify these advertising charges and they told me that there are no such charges that originate from the manufacturer and that this must be a dealer charge. Good ploy if you ask me... It makes a lot of sense for the dealer to attempt to add a quick two percent to the invoice price before any negotiation has even begun!
I also called another dealer who confirmed that this is just one trick a dealer can use to hide profit and make the deal look better than it actually is.
I agree with some previous comments in this thread from fisher100 that you should not loose sight of the 'big picture'. After all, it's the $$ that matter rather than what the dealer cares to label each individual charge.
Thanks,
KiwiKen.
Sorry to run off on a tangent, 3-5% over invoice on a 4Runner SR5 is a heck of a deal. don't know what area of the country you are in but here at my store we sell those for no more than 1000-1500 off MSRP.
: )
Mackabee
The toyota number I called was the 800 number that can be found on www.toyota.com. I also called a second car dealer (both dealers are located in Connecticut) for verification of these charges and he was also skeptical about them.
I guess the problem I have is that this particular car salesman at best attempted to mislead me (my wife was present at the time and describes his statement as an outright lie!) by stating that the advertising charge was separate from dealer profit and was non negotiable. I think that he probably thought that this way he could sell me the vehicle at 5% above invoice but disguise it as 3% above invoice thus I would think I had a great deal... Just my personal theory.
Anyway, I decided to take my business elsewhere. Tonight I signed for a fairly loaded Toyota 4Runner SR5 for invoice + 4% with no additional charges for advertising etc. A great deal I think.
Thanks,
KiwiKen.
I am in the market for a Dodge 3500 Quad Cab. My location in LA and I too encountered the "advertising fees" add-on. Plus: fuel-diesel 2 gallons, $9; customer one owner loyalty mailing, $20; etching (applying vin # to glass areas, $119. I was actually told by one of the salesmen at the dealership that etching only costs $10 but he had to charge me the $119 because they had to get the truck from another dealership and that is what the dealership was charging them.
I balked at the advertising fees and other add-ons but was told that they had to pay it so they passed it on to the customer. Does anyone know where in LA you can get a good deal on these trucks and not be charged these outrageous fees for items we are not responsible for? I offered them 3% above invoice but they held out for 4%, which I agreed to until they tacked on the above charges.
I agree with the above consensus, that these charges are the automakers/dealers way of getting around internet pricing. We as consumers need to band together and object by not giving our business to these dealers. If we do business with these dealers, the internet pricing will do us no good because the dealers/automakers are getting what they want anyway