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Advertising Fees
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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.
Your Co-Host
Your Co-Host
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.
Your Co-Host
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.
Your Co-Host
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.
Your Co-Host
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
Your Host
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