D & H Charges Dealer Gouging or Fair Practice

[asp_125]

The profit is in used cars. The wholesale or auction price is probably 50-60% of what they can sell it for, even taking into account the reconditioning cost. I shopped my used car around before selling it privately: dealers, wholesalers, brokers all offered way less than blue book.

[Kristian]

There seems to be confusion between profit and margin(mark up).

I've been around the car business a long time. $20000 profits were a lot like Bigfoot. Everyone has heard about them, but no one has really seen them. Exceptions being one of a kind or exotic units.

[vort3xr6]

The profit is in used cars. The wholesale or auction price is probably 50-60% of what they can sell it for, even taking into account the reconditioning cost. I shopped my used car around before selling it privately: dealers, wholesalers, brokers all offered way less than blue book.

I wish you were right, but since supply shrunk so much in New Cars, Used Car auction prices are through the roof. A clean carfax vehicle will usually auction for about 90-95% of blue book.

[Ghosty]

For instance. 2 days ago this dumbass comes into our Toyota Dealership. He says he "knows" we have $10,000 in rebates and profit built into a brand new Sienna. He also says he "knows" Toyota gives us $5,000 in hold back. So he demands that we sell him a brand new Sienna for $15,000. The sad part is we get this ALL the time. Then the consumer goes online and BLASTS us for not being "up front" and lying to them.

Wow, now that guy has just thrown common sense out the window. I would hate to be a car salesman. I'd have to work at Saturn where there is no haggling, because I'm too nice, and I won't knowingly try to rake people, heheh.

My roommate went through the training program at Go Honda in Westy. She quit when it became apparent they were teaching all the new salespeople to knowingly deceive customers in any way possible to make profits. She said she just couldn't live like that, making money off people through deceptive practices. Even if it was totally legal. Plus she said most of her co-workers were your stereotypical "creepy sleazy used-car salesmen" types, lol!

[salsashark]

I wish you were right, but since supply shrunk so much in New Cars, Used Car auction prices are through the roof. A clean carfax vehicle will usually auction for about 90-95% of blue book.

Here is an example.



We appraised this 2006 Toyota Tacoma for trade in.
This tool tells us that the average Denver market price of this year, model, and trim level, is $20,904.
It also tells me the average blue book for this car is $20,375.
Below that it tells me the auction statistics...
The national auction average is $13,121, but the Denver Auction prices are $17,750.
Keep in mind we have to put an average of $2,000 in reconditioning, and attempt to make a profit.

So with the Denver market value, I would have offered this person $16,500 for the trade in, and if they started whining, I would bump it up to $17,000 to "cancel out D&H".

So, as a realistic and competent consumer, where can I go to get an actual idea of what I could get for trade ins? Obviously, I could go out to KBB, NADA or Edmunds. They give values for trade ins. When I read this, I would assume that I could expect to see a number somewhat close to this. Yet, go into a dealer and they come back with something quite different.

Looking at the screenshot you provided, it would appear that NADA states the trade in value to be 20sh, auction value being between 13 nationally and 17 locally. It also shows a retail value of 23. So, giving a 2K reconditioning (which blows me away because if the vehicle is in decent shape it doesn't cost 2K to shampoo the interior and do an oil change) and a 7% profit margin, I would think the trade in would be around 19. Yet, you stated you offered 16.5 with a bump of 500 (for the whining).

So for argument's sake, the owner says ok and you give them 17000, spend the full 2000 for reconditioning and sell it for the average retail of 23000. That's not 7%, it's closer to 21%. Now you've stated that used inventory is low, thus commanding a premium. Are you going to list at the average price or ask more to gain some wheeling and dealing room?

Now, I'm not going to fault the industry for trying to make a buck... Hell, it's capitalism. But I want to be an informed consumer and know what I'm getting into before wasting my and the salesman's time.

[Darth Do'Urden]

Reconditioning "should" involve more than shampoo and some upholstery cleaner, even if it's in fine shape. The dealer still has to put the vehicle through inspections, fluids change (as the new owner of said used car you'd expect the fluids to be fresh, right?), perhaps minor imperfections repaired, etc. And all that means a person has to do it, and they get paid, too. $2,000 can evaporate quite quickly even for a car that's truly in good shape.

I'm just sayin'.

[Ghost]

I'd have to work at Saturn where there is no haggling

Go for it. They've been out of business for a while...

There's an easy way to not haggle--just pay what they ask!

[salsashark]

Reconditioning "should" involve more than shampoo and some upholstery cleaner, even if it's in fine shape. The dealer still has to put the vehicle through inspections, fluids change (as the new owner of said used car you'd expect the fluids to be fresh, right?), perhaps minor imperfections repaired, etc. And all that means a person has to do it, and they get paid, too. $2,000 can evaporate quite quickly even for a car that's truly in good shape.

I'm just sayin'.

Fair 'nuff on the fluids, inspection, wash and wax. But what does that take? A couple of hours? A day? Dealerships aren't paying these techs hundred per hour, but they are paying them.

As for minor repairs, wouldn't that reduce the value of a trade in? I was going by the "clean" check mark, which I would assume to mean free from defects. If it did need repairs or touch ups, I would assume it would be of average condition, thus reducing the trade in value.

[FZRguy]

I bought a new Ford Ranger in January. I spent a number of hours at three Ford dealerships over two days. Same truck at each dealer, same rebate and financing available at each, same $ down, so I compared the amount financed at each dealer to roll it off the lot. I didn’t care how they arrived at that dollar amount.

Two of those dealers used some suspect tactics and made promises they could not keep. I bought the truck from Kristian at Courtesy Ford on south Broadway (CSC member and on this thread). He presented a straight-up deal with no BS. A number of CSC members have done business with him and I recommend you go there first if you want a Ford vehicle. I would have saved a lot of time.

[Frankie675]

Dumb consuming is the reason dealers are able to throw on d/h fee's and charge high prices.
Anyone who goes to a dealership and buys a car/motorcycle without doing any research deserves to pay d/h fees. Having patience will get you a better deal.

Last year I walked otd with my brand new triumph daytona (with $1500 performance package of exhaust, quickshifter, and levers sent directly from Triumph) for $8500. I was happy with keeping my gsxr750 but always wanted a daytona and seen Triumph was desperate to get rid of any 2010's that were lying around at the dealers.

My friends bf went out and bought a brand new 2011 zx6r for 13k(including financing), even though they were advertising the same model, a 2010, for 7k otd, which another friend went and picked up (he paid 7500 because that was the cheapest in florida at the time). They both got the same exact bike but the guy who bought the 2010 can ride longer because his ass still isn't hurting....

If consumers did their proper research, not just a day or two, but actually months of research before giving away their hard earned money, they should be able to eliminate d/h fees and find a desperate dealership that will give them a good deal.

[FZRguy]

A good deal is the only reason I’m driving a new truck. Ford no longer sells the Ranger in North America, so $5,000 rebate on remaining 2011’s (all gone by now). I figured a comparably equipped 2012 Tacoma would cost $11,600 more. Nice truck but I don’t have that kind of scratch for a new ride.

[FZRguy]

Speaking of Triumph, got the wants for a new Street Triple R.

[gsxr6]

This is a great topic.

Everyone thinks dealers price rape, but don't think twice about the 200% markup you pay for food, or the 80% markup on a new house.

I work for a small car dealership in a big group.

Our newest release car in the top trim line will all the equipment you can get has a difference of 951 dollars between invoice an msrp.

There is 286 dollars in holdback, and then if and only if I reach a certain number of new car sales for the month ( number given by the manufacture) do I get any additional support.

New car business is there for a name
On the side of the building and to drive service work. Service keep the dealership going, not new car sales. Used cars help as there is more money in them, but most of the time we have 60 days to turn your car you traded or
I send it to auction.

Say auction value is 17000 on your car and I spend 2000 reconditioning the car. The owner gets his part and "packs" the car 500 bucks. So that car I gave you 16,500 for I'm now in for 19000. I can sell at auction for. 17000. Or I try and sell it for 21000 and we make a deal at 19800. So I make 800 plus d&h which most dealerships the sales person, or managers aren't paid on d&h so I'm paid on the 800 dollars. Most sales people are paid 20-25% of that or 200 dollars. Sounds like good money for 4 hours of work right? Well now think about the national avg sales person sells around 8 cars a month.

Sales people aren't gouging you. Ecerything you buy (gas food ect) you get raped on.

[vort3xr6]

removed for self preservation purposes.

[Ghosty]

Go for it. They've been out of business for a while...

Yep I know, but they were the only ones I could think of with that policy off the top of my head.

There's an easy way to not haggle--just pay what they ask!

Never in my life have I. I learned from the best, my Mom. She practically brought the Glauser Benz salesman to his knees before she'd walk out satisfied, for her ML350 back in the day. Brand new from factory (had to be ordered or was on the order list), color she wanted, loaded, extras thrown in (step bars, HID's, etc.), all at "invoice". I walked in at one point, the guy said "Your Mom is killing me", with a distraught look on his face, hahahaa. Nizzzzzze.

[Frankie675]

"We offer a 3 month Guaranteed Salary while in training. The average first year salary is $50,000 but could be up to $100,000 for the truly determined!"

Taken from http://denver.craigslist.org/sls/2927037870.html

How are dealerships able to offer this much salary if they are only making around $300 per car? There has got to be a catch somewhere. Even if the dealer took $100 and $200 went to the salesman, the salesman would have to move 250 cars a year, or 20+ a month to get to the $50000 salary. Double that to make $100000 a year! I just don't see where all this adds up.

[spideyrdr]

The only time I will cry foul is when a business advertises something at one price then starts tacking on charges. Delivery, setup, advertising, etc. Don't tell me the price is $A when it's actually $A+B and B is significant. That goes for vehicles, airfare, anything.

I was buying my wife an FZ6R for our first anniversary. Grand Prix wanted MSRP + dealer prep + tax, title, and license. I tried to negotiate: "No, brah, that's a low as we can go." A phone call to Vickery that same week and they sold us the exact same motorcycle for $500 UNDER MSRP + tax, title, and license. And that was without a lick of haggling. It was around a $1000 swing on a ~$7000 motorcycle. Needless to say, Vickery had the sale.

I got my CBR1000RR by knowing what the OTD price for it could be at a competitor here in town. I walked in to Fay Myers, said if they could do it at that price, I would buy it that day. Sold!

The dealership may have a right to try to tack on stupid fees to inflate their profit, I have a right to walk away. Denverites are lucky to live in a town with about 3 dealers all within easy driving distance that will have the same exact new bike for sale. If the one you're working with doesn't want to play ball, be a man / informed consumer and take the business elsewhere.

As others have noted the OTD price is what you should focus on and if the dealer can make it happen, great for you both. If they can't, then try somewhere else and don't be a dick about it. They have to make money, I get it, but the smart ones will work out something. I think I read that MSRP -$500 as the OTD price on just about any new motorcycle is profitable for the dealer. They can stick to their guns and charge MSRP + setup + tax, title, etc. especially if it's a brand new model - supply and demand - but on a less-hot model, they ought to be able to get that down substantially.

One final point: It's only gouging if you HAVE to pay it. You probably never HAVE to buy a motorcycle. ie. charging $20 for a 4 pack of AA batteries during a catastrophe. That's gouging. It's your call on what you pay for a motorcycle though. And it's their call on what they want to try to charge you.

[Ezzzzy1]

"We offer a 3 month Guaranteed Salary while in training. The average first year salary is $50,000 but could be up to $100,000 for the truly determined!"

Taken from http://denver.craigslist.org/sls/2927037870.html

How are dealerships able to offer this much salary if they are only making around $300 per car? There has got to be a catch somewhere. Even if the dealer took $100 and $200 went to the salesman, the salesman would have to move 250 cars a year, or 20+ a month to get to the $50000 salary. Double that to make $100000 a year! I just don't see where all this adds up.

This was kind of touched on but this is more of a question than anything....

Is it because of the used cars? While a lot of cars are traded in at the trade in rate there are a LOT of cars coming from auctions and those vehicles are bought at a considerably lower price.

Lets say that a blob car is worth:

$23,000 Dealer retail
$20,000 Private party sell
$17,000 Trade in
$15,000 Auction

The dealer still sells a car that was purchased at auction for what they would sell it for if it was traded in. In other words, just because they bought the car for $2k less they dont pass that savings on.

Thats why when you buy a used car the first thing you should do is look at what the trade in value is. That gives you a good idea of what the dealer payed for the car. I use that number as my starting point for negotiations and generally you end up less than Dealer retail.

They still charge D&H on used cars right?

[Lomax]

This is all a very interesting read.

When I bought my FJ cruiser I went online and got the MSRP of the vehicle with all the options I wanted and then contacted my broker. He found me the exact vehicle I was looking for, shipped it in and the deal was done. He sold it to me for a bit below MSRP, no D&H, dock, setup, or paperwork fees. All said an done including taxes it came out to about $5K less than the best deal I could find at a dealer.

So I can only assume there is a bit of wrangling to be done. ???

Marc

[Zanatos]

The last few times I bought a new car or truck, I ordered them through Automotive Avenues (http://www.autoaves.com) and saved quite a bit of money over what dealers were asking.

I went to Stevinson Toyota, Go, and Groove Automotive. None of those places could get me a truck with all the options I wanted in the color I wanted for less than $42,000 out the door.

When I ordered the exact same vehicle from Automotive Avenues, they sent me a quote of $36,500 out the door. I sent them an e-mail accepting the deal. Then, I went to Groove Automotive to inspect it. The truck had just come in on a flatbed railcar and had all the factory plastic on the hood, seats, etc. I signed a few papers and picked the truck up from Automotive Avenues the next day - all cleaned up with a full tank of gas.

I am thinking of ordering a new Acura TL next year.