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Car Forum / Driving, Maintenance, Tuning / Driving / July 2008Explain This Stealership Tactic
Long thread here about a car stealership that charges a $695 "doc fee:" http://forums.corvetteforum.com/showthread.php?t=2079411 The car salesman is defending this practice by saying (paraphrased) "if we sell our car for $50000 and charge a $695 doc fee, that's no different than the guy down the road who sells the same car for $50700 and charges no doc fee." The difference, of course, is most people don't find out about the $695 "doc fee" until they're sitting in the F&I office filling out the sales contract. This fee is not solely to cover the costs associated with filling out paperwork. MAYBE that costs $30 or $40 in time and material. The rest is PROFIT - which the salesman readily admits. So it's dishonest to call it a "doc" fee. As you read through the thread, you can see the overwhelmingly negative reaction. So if "it's all the same" why do you suppose this stealership doesn't just price their cars $700 or so higher and eliminate the bullshit fee? After all, they could sidestep all sorts of controversy if they did that, not to mention all the customers who won't even consider buying a car from them because of the bullshit games they play. The only ratiional conclusion is that this $695 doc fee somehow results in more bottom line profit for the stealership. But how? My theory: in most cases, buyers are worn out negotiating for an acceptable price with the salesman, so by the time they get into the F&I office they're too tired to fight over the doc fee. CHA-CHING! An extra $700 of profit for the stealership without even firing a shot. Can you think of any other possible explanations?  SignatureQ: What's the difference between a traffic snake and a real one? A: The traffic snake's a.shole at the *front* end. > Long thread here about a car stealership that charges a $695 "doc > fee:" [quoted text clipped - 14 lines] > is PROFIT - which the salesman readily admits. So it's dishonest to > call it a "doc" fee. That's why the airlines are charging for the first checked bag instead of just raising ticket prices. > As you read through the thread, you can see the overwhelmingly > negative reaction. So if "it's all the same" why do you suppose this [quoted text clipped - 3 lines] > won't even consider buying a car from them because of the bullshit > games they play. The problem is, the few who object to the bullshit games don't put a dent into their business. > The only ratiional conclusion is that this $695 doc fee somehow > results in more bottom line profit for the stealership. But how? The same way Ford dealers can keep selling GT500s for $15 grand plus over sticker. An endless supply of stupid people. For every person that will walk away from them there is another who doesn't. It will be years before they start to go out of business (if they ever do) and they won't have a clue why. > My theory: in most cases, buyers are worn out negotiating for an > acceptable price with the salesman, so by the time they get into the > F&I office they're too tired to fight over the doc fee. CHA-CHING! An > extra $700 of profit for the stealership without even firing a shot. Don't forget that objecting to such a thing in person is considered bad form in this society. > Can you think of any other possible explanations? The american public accepts being scammed. > > As you read through the thread, you can see the overwhelmingly > > negative reaction. So if "it's all the same" why do you suppose this [quoted text clipped - 6 lines] > The problem is, the few who object to the bullshit games don't put a > dent into their business. Many years ago, I researched a new car purchase CAREFULLY. At the time, I wanted a Jetta, with specific trim level and options. Knew the out the door price I should pay, to the penny. It was a straight cash deal, no financing needed, no trade-in. (was keeping my current car) It boiled down to, I'll give you $XXXXX in cash (well, cashier's check), out the door, for that specific car. Went to several local dealers. A few turned me down with no effort to haggle at all. One wrote up a contract for sale, had me sign it (so I was legally obligated to buy, if the offer was accepted), then it went to management for approval...and was turned down. Just about gave up. A couple months later, was shopping with a friend of mine, we happened to stop into another VW dealer. I gave it one more shot. Found a salesman who said he'd GLADLY sell me the Jetta I wanted for the exact price I was offering. OK, so what's the catch? He was a sales manager visiting from out of state. He referred me to the local sales manager who turned me down flat. Before doing so, the out-of-state manager told me that he would only make a few hundred on the sale, but that he'd be HAPPY to make the sale anyway. All I had to do was visit his dealership, thousands of miles away. Basically, if car dealers can't make a killing, they would rather the car sit on the lot for weeks or months (or maybe never sell). Some of the dealers I visited, the exact car I'd been trying to buy was still sitting on the lot, unsold, several weeks later... I never did buy my Jetta. No takers. Nobody wanted to sell me a Jetta. And I know that my offer was good (not a loss, but a small profit), as at least ONE VW Sales Manager confirmed. -Dave > Many years ago, I researched a new car purchase CAREFULLY. At the > time, I wanted a Jetta, with specific trim level and options. Knew the > out the door price I should pay, to the penny. It was a straight cash > deal, no financing needed, no trade-in. (was keeping my current car) > It boiled down to, I'll give you $XXXXX in cash (well, cashier's check), > out the door, for that specific car. That was the problem. You should have led them to believe you were going to finance it and negotiate a price based on that. If they agreed to a given price, then before you sign any contract, tell them you have a cashier's check for the amount you agreed upon. It would be harder for them to back out at that point. > > Many years ago, I researched a new car purchase CAREFULLY. At the > > time, I wanted a Jetta, with specific trim level and options. Knew [quoted text clipped - 8 lines] > you have a cashier's check for the amount you agreed upon. It would > be harder for them to back out at that point. Thanks for the hint. I eventually bought a Galant (paid cash) for it. No negotiation required, it was discounted several thousand dollars already as a previous year left-over (still new, but last year's model). I settled on that, as I didn't feel that any haggling was required (best price at any other dealer was over $4000 higher), and it was my 2nd choice, after the Jetta. Haven't tried to buy new since. Haven't needed to. My wife has bought a few new cars though. But I'll remember to pretend like I'm financing next time. Great hint. -Dave >> > It boiled down to, I'll give you $XXXXX in cash >> > (well, cashier's check), out the door, for that specific car. [quoted text clipped - 7 lines] >Thanks for the hint. I'll remember to pretend like I'm financing >next time. Great hint. -Dave Just to play Devil's Advocate for a moment, isn't that sinking to their level? I mean, we cry foul when stealerships play these bullshit games, but it's somehow OK for us to do the same thing to them? Ideally, wouldn't BOTH sides be above-board, up front, and honest? Just askin' :) SignatureQ: What's the difference between a traffic snake and a real one? A: The traffic snake's a.shole at the *front* end. >>> > It boiled down to, I'll give you $XXXXX in cash >>> > (well, cashier's check), out the door, for that specific car. [quoted text clipped - 11 lines] >their level? I mean, we cry foul when stealerships play these bullshit >games, but it's somehow OK for us to do the same thing to them? Depends on the stealership. If they are the relatively honest kind who will deceive, mislead, misdirect, flim-flam, but not out-and-out lie, then yes, it is sinking to their level. If they are the more crooked kind, then it is not. In any case, this is more or less a flim-flam, a game which will not screw the (theoretical) honest dealership; if they're giving you an honest price for the car, everyone's happy when you pull out the check. If they're offering a low price the car intending to screw you on the financing, they deserve what they get. >Ideally, wouldn't BOTH sides be above-board, up front, and honest? There's too much advantage to be gained from not being so. SignatureThere's no such thing as a free lunch, but certain accounting practices can result in a fully-depreciated one. > Just to play Devil's Advocate for a moment, isn't that sinking to > their level? I mean, we cry foul when stealerships play these bullshit > games, but it's somehow OK for us to do the same thing to them? > > Ideally, wouldn't BOTH sides be above-board, up front, and honest? The joke: Q. How can you tell your customer is lying? A. Their lips are moving. probably originated on a car lot. It is f.cking amazing what people will tell you... and ask you when buying a car. They're just scared. One guy "promised" to buy a used mini-pickup if I could guarandamntee the rear suspension had never been overloaded (it had a frame hitch). Another idiot wanted a new S-10... as long as it didn't have power steering... ("just another thing to break")... even though the rig he drove on the lot had power steering, and he'd never had a problem with it. It doesn't take any special tactics to buy a vehicle at bottom dollar. Basically, you want to make an offer and see if they'll let you walk. There is no such thing as hoping for a "be-back" in the car business. 99 times of 100, if they won't take your number, they "know" they can sell it for more. Simple as that. New cars, you can get the dealer invoice and offer 100 over. By the time a skillful salesperson has run the numbers on your trade- in you won't have any idea what you're getting for it, but you can pretty much count on giving it away. If you're a "payment" buyer, you're just f.cked, unless your credit sucks. Often a dealership has to cut all the taters out of the deal to get it done with the bank. A poor person can't hardly get financing on a used rig. But, I imagine it's a f.cking fire sale out there right now. Bad time to be in the car business. Dealerships around here have closed and are sitting vacant, and I mean 50 year old dealerships. (It's going to get worse before it gets better.) ----- - gpsman > > Just to play Devil's Advocate for a moment, isn't that sinking to > > their level? I mean, we cry foul when stealerships play these bullshit [quoted text clipped - 27 lines] > 99 times of 100, if they won't take your number, they "know" they can > sell it for more. Simple as that. I disagree with this. I had a close friend that worked at one local Honda dealership, in the garage. I had a few less close friends who also worked there, and I knew the owner, so I spent some time hanging out there. Many of their customers were regulars, some of whom were so regular the employees knew when they'd be back. Some were a new car every year, some every 2, some every 4, etc. Of the people who recently purchased cars from stealerships that I consider close to me, close enough I would know something like this, 2 of them plan to return to the same dealership. > New cars, you can get the dealer invoice and offer 100 over. > [quoted text clipped - 15 lines] > > - gpsman On Jul 18, 5:00 pm, "DanK...@gmail.com" <DanK...@gmail.com> wrote: > > There is no such thing as hoping for a "be-back" in the car business. > > 99 times of 100, if they won't take your number, they "know" they can [quoted text clipped - 10 lines] > consider close to me, close enough I would know something like this, 2 > of them plan to return to the same dealership. There is a certain segment that always buys from the same dealership, or salesperson, but they mostly make up a very small percentage of dealership "clients". I was referring to the vast majority of car shoppers who have no allegiance, or "in", or wouldn't buy from their last dealer under any circumstances. ----- - gpsman > > Many years ago, I researched a new car purchase CAREFULLY. At the > > time, I wanted a Jetta, with specific trim level and options. Knew [quoted text clipped - 8 lines] > you have a cashier's check for the amount you agreed upon. It would > be harder for them to back out at that point. Thanks for the hint. I eventually bought a Galant (paid cash) for it. No negotiation required, it was discounted several thousand dollars already as a previous year left-over (still new, but last year's model). I settled on that, as I didn't feel that any haggling was required (best price at any other dealer was over $4000 higher), and it was my 2nd choice, after the Jetta. Haven't tried to buy new since. Haven't needed to. My wife has bought a few new cars though. But I'll remember to pretend like I'm financing next time. Great hint. -Dave > > Many years ago, I researched a new car purchase CAREFULLY. At the > > time, I wanted a Jetta, with specific trim level and options. Knew the [quoted text clipped - 8 lines] > a cashier's check for the amount you agreed upon. It would be harder > for them to back out at that point. Agreed. My father spent quite some time looking for a new truck a year or so ago. He finally found the one he wanted, sitting in the lot, while the owner was inside trading it in. It was almost new, under 20K miles, and loaded to the gills. The negotiations were in his favor all along, since he knew before sitting down exactly what the dealership had given the previous owner, as well as how long it had sat in their lot (hours, he was negotiating for the truck before the owner had finished the paperwork signing it to the dealer). They finally agreed on a price that allowed the dealership to make some profit, though not nearly as much as they’d have liked. They played the usual games, first lying about how much they paid, then saying that they’d sold the guys new truck at a loss planning to make the difference in this one, etc. When it came time for the payment portion of the deal and they couldn’t interest him in any sort of financing, the salesman was extremely upset, and the already agreed upon deal nearly fell through. It was funny to watch the salesman try to push the financing. “You don’t want to tie up all your cash, save some for a rainy day and the business.” “It’s not all my cash.” “I can give you a phenomenal APR, out of this world. Better than you could get anywhere else.” “Like what?” “(insert APR here, I forget what it was but it was over 10%)” “I can borrow against my home or my business for 3-4%. I still don’t want to borrow, I want to pay cash”. It was quite an ordeal. They still made a good amount on the truck, which they never had to give a choice lot display spot, write up an options sheet for or make any effort at all to sell. All the while it was like he was pulling teeth trying to get them to make a profit and sell the vehicle. At one point I really thought he was going to walk away. He almost did, but he really liked the truck. >> > Many years ago, I researched a new car purchase CAREFULLY. At the >> > time, I wanted a Jetta, with specific trim level and options. Knew the [quoted text clipped - 42 lines] >sell the vehicle. At one point I really thought he was going to walk >away. He almost did, but he really liked the truck. I've had dealers refuse my offer when we were $50 apart. Last time that happened I walked across the street and got a better car (same exact model with much more equipment) for the same price. >That's why the airlines are charging for the first checked bag instead >of just raising ticket prices. Going off topic, but if I am flying somewhere for a couple of days or so and can pack what I need in the carry on, why should I have to subsidize your checked bag through a higher fare on my part? "Oh yeah. Well i've gone 3 1/2 years without a fatal crash so i must be doing something right." --Laura Bush murdered her boyfriend/laura bush - VEHICULAR HOMICIDE/ Speeders And Drunk Drivers Are Murderers (SADDAM), 9/24/2006 Ref: http://tinyurl.com/qdotr Msg ID: ivadh2t9kd05ilrgdercft8iuvcls6r5op@4ax.com > >That's why the airlines are charging for the first checked bag instead > >of just raising ticket prices. > > Going off topic, but if I am flying somewhere for a couple of days or > so and can pack what I need in the carry on, why should I have to > subsidize your checked bag through a higher fare on my part? Are you SERIOUS?!? Carrying passenger baggage (some of it checked into the cargo area) is a cost of doing business. You aren't "subsidizing" someone elses luggage by choosing to take less of it yourself. -Dave >>That's why the airlines are charging for the first checked bag instead >>of just raising ticket prices. > > Going off topic, but if I am flying somewhere for a couple of days or > so and can pack what I need in the carry on, why should I have to > subsidize your checked bag through a higher fare on my part? Um maybe you didn't notice... but the TSA has made it impossible to carry on a number of things you may need to carry with you and a bunch more marginal because some TSA employee might decide you can't take it on board. Then they keep it or you miss your flight or you pay the fee anyway. > The only ratiional conclusion is that this $695 doc fee somehow > results in more bottom line profit for the stealership. But how? Some combination of: They think it sounds more official and non-negotiable if they call it a "fee" or a "charge" rather than "overhead of doing business" which they have to climb past in order to get to the "profit" part. Skating further onto the thin ice of speculation, this epiphany may have been triggered by state laws here and there that required them to disclose how much they were marking up the price. The whole concept of the car dealership not just as a see-and-touch option among other ways to buy, but an exclusive sales channel mandated by law and by granting of exclusive channels by manufacturers, is not physical law, of course; it is a social construct that seemed convenient and profitable to manufacturers and car dealers (and the politicians they could influence) a long time ago; there is no inherent reason it *had* to be. Recommended reading for all considering a new-car purchase: http://www.dontgettakeneverytime.com/ (even if you've read an older edition of the book, the new one has some interesting Internet perspectives.) You may not win (hence the title -- they do this more often a day than most customers do in a lifetime) but it helps you avoid the more egregious consumer rips. For those who *don't* use this and other resources to learn how the game is rigged, it's like betting $30k you can swim across the shark tank with a fistful of hamburger. > The only ratiional conclusion is that this $695 doc fee somehow > results in more bottom line profit for the stealership. But how? [quoted text clipped - 5 lines] > > Can you think of any other possible explanations? I can, but yours would be the "simplest". http://www.edmunds.com/advice/buying/articles/117494/article.html (My personal favorite is "ADP", Additional Dealer Profit.) But, people most often won't "walk" once they sit down in F&I. It is a very deliberate tactic to get people worked up over the numbers in the showroom, let them "win", then "relax" in F&I... then really break a dick off in their a.s on the "back-end". To be fair, the average car dealer, at least in my day, was making only about 1% on the front-end of "new", the real money is in "pre- owned". And, in my day, the Doc Fee was on the "worksheet", and not popped as a surprise to the customer afterward in F&I. My personal profit record was 4 grand over retail "sticker"... on a car that sold for, like, $12K. I spent an entire Saturday selling that car, while my superiors screamed bloody murder to just close it and sell another. They even sent another salesman over to "force a turn", which I deftly deflected. I made about $2K on the deal. Man, those were the days... I loved the car business, I just despised the people in it. Anyhoo... you are not wrong, for a change. ----- - gpsman >Long thread here about a car stealership that charges a $695 "doc >fee:" > >http://forums.corvetteforum.com/showthread.php?t=2079411 Heh... heh... That's a good one. Here's a good one going here in the sticks: The local toyota dealer has taken out these ads in the area fishwrap, but instead of an ad on the page, it is in the form of a post-it type note on the top of page 1 of the paper. In effect, the sticker reads, "$5000.00 in gas with the purchase of any new Camry or Corolla." Though in a much more colorful and artsy presentation. I can just imagine how many suckers get drawn into that dealership - especially if they don't read the back of the post-it that says, "gas value is added to the amount financed," or something to that effect. I can imagine a lot of disappointed people leaving that dealership in addition to the suckers who fall for the deal..... -- I am necromancer and I approved this poast. >In effect, the sticker reads, "$5000.00 in gas with the purchase of >any new Camry or Corolla." Though in a much more colorful and artsy [quoted text clipped - 6 lines] >I can imagine a lot of disappointed people leaving that dealership in >addition to the suckers who fall for the deal..... HO LEE PHUOC!!! I gotta grudgingly admit, that one is BRILLIANT! :) SignatureQ: What's the difference between a traffic snake and a real one? A: The traffic snake's a.shole at the *front* end. > Heh... heh... That's a good one. Here's a good one going here in the > sticks: [quoted text clipped - 13 lines] > I can imagine a lot of disappointed people leaving that dealership in > addition to the suckers who fall for the deal..... I forgot which brand (Dodge?) was recently advertising GUARANTEED $2.99 gas for three years, or something like that. But it was limited to (from memory) the first 12,000 miles per year. So even if you figured gas at a cost of FIVE Dollars per gallon, the price guarantee amounts to something like a maximum of a ~$2000 rebate on the purchase of a new car, which is less than the NORMAL rebates that they offer as an option, instead of the gas price guarantee. But you gotta hand it to the marketing group, it is a brilliant promotion. $2.99 gas??? I'll bet they suckered in a lot of dimwits with that one. :) Essentially, the customers that went for the deal are paying more upfront to buy a vehicle that they probably don't even need, and they'll get SOME of that -extra- that they paid for the vehicle back in the form of gas purchase rebate. -Dave |
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