The Market Ticker
Commentary on The Capital Markets- Category [Consumer]

C'mon guys, you really don't think that most of Boobus Americanus will fall for this, do you?

Well, actually they do.

Witness the frequent game with "dealer stickers" on the windows in which they charge up to $1,000 for what amounts to $5 worth of Scotchguard (yes, from a spray can) in the form of "fabric and paint protection."

That's pretty good money for a guy to spray a bunch of silicone from a can on your new upholstery for 10 minutes!

No, I'm talking about the ubiquitous "documentation fee" that has showed up of late -- well, ok, not necessarily "showed up" (it's been there for quite a while) but ratcheted up.

My quick survey says that these junk fees have more than doubled in the last 10 years or so and now frequently are over $500!

You know what the dealer does for that?  

He hits "Print" on his computer.

Yes, really.

What's his per-hourly billed rate, when you look at what's actually done, for that "service"?  $5,000 or so?  That's nice if you can manage to talk people into paying that sort of hourly rate.

Since this is a "fee" it generally cannot be blanked off their purchase agreement, and in fact there are even laws to that effect.  But that doesn't stop you from getting rid of it -- simply demand that the same amount come off the top-line price of the car.

Oh, by the way, if you want to really be insulted in most states you will pay sales tax on that "Documentation Fee" too.  So now you get to pay the state for the dealer pressing "Print" and his $5,000 per hour charge to do so.

People say that "The Internet has made car buying more-transparent."  That's a lie.  Take a look at all the various sites -- Truecar, Edmunds, etc.

They all state in the fine print that these fees are excluded in the prices they quote you.

As such you cannot compare apples-to-apples using these "shopping tools", because they exclude a fee that each dealer sets and that fee tends to be quite large and is factually nothing more than "additional dealer profit" on a per-unit basis.

I own two vehicles I bought new at the present time.  On one I walked out of the dealership twice when they tried to add that fee in after we had negotiated a cash price "plus only tax, title and tag" and then in the F&I office they attempted to present with me a "standard" sales order that had it on there.  I told them I wouldn't pay it, they said because it was pre-printed it couldn't be negotiated, and I countered with "oh yes it can, subtract it from the price of the car and it is mathematically removed."

It took walking out twice, but the deal closed and they didn't get a nickel of that junk "fee" from me.

On the second transaction the dealer listened to me initially when I told him that my father's best friend ran a Buick dealership for 30 years, and as a result when I asked for a bottom-line price I both understood how car dealers operated and meant what I said -- and had no intention of playing games.  They presented me with a sales order that was acceptable "as-written" -- yeah, the "fee" was in there, but it was deducted back out of the cash price up above, so there you have it.  That transaction was utterly painless and the delivery was too; it took a literal 20 minutes front-to-back complete with paperwork and I was out the door with the car on a cash transaction.

There is a common meme running around these days that dealers "don't make any money" on new cars nowdays due to the Internet.  That's horsecrap.  I'd argue they're probably making more per-car now than they were before due to this fee escalation; in many cases your actual cash price for the car exceeds the MSRP.  

I have a quote right here in my email for which this is the case.  

A better price eh?

smiley

I've been asked to help a few friends over the years with this process at various dealers and every one of them have tried to pull this and sometimes much worse.  But in recent years this sort of nonsense has escalated in size, if not technique.  When called on it dealers will usually admit that this is simply profit to them, but they all start with pointing at their contract and trying to defend it as "everyone pays that."  I even had a dealer recently tell me that he paid it on his car.  Well, if he did and didn't get that trash deducted back off the cash price then he's dumber than a box of rocks.

I have been blessed with not having a personal reason to deal with this crap voluntarily, other than when helping a friend in navigating this snake pit, for the last decade.... but now I do, once again, and thus into the breach I go.

Now let me point something else out: These are the same people who form associations and then try to get those who want to break the back of this sort of outrageous behavior thrown out of their states -- witness Tesla in New Jersey and, believe it or not, the so-called-free state of Texas.

PS: Let's run an experiment.  If you are a car dealer and don't pull this crap PM me (or use the "email" link below) and tell me what line(s) you represent.  I'll give you one shot if you have a line I'm interested in, and yes, I'll take a road trip to come get the car too -- I'm serious.  I like road trips.....

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