Car-buying process needs repair
DOUBLE-DIPPING: CHARGING TWICE FOR SAME ITEMS AT INSANE MARK-UP
Experiences at car dealerships indicates customers are standing last in line.
Ilike to think I’ve finally figured out the up-sells, unnecessary – and sometimes hidden – charges and things you should generally say no to when buying a car. I’m on my third.
The latest wasn’t a particularly tricky purchase, so imagine my surprise when the invoice the dealer tried to present to me for financing differed by more than 12% from the quote. And this wasn’t a mistake or anything like that ...
Shop floor fleecing
This “reputable” dealer tried to invoice me R4 000 for “smash-and-grab” protection, the car already had fitted.
It also tried to invoice me another R5 000 for a tracking device, which also already existed.
“Oh, sorry, it’s the system,” was the best excuse the finance “specialist” could muster when I questioned these blatant ripoffs.
Double-dipping aside, the margins dealers charge on these extras (even when they are valid) are eye-watering.
The smash-and-grab fitment price “quoted” is at least double what you’d pay if you went direct.
And with tracking devices, the ethics are questionable: on every tracking option I’ve researched, you’ll get a device for free if you sign up to a subscription ( like a mobile phone contract). There are also “cash options” which, again, translate to a markup of close to 100% for the dealer. (And don’t discount the “incentives” available to dealers for installing these devices and getting your subscription activated.)
The inflation of “on-the-road” fees in recent years make food price increases seem benign.
Nowadays, you pay close to R5 000 for a mere licence registration (which dealers do in bulk). Even the obligatory “free” tank of fuel has morphed into half a tank. I’m not suggesting dealers shouldn’t charge this fee, but R4 500?
Also on this invoice were many line items of insurance: tyre protection, paint protection, minor dent protection, a third-party maintenance plan (the car already has the remainder of its maintenance plan in place) and something you should be used to seeing on any credit agreement, “credit protection”. Never mind that your comprehensive insurance cover – mandatory when financing a vehicle – will cover the above.
T ypical buyers don’t realise they’re paying significantly more for their car than what they first thought. A 10% (or more) difference in the purchase price is easy to obfuscate – usually, “only” a few hundred rands a month.
Not only does the typical buyer likely not understand much of what they’re signing (trust me, they don’t), but buying a car is such an emotional purchase that it’s easy to get “caught up” in the moment. I’m stuck having paid for “paint protection” that no one can tell me how to use.
I’m bearish on motor retail for no other reason than I believe the process is fundamentally broken. No one is incentivised correctly.
Tesla shows the way
It’s no wonder Tesla has upended the motor dealership sector in the US. Sales people are not incentivised on deals (cough) and Tesla owns its stores and service centres directly.
Elon Musk is intent on retaining control of the customer experience as a competitive advantage because the notion of putting the customer first is almost completely foreign to existing players.
Hilton Tarrant works at immedia.