Monday, February 22, 2016

Dealer Pre-Installed Accessories: Avoid them like the Plague

When I talk about unfair and deceptive sales practices by car dealers, number ONE on the list are pre-installed dealer accessories. Number two on that list is the Dealer Fee. Both of these common practices are the essence of how car dealers “bait and switch” you from the advertised car with the low price to the car they really want to sell you with the high price.

There are a lot of car dealers that represent each make sold, especially in Florida. Dealers advertise more than almost any other retailer because selling cars is intensely competitive. If you live in Florida, the chances are that there are at least 3 car dealers selling the make you want to buy within a short driving distance. If a car dealer advertises a price on a car higher than his competitors, you will probably not buy that car from him. Therefore, most car dealers do everything possible to make their prices appear to be lower. Statistics for all makes prove that the average transaction price on cars purchased is hundreds (and even thousands) of dollars more than the advertised prices. Virtually all advertised car prices are lower than the price that the dealer can profitably sell the car for.

You’ve heard the old saying that “necessity is the mother of invention” and the previous paragraph explains the necessity for the invention of the pre-installed dealer accessories (and the dealer fee). The pre-installed dealer accessories are products that dealers install (or claim to install) on all of their cars in their inventory. These accessories have a very low cost to the dealer and the dealer marks their retail price up to you by several hundred or even a thousand percent. Some examples of dealer installed accessories are nitrogen in the tires, pin stripe decals, paint sealant, fabric protection, emergency road service, glass etch theft protection, LoJack, etc. A “basket” of items like this can cost the car dealer under $100 but he will mark that up to $1,000, $2,000 or higher. When he adds this plus his dealer fee of $800 to $2,000 to the advertised price, the great price you thought you had, disappears into a high price with a large profit to the dealer.

My advice to you is simply to refuse to allow any pre-installed dealer accessory to be added to the advertise price of the car you want to buy. If the dealer won’t comply turn around and walk out. If in fact he has installed all of those overpriced accessories to all of his cars, he can obtain a car without them by trading cars with another dealer or ordering one from the factory. The same thing holds true for his dealer fee. It’s best to make it clear from the get-go that you will not visit a car dealer without an “out-the-door” price plus government fees only. Any “fee” by any name that is added to your out-the-door price must be one paid by the dealer to the state or local government…license place/registration and sales tax.

If you want an accessory that the car dealer can install, it can be installed after the fact and after you’ve had ample opportunity to verify its value and price. The best rule of thumb is to buy only accessories sold and installed by the manufacturer. These are usually high quality with a fair markup, and they are covered by the factory warranty. When you’re considering manufacturer’s accessories, be sure that they are from the manufacturer and not the distributor for that manufacturer. Distributor or port installed accessories usually carry much higher markups than factory installed.

1 comment:

  1. This phrase wasn't clear in the article " average transaction price on cars purchased is hundreds (and even thousands) of dollars below the advertised prices." Is that a mistake or did you mean the price is higher than the advertised price? Great article!

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