Car dealership overcharging on repair.

In reply to SVreX :

It's all very libertarian of you, but I lost my faith in the market setting fair prices a long time ago. I agree they can charge what they want, but I feel it's completely fair to say that it's overcharging when their cost of the service provided bears basically no relation to the price they charge. I'm a business person, been in business for myself my whole life, and never have I felt it fair to charge $2000 for 2 hours of a skilled laborer's time, especially when that time likely costs me less than $50/hour all in.

I have an issue with dealers charging over retail price. Our local Toyota dealer does this, they charged over $10 for a $4 part (online price for the same OEM part) that retails for $7. I went to get a case of WS ATF last week and they were charging double their cost from 3 years ago. So I ended up leaving and buying it on Amazon. I try to support local places, but in the end they continually disappoint me.

The same place wanted $900 for a hitch I had shipped to my door for $450. They refused to budge on their price, which is their right. And I exercised my right to walk away.

In reply to einy :

When I was a service writer only once did I tell a customer that their car was unsafe to drive home and had her inspection sticker removed.

I remember it clearly as she was my wife's coworker at the time. I told her that I regretted having to give her the news but that I didn't want the hear from my wife that she had been in an car accident. 
 

As for the original post, that's ridiculous oe parts and dealer techs or otherwise. 

barefootskater said:

frenchyd said:

SVreX said:

I'm almost a little uncomfortable with the phrase "overcharging". 

That's their price. And I think it's in line with other dealers. 

I wouldn't pay it. And I'm proud that dculberson has graciously offered to help a friend in need. 

But "fair market value" is defined as the price a willing buyer and a willing seller can agree to when neither is under duress.

Can someone else charge less?  Sure.  It's up to the buyer to determine if that is a good value or not.

In an age when anyone can get on the internet and learn anything they want, buyers should be informed.  There's no excuse to not be educated.

Its not that the vendor is "overcharging".  An informed buyer should make whatever decision they need to, and let the vendor decide what they want to sell the service for.  If the vendor wants to make sales, and needs to lower their price to make those sales, so be it.

They are not "gouging".  They are quoting their normal price (which is higher than many others would charge).

Sellers have a right to sell their services for whatever they want to.  Buyers get to choose whether to buy or not.   No harm, no foul.

 

While You are right,  a little more information is required.  Car dealerships don't make a profit selling new cars.  In a good year, they will offset their sales  labor costs  and maybe pay for the lights.   Bad years not even that. Now Used sales often can cover not only their  sales  labor cost but office staff, and a significant portion of building cost including property taxes, and inventory costs.

 
Parts and service are where the owners start to put money back into their pockets. 
The problem is those profits usually don't appear until the business is several years old and the owners ( investors ) have several years of outlay before those profits are seen. More than a few fail to ever generate profit. So the risk is high and the rewards not certain. 
Not to mention we are speaking of costs in the 10's of millions from start up. 

The dealer probably wouldn't make money on selling her a new car. They would make money on all the warranty and service contracts that usually go into those deals. And they'd make a killing when they cheaply fixed her current car and sold that. 

That's why new car dealers sell used cars, because there is so much potential profit in selling used cars.
Why also using trade in prices on used cars is so foolish.  That depreciation they claim is based on their desire to take in that used car as cheaply as possible. 
 

Reality is a well maintained car will usually last a decade or more before repairs become too expensive to justify. 
 

At slightly over 50,000 miles my current vehicle ( Ford F-150 ) 4 years old has yet to need a single repair.    My previous (1997 Chevy K1500 ) went well over 100,000 before any repair was required. and only cost me $1000 in repairs over 20 years and 371,xxxx miles of massive over work ( I literally carried my new home with it ) 

dculberson said:

I just replaced the axle shafts on a friend's 2008 Honda Fit. It's a neat little car, easy to work on and in good shape - no rust or other challenges. It started making a noise she was uncomfortable with, and she took it to the Honda dealer. They quoted $3000 using Honda parts or $1950 using aftermarket parts. I just got done doing the job and it was $130 for the parts and 2.5 hours of my time. I cannot imagine a world in which $1950 is a reasonable charge for that. At least the price difference is reasonable - the Honda parts are $1073 or so, which makes the $1050 spread between the two reasonable. But ~$1800 labor for what should be less than two hours of work for a shop is absolutely ridiculous.

Does anybody have a defense for them or is this just borderline criminal abuse of a customer?

I looked over the estimate and there was nothing other than the axles included in that price. And again, I have finished the job and it took me, a layman, 2.5 hours total from putting the car up in the air all the way through successfully test driving it.

As another data point. Same job at my dealership would run between $2100-2300 depending if the car is AT or MT using OEM parts, flat rate time is 1.2 per axle. $3k seems high, but that depends on their labor rate and if trans seals were needed as well.

In reply to SVreX :

Sure, you'd find another dentist.  But you'd feel like I was trying to take advantage of you and tell all your friends about the greedy dentist who tried to rip you off when you went to ABS Dental and they did the same thing for $1000. 

See what I mean?  Same thing here with an auto dealership or the plumber.  When you charge 300% MORE than what the retail price is, that's a problem and not ok.

In reply to spitfirebill :

My overhead FAR exceeds what the lab charges me.  I always get a kick outta hearing the labs piss and moan.  They don't have my loans, my facility costs, my payroll, my supply costs, etc.  Frequently the lab is one guy working out of his basement with his wife delivering/picking up the cases, they didn't incur 6 figure debt going to school.  Their overhead is almost nothing while mine can exceed 70%.  Building a dental office can easily cost $120 a square foot and that's just the facility, that doesn't include ANY equipment.

So that $1000 (well, more now but this makes the math easy) turns into maybe $300 for me, at most.  That's a cash pay patient, I get less for the crown if I'm billing insurance.  Which I then have to use to pay myself and any school loans that I have too.

1SlowVW said:

In reply to einy :

When I was a service writer only once did I tell a customer that their car was unsafe to drive home and had her inspection sticker removed.

I remember it clearly as she was my wife's coworker at the time. I told her that I regretted having to give her the news but that I didn't want the hear from my wife that she had been in an car accident. 
 

 

As for the original post, that's ridiculous oe parts and dealer techs or otherwise. 

In the 13 years I slung parts, we only did that to 2 customers. One because the upper ball joint had completely seperated and the wheel was laying at a 45* angle outside the fender. The other because the subframe had literally rotted away and the transmission was hanging in the air with nothing to support it. Neither were actually drivable but the customers wanted to drive them home. 

In reply to docwyte :

Ok, but they were not charging 300% more than the retail price. 
 

As 1kris06 noted directly above your post, his dealership would have charged $2300 for the same job. That makes it 30% over a competitor. High, but not out of the ballpark. 
 

You are inflating the discrepancy by a magnitude 10X when you say it was 300%.
 

Dealers are expensive. That's why I don't go to them (and bravo for the OP's friend who knew better too). 

In reply to docwyte :

And no, I wouldn't feel like you were trying to take advantage of me, and I wouldn't tell my friends. 
 

I simply wouldn't buy from you.  Pretty simple. 

Datsun310Guy said:

My 2011 Accord needed new shafts and the dealer quoted me $250 each in 2015 for Honda ones.   Have they doubled?

I work at an Acura dealership and can state from personal experience that Honda axle prices are all over the place.   

In reply to SVreX :

The plumber tried to charge me 300% more for the water heater vs Home Depot.  That's where that number came from. 

When I had my GX470 I found the dealer was only a bit more money than the local Indy Toyota shop.  Flat book rate means most the shops are the same, Indy labor was a bit cheaper, dealer more convenient because they send you home with a free loaner.

Indy dealer wanted $800 for an axle for the GX470, took me an hour to do and the axle was $250. 

docwyte said:

In reply to spitfirebill :

My overhead FAR exceeds what the lab charges me.  I always get a kick outta hearing the labs piss and moan.  They don't have my loans, my facility costs, my payroll, my supply costs, etc.  Frequently the lab is one guy working out of his basement with his wife delivering/picking up the cases, they didn't incur 6 figure debt going to school.  Their overhead is almost nothing while mine can exceed 70%.  Building a dental office can easily cost $120 a square foot and that's just the facility, that doesn't include ANY equipment.

So that $1000 (well, more now but this makes the math easy) turns into maybe $300 for me, at most.  That's a cash pay patient, I get less for the crown if I'm billing insurance.  Which I then have to use to pay myself and any school loans that I have too.

Huh, and dculberson does not have the dealerships loans, facility costs, payroll, supply costs, etc.  He is one guy working out of his garage, and didn't incur 7 figure debt building a place.  His overhead is almost nothing while the dealers  can exceed 70%.  Building a car dealer can easily cost $10 Million and that's just the facility, that doesn't include ANY equipment.

See how that works?

In reply to Steve_Jones :

Yeah, I don't have flat rate labor book time where I can bill you for 6 hours on something that takes me 1.  I don't charge however much I want over retail for parts, plus add a shop supply fee, disposal fee, recycling fee, etc .  I don't pay my techs a small fraction of what I bill my patients.  For the most part my fees are set by the multi billion dollar profit a year insurance companies and they screw me.

See how that works?

In reply to docwyte :

You can try to justify it however you'd like but saying your business is different than others because of overhead and expenses, is foolish.  Businesses have income and expenses, saying a dealer is ripping you off because of X,Y, and Z is like someone saying YOU ripped them off because of X, Y, and Z.

I believe that a medical office overhead runs 60-70%, because that has been my experience, higher in California than Texas for sure.  Fairly certain it does not run that high for dealership service dept.  If that were the case, they would charge more per hour, not pad the hours on the invoice.

In reply to Steve_Jones :

Yes but not all businesses have the same amount of overhead!