Is Dealer Prep Fee a B.S. Fee?

Discussion in 'The Perfect Line and Other Riding Myths' started by Buyk, May 27, 2020.

  1. ZappBranigan

    ZappBranigan Still Riding

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    BTW I'm guessing this thread will turn into the kind of train wreck that threads like this always do on ADV always do but before it does, let me play Devil's Advocate:

    devilsadvocate.jpg

    And no I'm not a salesperson or a dealer shill.

    The counterpart to the dealer that "adds on" to an already negotiated price is the customer who haggles a "best price" out of a salesman and then takes that price to a competitor and asks him to beat it.

    Car and motorcycle dealers aren't dumb. They know people don't like the "add ons." But they also know that if they can't get you to walk into their shop they have a 0% chance of getting a sale. So of COURSE they'll advertise that hot new KawaYamaHondaZuki XYZ1000 that has an MSRP of $12,999 for $9999. They have no intention of actually selling it at that price but they need to advertise that price otherwise you'll go to the dealer across town that advertises the bike for $10,999.

    My point here is that the current business model of having an artificially low "sale price" and then bumping that sale price upward with spurious additional charges is a business model that really doesn't benefit the dealer either.

    And using "low prices" as the main technique to draw in buyers also means that dealers have to recoup those losses elsewhere - like overcharging for accessories and parts and underpaying their staff (which in turn leads to high turnover among technicians and poor quality service.)

    Also, it does seem like this is starting to change at least in some areas. There are a few dealers who will advertise "Price plus tax, no dealer fees!" What remains to be seen is whether BUYERS will catch on to the fact that Dealer A may be offering that XYZ1000 for $9999 and dealer B may be offering it for $11,999, but that dealer A adds $2500 worth of additional charges and dealer B doesn't.
    #21
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  2. ZappBranigan

    ZappBranigan Still Riding

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    Perhaps a better topic might be: Do we actually NEED dealers? For what?

    If you could buy a motorcycle online, have it delivered assembled to your door, what would you need a dealer for?

    If manufacturers could make contractual arrangements (in the manner of, say, health insurance) with independent mechanics to reimburse for warranty work, why would you need a dealer?

    Understand, I like going to a dealership, looking at all the cool new bikes and talking motorcycles with the salesman, and sitting on bikes I would never buy unless I won the lottery just as much as the next rider.

    But I wonder if maybe it's time to consider that just because this is the model that has existed all our lives, it doesn't necessarily have to be the ONLY way of buying or selling motorcycles.
    #22
  3. slartidbartfast

    slartidbartfast Life is for good friends and great adventures Supporter

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    If you buy a KTM and want to assemble it yourself, you will still need the dealer to activate the firmware in the ECU or it will not run for long (if at all.) Great concept from the factory but quite a few reports (all in USA) of people getting a few miles from the dealer on their new bike and having it refuse to start because the tech forgot or didn't know to do this.

    My new 1290 SA came with several stupid assembly errors (some that caused damage) and a bag of nuts bolts and other bits that were left over from assembly. It took me quite a while to get all that straight. I should have demanded at least a partial refund of the associated fee.
    #23
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  4. Buyk

    Buyk Adventurer

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    We don't need them, at all. They're a needless middle man. NADA is a powerful lobby that keeps this tax on consumers going. A vehicle doesn't lose value when you drive it off the lot. That's nonsense. It never had that excess value, in the first place. The immediate drop in price is the difference between the actual value and the dealer's profit.
    #24
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  5. ZappBranigan

    ZappBranigan Still Riding

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    If Tesla is any guide, I think the rise of electric motorcycles may also see a corresponding decline of the dealership model of sales and service.

    Dealers seem to be tied to the maintenance-intensive nature of the IC engine. Remove the IC and motorcycles could well become more like bicycles in the sense of being made up of user-replaceable modules.

    It's not an exact parallel but the wife and I got electric bicycles in January. We never set foot in a showroom, we researched online, put in our order and a week later the boxed-up bicycles were delivered to our home along with instructions. An hour after unpacking them we were riding.
    #25
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  6. markk53

    markk53 jack of all trades... Super Supporter

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    Do you actually want the truth or do you just want to go with the first reply? I'm guessing by one of your later posts you probably don't want the truth.

    If you want the truth read on from here. If you think elves come out of the wood work and do all the transporting, building, and set up work for free skip to the next post.

    For the truth, you answer the two questions below:
    Would you drive a semi and deliver bikes to dealers for free?
    Would you go in to a dealership and spend a couple hours per bike, depending on how much work it is, to build bikes for a dealer for free?
    Now considering your answers, what do you think, are there actual set up costs and are there actual shipping costs?

    Clearly most here do not want the facts -
    • like the cost of labor varying from place to place. Mechanic pay will vary by location and by skill of mechanic.
    • no one is building or setting up bikes for free that I know of. I know every bike I sold had someone build it and none were done for free - hell, I got paid when I did set up after hours.
    • even if set up costs, and freight costs are worked into the price they still exist - no matter what kind of crap all those who think no one is paid to do it may feed you.
    • Most established dealers are not permitted to sell bikes in the crate by the dealership agreement in some states, possibly all of them - but any dealer that sells in a crate is laying their financial ass on the line if the customer screws up and ends up injured or dead. They will be sued for selling an unassembled vehicle and probably lose the dealership if the manufacturer is brought in to the suit.


    Whoever told you to disregard any fees and keep your eye on the bottom line, before taxes and real titling fees, is the one with good information. Who cares what costs there are above that bottom line? I know I didn't. We told customers that. One of the first things I had to learn was how to back out the price. Taking the actual out the door price the customer or we would want to work with, subtracting title fees, work out how much tax there was to get to the actual price of the product.

    When we worked a deal it would almost always end up being some flat number like $5650 OTD, Subtract the $20 title fee at the license bureau and memo copy for bank, if 7% sales tax divide the remaining amount by 1.07 finding our gross sale price with all in to be $5261.68, the other $368.32 was the tax. We would write it up as such too. We were also honest about the costs. The freight per bike is known and that was what was charged, it wasn't a mark up in the dealership where I worked. Same with the set up, specified 1.5 hours multiplied by the shop rate was what was charged. We could show the customer the numbers, but the only number that mattered was that number just before the tax.

    Why bother putting some price on the bike other than MSRP, maybe a sale price on some slow movers, when you know it isn't going to sell for that, no incentive to do otherwise.

    Plus buying a house or RVs will not have all costs in the advertised price, there will be any variety of fees. Anything where you do any sort of dealing will usually have fees that may vary or be negotiated as part of an itemization. My house had a $350 inspection fee, had some other fees related to the deal. We had closing costs paid by the seller, a normal situation, but it can happen the other way too. Or other gives and takes. GM tried the all in pricing with the Saturn and it was a total flop. People didn't want to do the bottom line even if it was a good price. They just didn't respond well to it.

    Most appliances are sold without negotiation or minimal at most. Usually if the price gets negotiated you will find they may drop the price while dropping "free delivery" or you get "free delivery" after you spend enough money for them to justify paying for the delivery with part of their profit margin - which is a hell of a lot higher than that on any motorcycle.
    #26
  7. markk53

    markk53 jack of all trades... Super Supporter

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    Don't bet your paycheck on that. Would you pay new bike prices on a bike with 250 miles, regardless of the mark up? If you knew you were getting bottom dollar price on a 250 dual sport and it was say $3500, would you pay $3500 for one with 250 miles on it? How much would you expect to pay?

    How much profit do you think there is in most motorcycles? By the way I happen to know what the margin is. I know because I sold bikes for a living.

    I know not everyone needs a salesperson, but the majority of riders do not have the skill and ability to deal with building a bike out of the crate or doing any adjustments that may be necessary, much less troubleshoot problems or have another of the same bike in the same color if the one in the crate has some unforeseen problem. Some really aren't sure what they want and coming some place like here and having nameless people tell them a KTM690, a CRF450R, a BMW 1250 GS, or whatever is no decent help. It's like being blindfolded and throwing a dart at a board with all the models on it - good luck.

    Hell, why'd you even ask the question if you really didn't care for the truth? Usual wad of crap that is thrown about by people who really don't have a clue about the total picture. Having dealt with several thousand people on motorcycles I can tell you I wouldn't ride anything that 90% of them had if they did the set up and prep themselves.
    #27
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  8. markk53

    markk53 jack of all trades... Super Supporter

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    Gee, when did you actually get a TV from any store that was fully assembled? How many do you think they can fit in that truck, a couple hundred? Five hundred? Compare that to the number of motorcycles in a semi. Sure is a big difference in shipping cost spread over maybe fifty bikes versus 300-400 TVs now isn't it? Do you have any clue of mark up in electronics between wholesaler to retailer? Clearly not. Seems they can knock 30% off their MSRP to start and make a decent profit. A motorcycle dealer does that they will be out of business within a couple months if that long.

    Do you have a cell phone? Do you have some sort of TV or IP service? Look at the billing on them. A half dozen fees showing. How about buying a house, an RV, a boat? Seems most all big ticket items that have high shipping and prep costs have them broken out, especially when there may be variation in amounts paid for work done.

    I will agree if a person is foolish enough to even consider fees they have it coming. Like others and I have said, it's the bottom line - how much money before tax and real title/license fees.

    Gee you mean like a service agreement? Kind of like what a dealership has with the manufacturer?

    I actually sold motorcycles over the phone - pre internet. There's a Honda car dealer that sells over the internet in my area. Guess what they are - dealerships. They have an agreement with the manufacturers.

    Costco sells cars and bikes - how do they do it? An agreement with the manufacturer and dealerships to deliver in person or at the dealership the vehicle sold.

    Seems you can't get away from a serious representative of the manufacturer on something like this unless you want the problems people have with computers they buy on line. The number one complaint is when they can't get their computer working right for whatever reason and they can't get it some place to get it dealt with having to send it back and sit without one for a time. Imagine doing that with your next bike you buy in a crate delivered to you without any manufacturer representative to deal with the problems - you know... a dealership.

    By the way I've not met too many high rollers in motorcycle dealership ownership. Most use it as a stepping stone to car dealerships if in it for the big bucks. Many actually are enthusiasts trying to make a living.

    There are those who are trying to mislead and screw people over. What is really needed is riders intelligent enough to recognize them and realize you may actually need to spend an extra hundred bucks or two to work with a good group of people.

    I read and hear about people saying pay a bit more and buy American. Yet I'm betting a lot of them won't spend a bit more to work with good people in their own area. They'd run 100 miles one way to save $50. They'd rather cut throats then bitch when they don't get everything their way when they try to get problems dealt with by people who didn't make a dime off of them?

    Why not recognize the "stealers" you often speak of are the ones who sucker you in with BS pricing. The good dealers are seldom the lowest priced, but worth supporting. Learn how to figure out what a fair price actually can be, then give a good store a chance.

    But you won't, so I've wasted a bunch more time over whiners who've never actually been in the situation and don't know any more than they can fabricate.
    #28
  9. Barry

    Barry Just Beastly

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    This. 1 number simplifies the transaction - for the buyer. Out the door price is all I care about. Boggles the mind people complicate the process by concerning themselves with many numbers, fees, etc.

    Barry
    #29
  10. windmill

    windmill Long timer

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    I deliver to a company that warehouses, assembles, and delivers bikes to dealers. Always wondered what they charge dealers Vs. what the dealers charge the customer.
    #30
  11. glory racing

    glory racing Been here awhile

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    Soon all bikes will be sold via the tv and/or internet. But wait, many times you will actually get a second bike for absolutely free. That's right, 2 bikes for the price of one! (just pay a separate fee)
    #31
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  12. Doug Just Doug

    Doug Just Doug Silly Party Candidate Supporter

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    I'd like to have the option to bypass a traditional salesperson altogether in exchange for a lower but fixed price. How many very experienced riders and buyers really NEED a salesperson? I'm guessing most of us do our homework, narrow our choice of bikes down to one or two, and just need a test ride or rides arranged, and then will need the paperwork done if a decision is made to buy, which can be done by employees who aren't working on commission. I've purchased my last 3 bikes brand new (leftovers actually) from a Big 3 dealer, and the sales folks didn't really contribute anything useful -- if anything, they just got in my way and slowed down the process. I have no insight into the business though -- is this a way to lower purchase prices while also increasing dealer profit (as to the experienced rider subset; the sales force would descend on newbies just like always), or is it just a dumb idea?
    #32
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  13. Big John Sny

    Big John Sny Long timer

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    Around here we have very good dealers and very bad ones.
    It is interesting, as consumers that I see are not valuing customer service at all.
    We used to see that when I worked at the machine shop. We would often see people that came in and would tell us they were going somewhere else because our price was too high, but those same people would be back a week later because they were having trouble with the "big box" machine work they had done. They would then say the place they had paid to do the work, had outsourced the work, or had no info to help them, or was just unwilling to talk to them. They could not put together, that our information on how to fix or set up the parts (our support) was part of what they were paying that higher price for.

    Currently when I go try to buy parts for my wife's ninja I get that they don't carry parts for it (not even service parts). The parts are more expensive, and take longer to get to me than from an internet source. The kid they have in the back has no experience to help me with questions regarding the part, and after a 2 minute conversation, I realize that I would never trust this person to do the valve adjustment on the bike, especially since this bike requires camshaft removal to do this. After getting the plastic body panels replaced by them from an insurance job and seeing how badly they botched that, I was more convinced, not letting them touch anything critical on this bike, was the right decision.

    Personally, dealers like this, do seem like a waste to me. I would pay more for a dealer that I trusted their work, that carried parts, and had excited friendly staff, but I know I am not in the majority. I hear all the time how excited people will be because they saved 300 bucks by going to some dealer they have never been to before.

    I figure all I can do is try to support good dealers so the they will be around when I need them. It is actually why I decided to try a Harley. Was actually not interested in one till I built a performance engine for a friends Road King, but the dealer next to me, always had anything I needed, even some pretty obscure stuff. The parts staff actually knew what I was talking about when I went in, knew the part, and had knowledge of the good and bad of the part. If there was anything they had a question on, they brought someone up from the back that actually knew. it was so crazy different than the experience I had at the Kawi dealer, with the kid that tells me "We don't have it, We don't carry anything for a bike that old" for my wife's 3 year old ninja, and then I have to show him which part on the picture is the valve cover gasket. The parts at the Harley dealer here are usually a few bucks more than I could source them on the internet, but they have them in stock if I ever need to have it in an emergency. That is something I want to remain around. Bonus, is that occasionally the parts guy will throw out a helpful tip for installation.
    #33
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  14. Ophbalance

    Ophbalance Web Slinger

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    Here's an example of why, to me, the other numbers matter:

    Several months ago I started looking a VStrom to replace my VTX as my primary bike. So I started to scour FB marketplace, CL, CycleTrader to get a feel for what the market was at and what I'd need to come up with for a final payment. I'd already put $1500 into savings and figured with the sale of my VTX I'd have $4500 to play with. If I had to wait another year I'd have another $1k to throw at it.

    In the course of looking I found a 2017 DL650 Adventure model with very low miles for $5999 at a local dealer. Great! So I try and figure out what the true out the door is going to be as I'd beg/borrow/steal what I was missing for a very cherry bike. The dealer wanted doc fees, prep fees, 3% sales tax (NC has 1/2 sales tax on motor vehicles), other fees, this fee, that fee, whatever fee. In the end the true OTD price on this used bike that would have required no service to flip was actually $7500. I could have gotten a brand new 2019 or NOS 2018 for maybe $1k more.

    Just... NOPE. No way. How? $1500 in fees and taxes? Absolutely insane. $300 alone was for transfer of registration. NOT the title fees, which are actually about $250, but $300 in labor in addition to that. This reaffirmed that I will avoid dealers at all costs.

    In the end, I found someone that lives just 10 miles away that was selling a 2012 DL650 that was willing to swap for the VTX and $800 in cash. It took me 10 minutes at the DMV and $250. They sadly wouldn't let me transfer my old plate or it would have only been $180. I don't know when NC introduced this stupid "one time road use fee", but that was the bulk of the cost as the reg/yearly tax was about $70.
    #34
  15. Barry

    Barry Just Beastly

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    I don’t see how any of that negates the OTD price as the only single number to focus on. Dealer’s manipulate numbers... if there is only 1 number, you remove their ability to game the sale. You can easily say “I want to pay X OTD”, and the bike can be $1 with thousands in fees... long as all that is no greater than X. Or the bike could be more money, with no fees, long as it remains X to you OTD. You don’t care about those other numbers, or shouldn’t, as your OTD price is all that matters to you. Simple...
    #35
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  16. sieg

    sieg Wearing out tires......2 at a time, day after day. Supporter

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    .....so it seems to me that the OTD price was exactly the only thing that matered. Thats the number you're comparing. That versus what you had to spend. The dealer can call it labor, set up, documentation fee, BS fee, theft, or we do it because we can fee. Really wouldn't matter would it, the total was to high.

    If the dealer sold you the bike for a dollar and charged you $4000 in fees for a total of $4001 OTD, would you say that's to much in fees. I'm buying from the dealer across town with the same bike for $3800 because he only adds $600 in fees for a total of $4400. Because fees are important to me when I make a purchase.
    #36
  17. Florida Lime

    Florida Lime Long timer Supporter

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    FTFY
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  18. slartidbartfast

    slartidbartfast Life is for good friends and great adventures Supporter

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    Dealer and private sales are not a very good comparison. Right or wrong, you should expect to see some extra fees from a dealer (although $1500 in fees for a USED bike is nuts) and the need to call for an OTD price - which you did. It is interesting that we have got so used to this though. If I advertise a bike privately, the prospective buyer should be expecting to pay what I am asking or a bit less after haggling - but NEVER more. BUT they will ALWAYS have to pay their own tax and title fees. No private seller is ever going to include that. As long as you know the rules of the game, it should not be hard to compare an OTD dealer cost with a private sale cost.

    I tried to work with a notorious dealer in Florida that always has crazy low advertised prices. Called them up for an OTD price and while their extra charges were eyeball-popping, the total was still lower than everyone else. Something in the back of my head kept telling me something wasn't right, however, so before booking a flight to pick up the bike, I asked for a cost break-down. I got all sorts of assurances about the OTD price but an absolute refusal to send a written break-down. I finally got a sales-person to read it out to me and they had under-estimated the sales tax and title fees by more than $1000. I got an innocent-sounding "how are we supposed to know?" ...well guess what? That's your fucking job and it's kind of important to me (the buyer.) I am utterly convinced that was entirely deliberate and fundamentally deceitful.
    #38
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  19. ZappBranigan

    ZappBranigan Still Riding

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    To be fair, tax is tax, you can't hold that against the dealer. If you think the taxes are too high, you should take that up with the legislature. ;)

    But to get back to the point, to those who say "having a single price would make it easier" the answer is "yes, it would which is EXACTLY why dealers usually DON'T do it." The LAST thing in the world they want is for you to be able to make a clear comparison between them and their competitors.

    The salesman is NOT your friend. His job, his ONLY job, is to extract as much money out of you as he can for the benefit of his employer. That is literally his job description. He is there to look out for his employer's best interests, not yours.

    And that's exactly the way it should be.

    Dealers slap on these fees so they can advertise a "lower price" than the competition, because they know that "lowest advertised price" is what will get you to walk in the door. What they're HOPING is that by the time you spend a few hours haggling with the salesman, that when the additional fees get tacked on, you'll just shrug your shoulders and pay them because after all "It's only an extra $10 a month, no big deal, right?"

    It's the classic "sunk costs" fallacy: You figure you've "invested" several hours (or days) of your time, and you don't want to go through it again so you just pay up. The whole "Let me ask my manager" approach is designed to be as unpleasant as possible so that you finally just agree to their numbers so the whole process can be over with.

    Don't forget that Tru-Coat.



    You really can't blame the dealers for doing this, since it's been shown pretty conclusively that buyers will respond more consistently to a lower "advertised price" than they will to a "no fees, what you see is what you pay" approach.

    So Dealer A sells for $10,999 + tax, no fees and Dealer B sells for $9999 but adds $1500 in fees. Sometimes the fees are disclosed in advance (I know of at least one local dealer that puts a boilerplate into all their ads showing the additional "dealer prep and doc" fees) and some are more cagey, but either way the OTD price for Dealer B might end up being quite a bit more than Dealer A, but Dealer B is going to sell more bikes because he has the lowest ADVERTISED price.
    #39
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  20. Millwright98

    Millwright98 Share the love, leave the dirt in the garden.

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    When I bought my '17 Super Tenere, it was a demo that had been assigned to the Yamaha regional rep. I knew it was coming back to the dealer and I wanted to see it when it arrived, in the condition it was received in. Not post wash and prep for the sales floor. True to their word they called the day it came back, the bike was immaculate and had only 600km on the clock. When the sales rep started talking about % discount, etc, etc. I handed him a piece of paper with a number on it, and my phone number. I simply stated that I was definitely interested in the bike, was paying cash, no financing and that number was what I was willing to pay OTD, including the 5 yr warranty, and that I didn't care how he wrote it up to make that number work. Firm but totally amicable discussion, salesman was clear that he'd have to talk to his sales manager, and promised to call me the next day. Again, true to his word, the call the next morning was a green light. Drove in later that day and wrote a check and rode the bike home.

    I think this went as smoothly as it did for a few reasons....dealer risk in late August of having a large adv bike in inventory over the winter, and I had done my homework on the market pricing, cost of fees, calculated the taxes and knew what % Yamaha was giving the dealer for the demo. I got the bike I wanted for what I wanted to pay at a respectable enough price for the dealership to move the unit.

    The best experience I've ever had buying a vehicle, I buy all my consumables from them now, and they almost always give me 10%-15% discount.
    Just my $0.02...YMMV
    #40
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