Not too long ago, I wrote an article about an app that would let you schedule a motorcycle demo/test ride. And I asked you whether you would be OK with paying for it. Was it OK for a dealer to charge you for the ability to schedule and test ride a new motorcycle prior to purchase?
I then set the question against a backdrop of car dealers. Most car dealers will happily hand you the keys to test drive a vehicle which could potentially cost far more than the motorcycle you are interested in. They’ll likely take a photocopy of your driver’s license and hand you the keys to a vehicle. That’s interesting considering that the car could easily cost two to three times the price of your favorite bike.
Many of you had a lot to say about the subject. And, your opinions varied widely. Some think it was more than reasonable to pay for a test ride. Particularly if the cost of the test ride is deducted from the bike’s purchase price. Others thought that charging for a test ride is a ripoff by well-heeled dealers looking to make more profit at the buyer’s expense.
Your comments got me wondering about the differences between the purchase process in the two somewhat related industries. Both sell transportation-related items which often cost many thousands of dollars. So why then is the process different between the two of them?
Difference between motorcycle and car purchases
We’ve already discussed the fact that most car dealers will readily hand you the keys with little more than a photocopy of your license. But why is it that motorcycle dealers are so reluctant to give you the keys to a bike often costing far less than a car?
Clearly, there is more risk of damage to a motorcycle than to a car during a test ride. Cars balance themselves, motorcycles do not. Today’s cars are more easily controllable and require drivers with less skill than motorcycles do. Motorcycles require the rider to balance the machine itself and work a set of “more complex” controls.
But what happens if either the car or motorcycle crashes? The cost to repair either can be quite expensive. However, dealers have insurance to pay for these types of situations. So shouldn’t getting a motorcycle test ride be as easy as getting one for a car?
And what about the purchase process? Is it just as easy to purchase a motorcycle as it is to purchase a car?
Fees and markups
Both motorcycle and car dealers often add fees to the cost of the vehicle being purchased. And in the case of car dealers, non-negotiable fees appear to far outstrip those for motorcycles. But they are required to make a motorcycle purchase.
Additional costs for shipping and administrative burden pretty much apply to both cars and motorcycles. However, for some reason, the fees for cars seem much higher than those for motorcycles.
Does it make sense for either a car or motorcycle dealer to separately charge a buyer hundreds of dollars to process paperwork that they require? Shouldn’t those costs already be part of the negotiated motorcycle purchase price?
Also, why are there separate and quite substantial costs for shipping? If we are being forced to pay the full claimed amount, shouldn’t those costs be included in the MSRP as well?
In the case of cars, shipping can cost more than $1,000. Luckily for motorcycles, shipping costs are substantially lower. However, we are often forced to pay a “set-up” charge that can run into the hundreds of dollars.
I can see the rationale for a motorcycle set-up charge. Motorcycles are not delivered fully assembled. Cars on the other hand are. However, why isn’t that cost included in the motorcycle’s purchase price? It does seem like just another way to extract some additional money from the buyer.
Interestingly, there is a lawsuit against Harley-Davidson whereby a buyer alleges that Harley consistently reimburses dealers for setup. Yet the dealer still charged $1,399 to do no more than Harley pays them to do.
Even more concerning is the issue of additional dealer markup. Perhaps as motorcyclists, we should be happy that this practice hasn’t for the most part made it into the motorcycle industry.
Additional dealer markup
For example, Kim and I are in the market for a new SUV. And we were interested in the KIA Telluride. Its “reasonable” pricing is one of its forte’s. But when we set up a test drive, the dealer informed us that there was an additional $10,000 fee because Tellurides were in such short supply!
I actually contacted KIA and they told me that since dealers are independent businesses, they can do what they wish. In an email, their representative said:
“All manufacturers provide the MSRP, or Manufacturer’s Suggested Retail Price, and we at Kia encourage our dealers price their vehicles in accordance. However, per previously noted franchise laws and policy, each dealer is allowed to set the final transaction price as part of their sales process.”
What do you think?
Do all of these additional fees and extras make sense? I know that dealers provide a service and that they should be able to make a profit. But are the fees reasonable and are they misleading? Should all costs become part of the MSRP? Or would putting them into the MSRP make it more difficult to determine the vehicle’s true worth?
Let us know what you think in the comments below.