Of course a dealer has higher labor rates. Their side of the expense ledger is also considerably higher than an independent shop including one area that an independent does not have to contend with.
That area would be warranty repairs, which are often time consumers and money-losers.
ok4450: My thought is that maybe dealerships have a built-in conflict of interest problem. If a warranty repair consumes time and loses money, wouldn’t they have to be just a little less inclined to do a warranty repair? Or perhaps thats why they increase the costs of their other services – to compensate?
When it comes to warranty repairs the dealer has no say-so in this matter. If we use Subaru as an example then corporate Subaru (Subaru of America) requires the dealer have a service department and perform any and all warranty repairs. The Federal government also has a mandate about this. It’s like the Mafia, they’re making an offer you can’t refuse. 
I’ve performed many warranty repairs on Subarus and even handled a lot of warranty claims although the latter was not my job most of the time. The warranty clerk often asked for my help on stubborn claims because I had a bit of a knack for getting the kicked back claims through the system. I was even offered a job as a warranty clerk on several occasions but have no desire to sit in a chair staring at a PC screen all day long.
Several examples of how warranty can be a losing proposition.
Subaru will pay .5 hours (half an hour) for the diagnosis and repair of any electrical problem no matter how complicated. Think about that one for a minute and keep in mind that the dealer and mechanic would be every lucky to even get that half an hour; the norm is .2 hours, or 12 whopping minutes.
I remember reading about one warranty operation (Ford I think it was) involving warranty replacement of brake pads and it paid .1 hours. Think about that one! An astronomical 6 minutes to replace brake pads on all 4 wheels at 1.5 minutes per wheel! A mechanic will spend 6 minutes getting the car out of the parking lot and putting it on the rack, much less doing a brake job on it.
Dealers are also required to buy a ton of special factory service tools, many of which may never be used. These tools can be godawful expensive but the dealer has no choice. The tools are shipped to the dealer and they’re billed accordingly in the thousands of dollars.
Back in the 80s Subaru started a promotion with every dealer giving away a replica Subaru go-kart in a customer drawing. These karts were expensive and the dealers found out later that Subaru was charging the dealers for those carts.
I’ve attended a lot of out of state Subaru service schools and Subaru of America pays for lunch every day. Nice of them, huh? Not so. I found out later that these lunches are billed back to the dealer parts department as a “part”.
See what I mean about expenses the dealer has? And I only scratched the surface.
Thanks for the explanation, I had no idea how separated the dealership is from the corporation. Seems like a s**t rolls down hill scenario I guess 
Hey speaking of that, maybe you guys could have mailed Subaru those lunch “parts” back for a refund when you were done with them lol. Or they’d probably say they wont take them back because you ran the “car” with the parts “installed”.
So the corporation pays basically nothing for the warranty repairs. Thats lame. What I’ve noticed with other things is when someone is not paid for their time they do the fastest most ridiculous hack job ever. I know that might not make sense with the dealership since the customer might have to bring the car back, necessitating more work. In your experience have you noticed a tendency for the service dept to rush through jobs too quickly, even if only out of necessity or some mandate?
Thanks
I get everyone’s perspective and think all are valid from their point of view. Mine is this.
- Don’t always buy the parts from the dealer unless you can’t get comparable quality parts elsewhere,that’s a huge expense for me.
2, Even though the dealer may have a higher hourly price, they often do labor work more efficiently; it often depends upon the job that has to be done. - Regardless of what either the dealer or independent says in the work that they feel must be performed, get estimates from each in writing before you commit.
- Don’t be afraid to say to the dealer…“your price is too high and I want other options. What can you suggest ?” My Toyota dealer when asked, has saved me money by leading me to other parts and service sources when this was done.
- YOU decide what routine maintenance that has to be done by using manufacturers suggestions, not the dealer.
- Always be friendly, courteous but firm. I tell them over and over I respect what each says but I need to do what I have to do. I can’t over emphasize how important it is to remain on good terms with everyone who services your vehicles.
- Respect that NO ONE really gets rich off the service they provide you and accept that everyone has to make a living. Be willing to pay fair prices for good service instead of going with the cheapest at all cost… I make sure I tell them that as well.
Even though the dealer may have a higher hourly price, they often do labor work more efficiently; it often depends upon the job that has to be done.
Both the independents and dealers all charge the same flat rate. If the book tells them it takes 2 hours for this job…then that’s what they charge. If the dealer can do it faster…they still charge for 2 hours. More efficient does NOT mean cheaper. The savings is NOT passed on to the consumer.
Here in the North East many dealers make well over 50% of their profits in the service bays. Especially the big multi manufacturer dealership. These dealerships may sell 2-5 different kinds of vehicles (Honda, Toyota, Chryco and Volvo)…but they only have ONE service area to keep costs down. They don’t lower their prices…but their costs are down.
Mousse, let me add a few comments about flat rate in regards to rushing a job. The flat rate pay system sucks for want of a better word but the alternative could be worse.
If a job pays 2 hours flat rate and a mehanic does it in 1 hour then kudos to the shop and mechanic. What often happens is there are many influences on that job that may not allow it to get done in 1 hour and often a 2 hour job turns into 4 hours. The customer still gets billed for 2.
The advantage of flat rate is that it provides an incentive by assuring a mechanic does not spend all of his time around the coffee dispenser. The disadvantage is that it can promote speeding through a job which can lead to mistakes or even downright fraud.
An alternative would be for a mechanic to clock in and bill for actual time but this would go over like a load of bricks when a mechanic spends a full 8 hour day loitering around and putting a set of brake pads on.
Ideally, what should be done is that a mechanic should be paid a set, per hour wage (work 40 hours, get paid for 40 hours) but I don’t see this ever being done in the immediate future. Any argument about a mechanic loitering could be easily remedied. A lazy mechanic is easily spotted and given the axe.
I do disagree if there is any insinuation that an independent shop is more fair with the flat rate book than a dealer is. If anything, an independent has no corporate master breathing down their neck to make sure they’re not gouging. A dealer who is routinely gouging is going to have many complaints and corporate is not going to stand for it. Some years ago the sales dept. was using bait and switch at a Subaru dealer in OK City. They got caught and were warned. It happened again and the franchise was pulled.
The dealer MAY make a little money on some warranty repairs but it’s often very limited or nothing. If a mechanic spends 3 hours repairing a warranty problem and only gets paid half an hour then everyone loses, including the parts department. Under warranty, most reimbursement to the dealer on parts is limited to dealer cost + 25%. There’s a level of bureaucracy involved in claims processing that chews up any overage and that doesn’t include the redos of the claims they have an annoying tendency to kick back.
We’re still barely scratching the surface…
MikeInNH “More efficient does NOT mean cheaper. The savings is NOT passed on to the consumer.”
Let me give you examples.
1)The manual hubs on my Toyota truck were seizing. I had been taking it to an independent for service. He offered to repair them saying, he would do what they could for about two hours labor. When I returned to pick it up, he claimed he cleaned them by removing and soaking without dismantling because he did not have the right tools, but offered to replace them with rebuilt as their job did very little to improve the situation. Guess I pay for the “soaking time” and got a soaking.
Two months later as they worsened again and became immovable, I drove across the street to the Toyota dealer. They offered to dismantle and clean them in 1/2 hour with the right dis-reassemble tools. They were like new…I call that more efficient. The time estimate to do the job was different for each. Independent estimate cost labor and parts—$500, dealer actual cost about $75
- The dealer said a replaced broken leaf spring on my truck required an entire new pack, on both sides for $1000 plus dollars, but he could do it one afternoon.
Independent could make up one leaf spring, needed it over night and would replace leafs as he found them broken…2 days away waiting for spring to be made up and delivered but no labor charge in mean time, less then $200 total because of fewer parts needed with inefficiency I could live with. The job descriptions were again different. Replace two packs from dealer…replace one spring from independent…their hourly rates were different too !!! Now I call the independent more efficient.
Just a couple of many I have had…like I said, it all depends upon the job…I do not see the same job description from each which makes their costs to me different. Maybe I didn’t make my point clear enough or I’m not getting yours.
Also, your statement of "Dealers here in Southern NH and Northern MA charge about $130/hr. The independents don’t charge anywhere near that. " seams to agree that there is often a difference in cost for similar jobs as well…yes or no ? If the flat rate was for 2 hours and both charged the same hourly rate, I could get it.
the only way all this work would make sense is if you had tons of road salt on the vehicle for years and didn’t keep up with inspections. this would allow leaks in the boots to wear down, rotors to rust, rust the exhaust system causing leaks, rust the converter, etc.
and a note on dealers. some are good and some are bad. we have a subaru dealer around here whose mechanics are smart and the labor reasonable.
we have a chevy dealer however that can’t diagnose anything, and they charged me 97 dollars per hour for labor. I have a graduate degree and don’t make that much!
find someone you are comfortable with… that’s all that matters. If you are uncomfortable, then find someone else.
Your comment about having a graduate degree and pay is way off the mark. You state that with a grad degree that you don’t make 97 dollars an hour. The mechanic who was looking at your car doesn’t make anywhere near 97 dollars an hour but the hourly flat rate charge for the shop can be that much.
If you work 8 hours a day you get paid X dollars per hour, right? With a mechanic this is not the case. It’s entirely possible that mechanic worked 8 hours and only got paid for 4. In fact, it’s very common for mechanics to put in 40 to 50+ hours per week and only get paid for 30.
There’s a lot more to that 97 an hour than meets the eye.
Just wait until the OP’s Head Gaskets fail…They will run out of printer paper when they print the repair parts estimate and labor costs… JEEZ man… WHy can I get all this Subaru biz? I’d sure save people a ton of money I know that. I would RUN from the dealership if you ask me. Find a good local guy…and be nice…
ok4450… thank you for the clarification… it’s just hard to swallow when the other shop is charging half the price.
Not all dealerships work the way OK described it. I know a couple that don’t work that way…but their prices are still very very high. No matter why the prices are high…there’s no reason to go to the dealer.
Dealers have far more expenses than the local independent down on the corner. That 97 dollar figure is not an arbitrary one picked out of the air; it’s designed to cover the bases and, hopefully, make a profit. The warranty labor rate is generally discounted (not set by the dealer) and odds are the warranty rate is probably about 80. That’s high, but if GM figures that much you can bet that the 97 is within reason.
The independents don’t have a staff o service management to contend with (and pay for), they don’t have to buy those thousands of dollars worth of special factory service tools, a 5 digit in cost alignment rack and wheel balancer, nor do they have to fund a dispatcher and warranty clerk. Both of the latter require a salary, computers, office space, workers comp, and a benefit package. Taking care of warranty and the assorted red tape is a full time job and someone has to pay for it. The independent is left out of that loop.
Those few things I mentioned are just the tip of the iceberg too.