Were dealership repairs this relatively costly back in the 70s and 80s?


#1

What I love about this forum is the age and experience people have.
I know the sales model of car sales has drastically changed over the last 20 years.

People got access to invoice prices sometime in the 80s and 90s.
Internet allowed easy comparison shopping.
Leasing has exploded, and margins are razor thin.

In all this time, I think the profit center has become service, not sales.
As a result, service rates are usually double than the local indy mechanic.
Was this always such a ripoff, or just a result of the change in the car dealer business model?


#2

Dealer repairs were ALWAYS much more expensive then the local mechanic in the 60’s to present. May not have been double.

But I also find that a lot more people did their own repairs back in the 60’s and 70’s then they do now. And this includes simple things like doing oil changes and changing plugs.


#3

Actually, dealer labor rates are not quite double that of the indy shop, at least not here

A dealer will charge about $120/hr, while a good indy probably charges $90/hr

In my opinion, the dealer labor rate isn’t really a rip off. The dealer has access to the factory tools and information, while the indy shop may or may not have access to that stuff

And while I may be wrong about this, I believe that a new car dealer actually makes the bulk of his profit from moving cars. Even though the margins are thin. They have to make that profit in sheer volume.

Here’s another opinion. And it has to do with the dealer service department. I believe one of the main goals is that the owners are so happy with their service experience that they will also buy their next car from the same dealer. However, I have nothing to back this up.


#4

As long as I can remember, most dealerships were divided into departments: 1) new car sales; 2) used car sales; 3) service; 4) parts; and sometimes 5) body shop. Each department has its own manager and each manager’s area must show a profit. Through the 1970s, there were service stations that sold gasoline and did a lot of service and repair work. These service stations provided a lot of competition for the service department at a dealership. Today, most of these service stations have disappeared and have been replaced by 7-11 type operations that sell gasoline and groceries. Most independent shops today don’t sell gasoline. These shops do have to make a much bigger investment in equipment than independent shops of an earlier time period. Also, there are specialty independent shops–transmission shops, electrical specialists, etc. One dealer in my area actually sent out transmission jobs to an independent shop. A friend of mine bought a used car with a guarantee and the car was sent to this shop. When I found out and needed some transmission work, I took my car to the shop. This shop had appointments from dealers all over the area.
Dealers have a bigger overhead and have to charge more. An independent specializing in a particular area, say transmissions, does not have equipment such as alignment racks, etc. that dealers have and can charge less and make a profit.


#5

“People got access to invoice prices sometime in the 80s and 90s.Internet allowed easy comparison shopping. Leasing has exploded, and margins are razor thin.”

Now that we have access to “invoice” pricing, the margin between “invoice” and ‘MSRP" has shrunk drastically (by about 50%). Why? The manufacturers and dealers exchange a lot more money now outside of “invoice” pricing, to protect the dealers’ profitability. So don’t think “invoice” is the same thing as “dealer cost”…


#6

I don’t think dealer rates are double independents unless you compare a high end dealer example to a very low end independent.

A dealer rate will be higher out of necessity as the dealer has expenses an independent is never faced with. Required specialty tools that may never be used, alignment rack/wheel balancer/whatever, training schools, the cost of a service manager/writers/etc. are a few examples.

The dealer also has to face dealing with warranty issues which are usually a money losing proposition. Warranty periods and mileage have also been extended much further than they used to be.

Labor has gone up but so has everything related to it.

For some perspective, consider the old paper I found in my attic a few years ago while rummaging for something. It was a copy of a dealer repair order for a clutch job that I paid to have done. At the time I had gone through a major knee operation and was on crutches so it was not a DIY repair .
The labor rate at the dealer in 1970 was 7 dollars per flat rate hour X a 3 hour charge and 20 something for the clutch kit for a total of about 50 dollars. Big money back then…

Mechanics were probably earning about 2.5-3 dollars per flat rate hour so the mechanic earned less than 10 bucks on a clutch job.


#7

Back in the 50’s and 60’s my Dad used the Ford and Chevy garages quite a bit for tune ups and any repairs. Never knew the prices to be that out of line. Used the friends gas station for oil changes and tires. I’m sure they were a little higher but if you had a newer car, you really needed to go to where they had the parts and expertise to deal with it. Plus the dealers could provide a loaner if needed.

I agree that there really isn’t that much of an hourly rate difference anymore witht he dealers and you know you are getting a mechanic that is trained and knows the model he’s working on. I use both and it just depends on what it is.


#8

It’s amazing that some of those gas station mechanics still do a lot of work in the shop. I suppose if the guy is good, and charges fairly, word gets around.


#9

I wish that I could give some helpful advice, but I can’t.
My first car from the '70s–a '71 Dodge Charger–never needed any repairs, and my subsequent car from the '70s–a POS '74 Volvo–was repaired (MANY times) by my indy import specialist mechanic after I realized how incompetent the Volvo dealer’s mechanics really were. The Volvo dealer’s mechanics had a hard time keeping that POS running while it was still under warranty, so once the warranty ended, I used only indy mechanics.

When I bought my '81 Citation, I also purchased the extended warranty (Thank God!!), so GM had to absorb the cost of the many repairs on that car.

My last car of the '80s–an '86 Taurus–was very reliable, and I don’t recall any out-of-warranty repairs on it.

So…unfortunately…I can’t give you a valid comparison between indy & dealer repair rates from the '70s & '80s.


#10

The shop rate at the Chrysler Plymouth dealer I first worked at was $12/hour.
We mechanics got $4/hour, based on flat rate.

And yet customers often complained how much more expensive we were compared to the independent shops in town.


#11

I have been involved with several local new car dealerships and all charged the full overhead of the business, including all real estate costs including property taxes, all utilities, mowing the grass, cleaning the windows and vacuuming the showroom floor to the service department. The service departments were garages with outrageously expensive overheads. And the internal book keeping at several dealerships resulted in farming out all work on the used car inventory because it seemed more profitable to pay a private shop $65/hour rather than the in house shop $85… Those business managers with MBAs were able to see something that I missed. I would much prefer to move $85 from one of my pockets to another instead of handing $65 to someone else.


#12

When shopping for a used car last year, I discovered that a prominent Toyota dealer had a contract with a local indy shop to get the trade-ins ready to be flipped.

That left a somewhat bad taste in my mouth, because the The Toyota dealer was selling used Toyota vehicles, but they were “prepped” by an indy shop. I met the guy, and he seemed honest and competent, but I don’t think they were even using Toyota parts!

Yet if you see the used Toyota on the Toyota dealer’s lot, you’ll probably INCORRECTLY assume that it was reconditioned in-house.


#13

I had a leaking head gasket in the left bank of my Dodge 273V8 in 1968. The car was out of warranty, but the dealer did the job for $55!! The little V8 was easy to work on and I don’t know how many hours were involved. That same dealer replaced U-joints on the driveshaft for less than $45.

Today’s engines are buried under many accessories and just getting at them consumes a lot of time. Any repair today certainly takes more time.


#14

I’ve seen the same thing as db4690; used cars being farmed out to an outside source. At one dealer where I worked their used car preps were done in the washroom by the 2 guys who cleaned used cars up.

Both were great guys but had practically zero mechanical knowledge. They were also the ones responsible for that “Certified” inspection. When a problem developed the customer would then point the finger at the mechanics in the shop as being slackards doing shoddy inspections.


#15

From my feeble recollection, dealer costs were higher. At least in the garages I frequent over the past twenty years, I have found that independent garages are getting closer. In fact, it is worth it to have dealers do some repairs, even if their hourly wage is greater. Some jobs I have found can be done with better results with the right tools and better experience and available manufacturer referral. It is seldom. But, if you buy an Ecoboost motor from Ford and it’s just out of warranty, are you going to have a local independent work on a problem with the motor ? It isn’t as clear as, " which is cheaper ? "


#16

'When shopping for a used car last year, I discovered that a prominent Toyota dealer had a contract with a local indy shop to get the trade-ins ready to be flipped".
This is not unusual. As I said in an earlier post, a dealership is divided into departments. One of these departments is the used car department. Suppose I am the manager of that department. To keep my job, I must show a profit. If I can get the work done less expensively outside the dealership, that is what I am going to do. A good used car manager is a good source of information about where to get automotive work done. These managers know the trim shops where upholstery repairs can be made, body shops that can remove dings at a good price, transmission shops that repair transmissions economically. These managers get special rates at these shops because they send them a lot of business.


#17

Dealerships do a LOT of warranty work, which gets reimbursed somewhat differently than non-warranty jobs…In the '70’s, if they wanted non-warranty business, they had to compete with MANY more good independent mechanics and shops so they couldn’t get too far out of line…I remember sending all our Ford product 4WD clutch replacements over to the local Ford dealer who could do them much quicker and cheaper than I was willing to do them…They had developed a method where the transmission and transfer-case stayed in place and the radiator was removed, the engine moved forward enough to change the clutch without disconnecting much of anything…With today’s electronic marvels, much of the dealership repair work involves “proprietary” parts and service diagnostics so they can charge anything they want because they are the only game in town…


#18

It’s all relative. I remember back in the summer of 1970 and the thought of trading my 2 year old Roadrunner in on a new car crossed my mind. For a few hours anyway.

My aspirations were shattered when I saw those armed robbery prices. The Dodge dealer wanted 3400 dollars for a brand new Superbee with A/C and even worse, the Chevy dealer had the unmitigated gall to have a new 427 Corvette sitting out there with an MSRP of 5500 dollars…

The Dodge dealer had a barely used orange '69 Daytona parked out front and just like everyone else, I passed on it because it was too weird.
What kind of moron would drive around in something like that I wondered at the time…


#19

Hind sight is 20-20

I, too, have passed on some car deals, only to beat myself up about it later

When I was at the Benz dealer, there were several trade-ins that came in, that I should have, and could have, jumped on. I was the mechanic assigned to the cars that were being traded in, and I literally would have had first dibs. But every time I rationalized why I should’t do it. And looking back, I made the wrong decision. However, I did eventually get a nice trade-in for my mom, and she loved the car.


#20

Bad dealerships and bad indys,forever kept me away from a certain area,a good shop is like a breath of fresh air.The local Honda-Nissan dealer is one of the best shops around(west central-VA)-Kevin