Why do dealers charge so much?

You have to look at it from the customer perspective. Most people only care that the grass gets cut. When the price difference gets past a certain point, the benefits from using a pro tend to diminish in the eyes of the customer. That tipping point depends greatly on the complexity of the work, total expenditure, liability concerns and so on.

Ok, so you still think by the dealer charging 500 on the OPs problem as compared to the independent shop’s 300 that the dealer is ripping the OP off?

The kid next door, or for that matter anyone who is “hired” to work for a homeowner is an employee of the homeowner and the homeowner is responsible for the employee and a any damage that the employee does. In other words, if the kid cuts his foot off the homeowner is liable for the medical expenses. And if the kid runs over a rock, which flies into the street and breaks the $2,000 windshield of a MB, the homeowner is responsible. But if the homeowner has a licensed lawn care service do the work they carry all responsiblity for themselves and damage they may cause.

i would never say that the dealer is ‘ripping’ him off.

it may be that an un (or under) informed custmer may be being tsken for a ride by a service advisor. how would the customer even know if they were getting the shaft???

this is a trust issue. obviously the OP felt it necessary to question the validity of the dealerships estimate.

that is good.

the fact that he has to feel this way is unfortunate. (but is a good thing)

eddiek has thoughts that indicate he may be suspect about the integrity of the service/price. isn’t that good that a customer is interested BEFORE they have the work done, and then gripe? then thats a lose lose for all parties.

dealerships charge alot of money so they can pay off more cars and have a nicer store so youll buy from them, bike mechanics have crappy shops because they dont charge much, and well, theyre bikers

Personally, I always think that everyone should get another opinion on any repair; and even two additional opinions is preferred.

What I object to is comparing prices between a dealer and an indpendent shop on the same repair when the playing field is not level and assuming because the repair is much higher that this automatically means being gigged.

The dealer is going to use a factory OEM part (they have to) and they’re going to pay a lot more for that part than a local AutoZone or Checkers would on an aftermarket part.
I assure you the factory is not giving the dealer a “break” on parts prices. In fact, it’s been my experience that the biggest mark-up is the one made to the dealer by the factory.

Consider a Subaru part. This part cost the distributor 6 bucks out of Japan and the dealer was billed 65 for it. The part is then retailed over the counter to the customer for 95.
Who’s tacking on the biggest % here?
It’s much easier to curse the live person standing there rather than an anonymous person in an office a 1k miles away who could care less.

The transmission I mentioned? 3700 or so dealer cost, marked up to 4500, and sales tax (9.5%) pushes it to about 5 grand. Obscenely high, but there’s not much mark-up on that trans by the dealer.

See where I’m going with this? The same applies to labor rates. The dealer is generally higher on labor out of pure necessity and one thing the dealer must fight with is warranty labor. Warranty labor not only pays less per flat rate hour, but also pays less flat rate TIME. It’s a lose/lose and that’s not counting the warranty repairs the dealer may get stuck with when the factory won’t pay up.

That can be a pretty complicated issue so I won’t go any deeper into it except to say that if someone went to work in a dealer service dept. they would see how this all works.

Take a look at this. This is a reman and is more expensive than what they cost new from the dealer. Ouch.

(Makes me appreciate those ones I get for 5 bucks from the Pull a Part yard.)

Service and parts pricing is higher than independant shops for all the reasons enumerated by others here, but ALSO because the profit margins on the sale of new cars are very SMALL . . . I am a Toyota / Scion Internet Sales Manager and I know how little we make per car these days on a new car sale . . . it is Serivice, Parts and Used car sales that keep a dealership in business.

The price of parts thru the parts department supply channel is so high that you are foolish NOT to buy the extended warranty that Toyota offers for instance, without even considering the labor costs.

OH , Good one Dartman, very good I never looked at it like that, I would love to say i care and dont want to rip off the insurance company but when it comes to my baby i want the best…
so i guess it has to be an individual prefrence…
but leads me back to simple repairs and seeing other less knowlegable getting taken advantage of…yes…yesss a 5 or 10 dollar piece of mind is worth every peny but in my case i stand and watch my baby go under the mechanics hands/tools…and if there is anything i feel uncomfortable with i Do speak out…
Not many people have time to stand and watch and nor do i …but i make time when i have to as that is my piece of mind.
no amount of money will make me feel or have my piece of mind when working on my car…
Yes i know what your gonna say there…its a sad life you lead there EddieK and thats fine…
but you must know i have been blessed with OCD and have been knowticing that lack of trust as i get older seems to be coming out more, or is it just the bad expieriences i have had>?Hummmmm…who knows
I do know one thing…my spelling stinks…

your loosing me guys …whats OP?

OP = original poster

you should go back to the dealership, he’ll treat ya betta.

after a good nights sleep i finally figured out what has been bothering me about this post!

the dealership repair shop IS bigger. it DOES have more costs associated with it. it Does have higher overhead.

but it is relatively similiar in costs to a small mechanic shop, since the dealership does 10 15, maybe 20 cars a day. it depends on volume to keep the profits up.

my neighborhood mechanic does maybe 4 cars a day max, usually 2 or three.

since my mech has lower volume (its only him and a helper) he doesnt depend on sheer volume, but on customer satisfaction, and return business.

if i get screwed by him i DONT go back.

if eddiek gets screwed by the dealership does he know it? would he go back if he doesn’t even know he got the shaft? a place that depends on volume is trying to get the most dollar out of each visitor (customer in for repairs) by “insisting” or “recommending” necessary services which are bogus. that is using unscrupulous business tactics.

i have been there, seen it, and (over)heard some of these service advisor recomendations. it is disgusting!!!

and brian give it up would you??!!

You’re still missing something here. The dealer shop is larger and they have more mechanics; true. But they do not make up for it on volume as it is not exactly proportional.

I’ve mentioned that the money the dealer has to outlay is considerably more than what an independent shop has to spend, and this really applies in the case of a very small or 4-5 mechanic shop.

In the service dept only at the dealer you will have to pay wages/benefits/workers comp/matching S.S taxes, etc. for:
Service manager
Service advisors
Warranty clerk
X number of office help for the paperwork

Office space, computers, office supplies, multiple phone lines, desks/chairs and something else that the ind. shop does not have to do. That something else is the lease payment the dealer must make on that building which is usually in a prime traffic area (HAS to be to sell cars).
A small dealer I used to work for was having to pay 120k a year just to lease an empty building.

A truckload of factory OEM special tools which are expensive, non-stop, and the dealer has to cough up money for.
Front end alignment rack, wheel balancer, engine diagnostic machines, along with a multitude of other specialty tools.
Go into the body shop and there is another set of circumstances just like service. Consider what the cost of complying with EPA mandates is in this area and that is exactly why some dealers are even doing away with body shops and farming it out. In some cases, dealers are getting together and forming a cooperative body shop (Ford, Toyota, Chevy, etc.) under one roof to ease the pain of regulatory costs.

Ongoing service training schools for techs. Consider what a round trip plane fare, meals, incidentals, hotel, etc. will cost for a week in a city a 1000 miles away.

Parts? The ind. shop does not have to pay wages/benefits/workers comp/matching taxes like the dealer must.
Walk into a dealer parts dept. and look at all of those people, equipment, and shelves full of parts. The dealer MUST keep those parts there and the dealer is also having to pay interest on those parts until they’re sold. Consider interest on a 100 grand for instance.

You know, those are just a sample of what the dealer must cough up every month and the list could be made a lot longer if needed.

Drive by a car dealer and you may note a promotional blimp floating in the air. That blimp may be required by the factory and the dealer is going to pay for it.

Many years ago I worked for a small town Subaru dealer and Subaru put on a promotion involving the giveaway of a Subaru Brat go kart to anyone whose name was drawn.
Cool, the boss thought. That should bring in business. He was not real happy some months later when Subaru of America BILLED him 1100 bucks for that kart; and this was over 20 years ago. Today’s dollars; ouch.

You may not know that when attending a Subaru service school that Subaru “pays for your lunch”. Not. They pay for it at first and then bill the dealer’s parts dept. for the lunch. They technically consider the “lunch” as a “part”. Sort of.

This may be lengthy but I hope it provides some insight into a part of those things the dealer has to shell out for every month.

Brian does not upset me at all. Just another keyboard warrior at work and I’ve already asked him once; what state does he live in? I’m perfectly willing to meet him sometime for a real estate deal (of which I’m legitimately looking for a vacation lot somewhere).

Your post has been moved to the moderation queue.

Username: Brian928s
And once again for the record…

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------------------Username: Brian928s
Willey. I see, according to you, you need “experience in the automotive field " to see that a
dealer charges twice what the shop across the street does for a windshield motor. OK, gotcha.
And you need experience selling HDTVs to see that Best Buy sells a certain 55” TV $800 less than
Tweeter across the street, right? But people should go over to Tweeter since their overhead is
higher and they need to price items higher, and it’s not a “ripoff” it’s just the way they do
business. Isn’t that right, Willey and ok4450?
And I haven’t been ripped off for repairs because I know what fair price for a job is and I
don’t DEAL with dealers like you probably do, I do the work myself or take it to my usual shop.

So you’re wrong on that point also. At least you’re consistent, eh?

thats why i have my grandmother doing the gardening to cover her share of the rent…lol


is that like “wine me-dine me and make me write bad checks”?..lol

You’re the only one having a problem understanding it ok4550, maybe you should get some common sense one of these days.

So what state do you live in? Are you going to help me with a property purchase or not?

Email addy is ok4450@yahoo.com


so ok, hearing this makes me now think i am one step ahead and when going to a dealer if i see a big inflatable “whatever” in the front lawn and dancing bears out in the drive and nice clean manacured lawn and pretty neon lights…
I will stop and turn around as i do not want to pay for all the pretty things just want my car fixed and pay for that only…