One of the most amazing rip-offs built into the new car buying process is a thing called, innocuously enough, dealer delivery charge. Let’s put that under the microscope.
Dealer delivery adds significantly to the price
Recommended dealer delivery fee: $2500
Fair value of actual services provided: $450
Rip-off factor: $2050
Even the term 'dealer delivery' is a lie: they don't deliver the car; you collect it...
Dealer delivery charge is – purportedly – the cost of getting the car ready for you to collect. But they don’t even deliver it. Talk about your semantic promiscuity. It’s really just a matter of getting your new vehicle off the truck, cleaning it up, checking the major fluids (the oil, the coolant, stuff like that), checking the tyre pressures, registering the vehicle, bolting on the plates, maybe driving it around the block just to make sure it works … and waving goodbye to you as you drive of into the traffic.
The best news is: dealer delivery is entirely negotiable. Keep reading.
Everything about dealer delivery is a lie: Even the name. There is no ‘delivery’ – you come in, and collect it. Come to think of it, it would be kinda nice if they valeted it over to your place – but that would be a bit too clever for the steam-powered Aussie car industry. They don’t deliver it, but they do prepare it – so exactly what preparation is involved, and how much would you be prepared to pay for that?
Let’s be generous: 30 minutes of a mechanic’s time (or, more likely, an apprentice’s time) is – maybe – $50. Pulling off any protective plastic and washing the car? Maybe another $50. A full tank of fuel? Let’s call that $75. Having the girl from the office run up to the motor registry with a stack of registration forms, of which yours is one? I think $30 would be fair for that. Bolting on the number plates? Call it $20 … provided they take their time and get them straight. And use stainless steel screws.
That’s a grand total of … $225. And the preparation is the same, no matter if it's a C-Class or a Kia Rio. But everyone has to make a profit. So let’s impose a 100 per cent profit margin over the top of that. Just to pay for the chrome, the glass, the dealer principal’s bad taste S-Class Mercedes-Benz and his kids’ private school educations, and the wife’s bad hair and liposuction.
Total for a fair and reasonable dealer delivery fee: $450.
Dealer delivery charges on ordinary cars in the $30-40k ballpark are in the order of $1500-$2000 – and that means $1250-$1750 worth of pure, unjustifiable dealership profit. As in: bend over; this will be over in just minutes. You won’t feel a thing. It’s a comprehensive, inbuilt, systematic, insulting violation.
Here's the four-step plan to beat extortionate dealer delivery charges
What you need to do is:
- Go to the dealership without your trade-in. (You can discuss a trade-in afterwards, down the track – but only once you’ve agreed on a price for the new vehicle, otherwise the trade-in will be used as leverage against you. Guaranteed.)
- Next, produce a written quote from another dealership – and use that as the springboard for any negotiation. Say, if you can make me a better offer, I’ll do business with you. And arrive at a price.
- Then, get the breakdown on that price – in writing – as a list. You’ll see the retail price of the vehicle, plus the options and accessories, plus stamp duty, plus registration fee, plus CTP insurance (if it’s not included in the rego in your state), plus dealer delivery.
- You then need to zero in on that dealer delivery charge. Ask them exactly what it’s for – ask them to justify it, based on what you now know. Do it politely, graciously, even. Break it down for them – the fuel, the wash, the once-over, the number plates. Tell them – again, politely – that you think $450 is fair and reasonable, and in any case you’re not prepared to pay more than $450 for the so-called ‘delivery’. Make it clear that the success or failure of your deal rides on this condition.
This is very basic stuff. Car industry 101. Don’t get ripped off by the dealer delivery charge. Once you’ve decided exactly what car you want, one strategy is to map out the three closest dealers to you. Go to the furthest one first, and come away with a written quote. Then use that written quote at the next-closest dealer, to see if they can stump up a better deal for you. Then repeat the process at the closest dealership to you ( and that dealer will probably check your address and figure that you’ll probably get your car serviced at his dealership, and he’ll make incremental profit that way – that’ll be a factor in the decision on what price he offers.
Alternatively, just get a professional car buyer on your side – they work for you and use inside knowledge and bulk buying power to achieve fleet discount pricing – or better – every time.