Hey Scotty,
My 2005 CR-V with 185,000 is in the shop getting a new Knock Sensor, I took it to my local Austin Honda Dealership. The fix is $500, but they also suggested another $3,000 worth of repairs. I mostly do work myself, and I was just surprised at the outrageous prices they quoted me. $325 to replace the serpentine belt, $216 to replace the spark plugs, $1,200 to replace the oil pan gasket. Why the crazy prices? Just trying to better understand the industry, as I know you have much to say about dealerships.
Thanks!
It's a business model pioneered by King Gilettte of razor fame - make the upfront cost low (sell the razor handles/cars cheap) but then make profits on continuing costs (charge a lot of razor blades /parts & repairs).
The bad news is that the mechanics who are hands-on your car are not getting big bucks - that's why the ones that are good go and start their own, independent shops (which don't have the crazy facilities overhead that a dealership has).
Upvoted for truth.
They have HUGE overhead costs. That, and greed of course. Just don't think the mechanics are the ones making the bucks.
The service manager at one of the local Ford dealers here in Houston makes $360k/year. All the sales managers are $400k+/year salaries, the GM is over the $1 million/year mark, and the owner is a multi-billionaire.
Padding management's pockets is where most of that money goes.
You're paying for all those expensive commercials they put on TV
This is why it’s best to do as much of the work yourself and/or take to an honest, independent mechanic to do the work. I do both and have never gone to the dealership for any work in the last 25 years. Granted some of the parts are ‘dealer only’ but I’ve been able to at least avoid their services. Besides sometimes when they do work on your vehicle they end up messing something up or don’t do the work right - I hear that more often than not. Or they say ‘it’s normal’. I don’t have faith in them.
Depends on the dealership. Back in the day most dealerships owned their lot and their inventory. Was a much different business.
Today many dealerships are paying 15-20k a month or more just for a lot. Then their inventory isn’t owned. Some pay 50-60k a month in loan payments and interest. Overhead on a huge car lot is staggering. Not to mention the profit margin on a New Average Car really isn’t that much. Now special models they will price gouge like crazy. Their money really comes from Add on packages, Service and Used Cars. Profit Margin on used cars is crazy. Large lots will give you 2200 on trade in, then clean up a car and sell it for double that or more. Prime example of special model gouging. There are no Lexus SC430’s for private sale within 400 miles of me. I’d really like to pickup one from 2002-2005. Book is 6-10k. Only ones around are at dealerships and they want 25k or more. And if one does pop up for private sale anywhere it’s gone quickly then reappears on a lot somewhere. And there are many “private listings” that are really dealers in disguise.
Overhead as the others said. If Scotty offered consierge service, he would have to charge more.
