Honda Motor Company (HMC), like virtually all manufacturers, itemizes freight & set-up. It is based on the engine size, and doesn’t distinguish geographical differences in the U.S.. ALL dealers are charged the same. Each dealer may then mark it up to whatever they want it to be. My lifelong experience is that almost every dealer misstates the actaul F&S to their customers by telling them “This is what HMC charges us.” The F&S charges are a cost of doing business so the dealer’s gross margin is tagged on. It is separated out from the original retail price to make the unit seem less expensive. (Obviously). Asking a dealer to forego F&S doesn’t just reduce their “profit”, it slips into the “losing money” category. The “hang tags” we placed on each unit would show the “price” of the unit in large font, and underneath that, in smaller font, would say “plus freight, set-up, and document fees”.
The “document fee” is PURE PROFIT. Always meant to be. A collaborative, insidious, and made-up charge to generate additional revenue. Ever notice how the fee, when mentioned on a radio ad, ALWAYS says “may include a NEGOTIABLE document fee of up to $150”? At least it always does within the state of Washington. It’s the law. Intended for customers to HEAR the word negotiable so they realize it isn’t mandatory.
I experienced all of this as the finance mgr at a Honda dealer for three years. I would listen to one of the owners sell bikes and side-by-sides as she, and the sales mgr, cleverly manipulated customers into over-paying. My “job” was to get the customer approved with a finance company at the lowest interest rate possible. Let’s say 4.00%. Then tell them “Congratulations! Your credit is SO GOOD, we just got you approved for a five-year loan at 6.00%! (The dealer gets an instant credit for the 2% difference, and the longest possible borrowing term increases that amount)
Math is hard. People are innumerate. (Illiterate...only with numbers not letters). The dealerships count on getting customers that didn’t sit in the front row in math class. It’s their bread and butter. As the owner would often say “I am NOT their mother! They are making their own choice!”
Still barely pays the bills, though. Owning a dealership is a financial struggle in the best of times. These aren’t the best of times.
You might think I’m a cynic, but all I’ve done is set down the facts...not just opinions.
