No Monkey for now

[Olyrider]

I listened to both the sales mgr and owner misstate the dealer’s cost. It usually (ALWAYS in the case of the sales mgr) came right after they said “I’m going to be totally honest with you, and show you how little we make on this bike.”

Their job, and they are really good at it, is to quickly measure your enthusiasm and math skills. All that occurs after that is to close you on the sale making the most profit they can.

But you knew that...right?

The sad part was hearing the same “sincere” lying time and again.

 

[Cormanus]

I remember reading a long time ago that, when someone says, “let me be totally honest with you” or “I’ll be frank”, you can be sure you’re going to be lied to.

 

[LongRanger_imp]

I was considering buying a BMW franchise in the northeastern U.S. about twenty years ago. The margins on new bikes back then were very thin -- about 10% at MSRP. A slow selling model, which incurred excessive flooring costs, would eat into the dealer's profit potential. The dealer makes his money at the parts counter, the service counter, and on used bikes. BMW dealers are required to comply with the factory's requirements for carpeting, displays, signage, paint, demo bikes, etc. it's not an easy business.

 

[GoldOxide_imp]

I would imagine so given that many view riding as a discretionary or recreational expense. So when times get squeezed, shops/dealers feel it, versus say a produce grocery store, or even the local liquor store. I think the last really, really good times for dealers here must have been around the late '90s. It seems since then, the established dealers just disappeared. Really sad. Some dealers are supported by other businesses like car and marine sales. Any many now do lawn mowers, snow blowers, generators, pumps, casual and riding ware, etc. etc.

 

[rboe]

I think owning a cycle franchise and farming are very similar in that the quickest way to make a million dollars is start out with two million.

 

[Cormanus]

Interesting, isn't it? When I was a kid, some of the wealthiest people in our small-ish community were motor vehicle franchise owners. They may have had many other business interests, but they got a better than handsome income from selling vehicles. Something has changed. Well, probably lots of things really.

 

[WRXer_imp]

I've never paid "freight" or "setup" on any new bike. Nor will I.

 

[VLJ_imp]

Not all Honda dealers pay the traditional flooring fees. "Powerhouse" dealers don't have to pay it, so they don't care if their new stock sits on the showroom long enough to have multiple birthdays.

As to the documentation fee, our local DMV rep explained it thusly: "It's not a mandatory fee, until a dealership charges even a single customer for it. At that point, once it was charged to one customer, by law it must be charged to all customers."

I've sold motorcycles and other vehicles for over thirty years, and the "doc fee" has never been waived for an in-state purchase. It's nearly always $80.

Freight and set-up? Total hogwash. Nearly all pure profit. These days, most bikes arrive just about fully assembled. All the PDI (Pre-Delivery Inspection) typically entails is uncrating the thing, adding fluids, and performing a cursory once-over.

For new motorcycles that aren't three-year-old leftovers, a general rule of thumb is msrp OTD (out the door, including all fees) is a decent deal. The dealer isn't giving it away at a loss, and you aren't getting gouged. It's a perfectly acceptable feel-good number, and it cuts through all the back-and-forth, fees-based b.s.

 

[Olyrider]

Since we are disagreeing about facts, and not opinions, I will write this once more.

HMC charges every dealer freight AND set-up. That is a plain and simple fact. Whether they raise those prices to generate revenue is on a case-by-case basis.

In Washington, the document fee is NEGOTIABLE. It was written into state law many years ago on the strength of the lobbying efforts, and power, of the Automobile Dealers Association. It was intended to bring additional profit to the dealers by confusing customers into believing it is “the law” therefore can not be negotiated. It is also “the law” that it must always be described as “negotible. Another plain and simple fact not subject to interpretation or disagreement.

 

[Paris_imp]

Since we are disagreeing about facts, and not opinions, I will write this once more.

HMC charges every dealer freight AND set-up. That is a plain and simple fact. Whether they raise those prices to generate revenue is on a case-by-case basis.

In Washington, the document fee is NEGOTIABLE. It was written into state law many years ago on the strength of the lobbying efforts, and power, of the Automobile Dealers Association. It was intended to bring additional profit to the dealers by confusing customers into believing it is “the law” therefore can not be negotiated. It is also “the law” that it must always be described as “negotible. Another plain and simple fact not subject to interpretation or disagreement.

As another poster pointed out, dealers quickly assess your interest level and use it against you in negotiation. Pretending to be disinterested does not work, because (well) you're there talking about buying in the first place. What did work for me with the CB1100 was having a dealership in PA which was actually willing to sell the CB1100EX new for about 3K below what anyone else locally was charging. How they did that no one else knew, but the price and availability could be and was confirmed by several other dealers with one phone call. This cat's paw finally got me a price from a local Honda dealer 2.5K below the lowest anyone else in the area was willing to charge.

That was a lucky one-of situation because PA was not so far from Virginia that transporting the bike was impractical, but you don't usually have that option. I think the key in a normal case is understanding that the negotiation does not have to be a zero sum gain, but that both parties can benefit in different ways. I let them impose freight, documentation and dealer prep, and even allow them an advantage in the trade-in. This, I believe, motivates them to close the deal with me in preference to anyone else. Where I get it back, and more, are in accessories, modifications, and service related concessions. These are things for which the dealer pays a very low wholesale price, or which can be absorbed without an out of pocket loss, such as labor.

 

[apex1_imp]

Please help me understand something. Isn't the freight charge something Honda charges dealers? If yes, how is it gouging to expect customers to pay it, unless a customer thinks the dealer should absorb it as a reduction to profit? I really don't know how it works when it comes to freight charges.

 

[Cormanus]

Apex, see this post by Olyrider: No Monkey for now

Honda charges freight to all dealers.

 

[LongRanger_imp]

The Honda U.S. website site lists the MSRP and $190 destination charge. I'm happy to pay the $190 but my dealer quoted "freight and set up" for an amount several times that $190, not to mention an arbitrary "documentation" fee. Combined, these fees totaled nearly $1000. Normally, dealers are willing to negotiate their fees to close a sale, but not when specific models are in short supply and/or high demand. I can wait.

My DLX sat on the Honda dealer's lot for over a month and the riding season was coming to a close. I paid hundreds less than his asking price and didn't pay a cent for additional "set up" or "documentation" fees. It was a win-win for both sides.

 

[rboe]

In Arizona, once a doc fee is set by a dealership then they have to charge everyone that fee.

However; you can (and I have) had that fee backed off on the sale price of the vehicle. So I ask for the Out the door price, if I don't like it I don't buy it. No sense dickering on price if you're not talking the final price you have to pay. How they distribute the fees and such in the final contract is their business.

 

[PAULIBIKER_imp]

Since we are disagreeing about facts, and not opinions, I will write this once more.

HMC charges every dealer freight AND set-up. That is a plain and simple fact. Whether they raise those prices to generate revenue is on a case-by-case basis.

In Washington, the document fee is NEGOTIABLE. It was written into state law many years ago on the strength of the lobbying efforts, and power, of the Automobile Dealers Association. It was intended to bring additional profit to the dealers by confusing customers into believing it is “the law” therefore can not be negotiated. It is also “the law” that it must always be described as “negotible. Another plain and simple fact not subject to interpretation or disagreement.

Why does Honda charge the dealer for set-up when the dealer is providing the service? Wouldn't it be the other way around?

I know GM pays their dealers a fee on every new vehicle to PDI (pre delivery inspection) it.

Most people don't have a problem with paying the listed freight charge.
Honda posts freight as $190 and the dealer charges $295. Honda says nothing about set-up and the dealer charges $495. Add $180 doc fee and there's about $1000 of "fluff".
Called just about every dealer when looking for a 14 CB1100. Didn't matter if it was listed for $5567 of $6297, they all ended up being about $7K plus TTL.

 

[VLJ_imp]

Honda does charge the dealer a small amount for freight (the destination fee). The amount that most dealers try to charge the customer for freight and set-up goes well beyond what Honda charges the dealer. That added mark-up is nearly all pure profit for the dealer.

As for the documentation fee, here in California dealerships never waive that fee, nor do they negotiate its cost. They charge the same number to every customer, every time. The only manner by which a doc fee could said to be negotiated is when the dealer simply deducts the equivalent of the doc fee from the selling price. The standard doc fee is always still included in the itemized contract.

Edit: As I mentioned earlier, the one exemption to charging a doc fee is for out-of-state purchases and deliveries. If a customer provides his own delivery truck and a bill of lading for an out-of-state delivery and registration, meaning he will not operate the vehicle in the state of California and he will handle all the DMV paperwork himself in his home state, then the dealership may waive the doc fee, since it's a fee charged by the dealership to process the California DMV paperwork.

 

[apex1_imp]

Thanks all for the clarification. When I bought my new 2017 EX in the summer of 2018, my dealer and I agreed on a price, plus the Honda listed freight charge of somewhere around $350 (the exact number escapes me), plus State sales tax and title fees. They didn't even suggest charging me a fee for set-up, which would not have happened if they had suggested it. When it was time to get all pricing details, they had a $150 doc fee that they said was non-negotiable and they could not waive. I had no problem with that at all, as long as they dropped the price of the bike from $10,000 to $9,850. This way they don't have to depart from their position that the fee cannot be negotiated, and I don't end up paying what I consider a total rip-off fee. I had looked at the bike on a first visit, and negotiated terms over the phone thereafter. If they had not dropped the price by the amount of the doc fee, I would not be the owner of that particular EX today. They were actually cool about it. It was an easy sale on a bike that had been sitting around a year.

 

[VLJ_imp]

apex1, yep, they do that all the time. They can't eliminate the doc fee, so they reduce the OTD price by the equivalent cost.

In the end, it doesn't make much sense to focus on the selling price as the key component of the negotiation. For car purchases, sure, that's fine, since there are no hidden fees charged by the dealer other than the doc fee, which is non-negotiable, but motorcycle purchases are an entirely different ballgame, with dealers successfully adding all manner of added mark-up fees under the guise of freight and set-up charges.

Forget all that nonsense. Focus your negotiation solely on the OTD total. You know you have to cover the selling price, state tax (which is based on the selling price, assuming your state has a state tax), documentation fee, and registration (licensing fee). That's your real-world total. Let the dealer work out how they're going to absorb all their phony fees. You just focus on the OTD number.

 

[Olyrider]

Since the document fee is negotiable in Washington, one customer sales agreement might show $150, while the next reads $100, and a third $60.00.

As far as out-the-door pricing, Honda encourages dealers to establish a competitive atmosphere among the departments in order to maximize store profits.

For instance:

Joe comes in to buy a Goldwing and is intent on getting, in his mind, “the best deal”. He spends an hour with the sales mgr. crunching numbers. Sensing that the customer is “price-focused “, the sales mgr starts playing games. “That’s the lowest price I can sell you the bike. To be totally honest, we’re only making about $200 on it. I haven’t heard of anyone paying less. But, I can help you with accessories. We’ll see if the shop can install them for no cost. Would that help you make up your mind? You’re saving almost $300 in labor! And...I’ll try to get the finance mgr to lower the document fee by $50...which we NEVER do. And maybe he can even save you something on an extended warranty to protect your bike.”

Then the competition begins. The sales mgr “tells” the service mgr that the service department will have to install the accessories for “free” to close the sale. The service mgr, knowing that the store owner will both reduce his bonus and embarass him in the monthly meeting for reduced “revenues per hour” tells the sales mgr what he thinks of his mother. Then the sales mgr goes to the finance mgr and says he has reduced the doc fee and lowered the price of the warranty to make the deal happen. Realizing this will reduce his bonus, and cause embarassment for him in the next meeting, the finance mgr tells the sales mgr what he thinks of his sister. Oh, and the “30% off” all parts the sales mgr promised? Explain THAT to the parts manager! The store owner fosters the competition believing, as HMC regional reps tell them, that it all “increases the bottom line”.

Maybe it does...but it’s the reason I buy used bikes!

;-)

 

[Paris_imp]

Since the document fee is negotiable in Washington, one customer sales agreement might show $150, while the next reads $100, and a third $60.00.

As far as out-the-door pricing, Honda encourages dealers to establish a competitive atmosphere among the departments in order to maximize store profits.

For instance:

Joe comes in to buy a Goldwing and is intent on getting, in his mind, “the best deal”. He spends an hour with the sales mgr. crunching numbers. Sensing that the customer is “price-focused “, the sales mgr starts playing games. “That’s the lowest price I can sell you the bike. To be totally honest, we’re only making about $200 on it. I haven’t heard of anyone paying less. But, I can help you with accessories. We’ll see if the shop can install them for no cost. Would that help you make up your mind? You’re saving almost $300 in labor! And...I’ll try to get the finance mgr to lower the document fee by $50...which we NEVER do. And maybe he can even save you something on an extended warranty to protect your bike.”

Then the competition begins. The sales mgr “tells” the service mgr that the service department will have to install the accessories for “free” to close the sale. The service mgr, knowing that the store owner will both reduce his bonus and embarass him in the monthly meeting for reduced “revenues per hour” tells the sales mgr what he thinks of his mother. Then the sales mgr goes to the finance mgr and says he has reduced the doc fee and lowered the price of the warranty to make the deal happen. Realizing this will reduce his bonus, and cause embarassment for him in the next meeting, the finance mgr tells the sales mgr what he thinks of his sister. Oh, and the “30% off” all parts the sales mgr promised? Explain THAT to the parts manager! The store owner fosters the competition believing, as HMC regional reps tell them, that it all “increases the bottom line”.

Maybe it does...but it’s the reason I buy used bikes!

;-)

:celebrate: I enjoyed that! This is exactly what I do every time I buy a car or motorcycle from a dealer, used or new. I never suspected how much trouble I was causing. Oddly, I do sometimes hear “I’ll have to check with service or parts”, but I’ve never failed to get the concession I asked for in the end. BTW, for a huge number of reasons, I would never get financing from the seller unless it was 0% or some very low promotional rate. Know too that the dealer gets a few points kickback on any financing they place.