How The Dealerships Maximise Profit Off You

With a fair amount of dealership experience under our belts we have decided to share with you some of our inside knowledge from our combined time working at various dealerships on the North Shore. It needs to be said that for me as the founder of GDL Automotive Services the experiences had at the dealer as well as some very shady doings at some smaller privately owned shops are what drove the desire to establish Our business and to pride it on the honest and fair treatment of our clients.It also needs to be said that the actions and processes that the dealerships use are not outright criminal or in some cases not even unethical, they are often dealings that fall in the grey area of whats right and wrong and in any sized business we feel that they dabble in the grey area is unethical in itself. Its probably not fair to call them scams either, more just dodgy dealings.Below is a list of practices we have witnessed that we feel the dealerships practice that destroy trust and tarnish the automotive industry.  

The first matter to bring to your attention is the two year rule. Whilst there is absolutely no written document to support this, a number of times whilst working in a dealership we were informed that “you have two years to make as much money as you can out of each client” The dealerships are well a wear that they do not have a strong repeat client base and are using new clients that have purchased a new car off the show room floor as fresh meat. The theory is that a new client will take twenty four months to realise that they are not getting great value for money and will move to a smaller workshop after that time. At this stage the loss of the client does not matter as the new round of new car buyers are coming through the system. So when you buy a new car be well informed you are not viewed as a valued client who needs to be looked after but rather as a short term source of income that needs to be maximised.

WARRANTY: The next massive issue that all dealers seem to try on is the whole “your car has to be serviced at the dealer to keep your warranty” this is an outright lie. NSW law requires the dealers to uphold warranty as long as the vehicle has been maintained by a licensed vehicle repairer. Our experience is that some dealers will outright lie to clients and tell them they have to, some will tell the truth from the start and that many will not give a direct answer and leave the client believing or assuming that they have to go back to the dealer for warranty.
YOU DO NOT HAVE TO TAKE YOUR CAR BACK TO THE DEALER TO KEEP YOUR WARRANTY!Slowly over time people are becoming more and more aware of this and are moving away from the dealers. To combat this the dealerships have introduced two new systems to try and keep the client coming back to them. The first is extended warranty. Dealers will offer extended warranty, which covers your car for a longer amount of time and kilometers. That amount of time and kilometers exceeds that which is required by law. By offering this extended warranty the dealers can now insist that you bring the car back to the dealer to keep that warranty. In some cases of extended you do have to bring the car back to them for servicing. This is not always the case so be sure to read your contract. Its also important to note here that breaking the conditions of extended warranty by going to a private shop will not break your standard or factory warranty. 

AFTERMARKET WARRANTY:Be very careful with these. These are often sold with second hand cars and whilst it may say three years warranty on the window if you do your research it will not be the

warranty offered on a new car that the vehicle manufacturer gives (dealer factory Warranty). Rather it will be a third party company that will be selling the warranty. In twenty years in the industry I have only once witnessed these companies pay up. One out of possibly thousands and on that occasion they only covered the faulty part to the value of a second hand part replacement not a brand new unit. Our advise is don’t even bother paying for aftermarket warranties as they are a complete waste of money.CAPPED PRICE SERVICING:
The second method that dealers are keeping the client coming back is “capped price servicing” this means that your new car can go in for servicing and your bill will not exceed $XXX what ever that amount may be. Typically this is around the $180 mark. BUYER BEWARE, read the paperwork, there is a long list of repair items this $180 does not cover such as brake pads, disc rotor machining, upsells (which we mention later) tyres and alike. So when you add up your capped price service VS your small repair shop it is more then likely after five years of servicing your pocket will be better of at the small shop at best it will be about the same money spent.Additionally the capped price servicing often does not include preventative maintenance items. This means that cars come out of capped price servicing then come to a private shop only to be told the car is completely stuffed beaches its only had the bare minimum over the past five years. 

First hand experience here, we recently purchased a brand new Hyundai I20 from a dealership in the Hills district, when we went through all the service talk, I told them we would not be bringing the car to them as we were mechanics and why would we pay them to do something we specialise in. An argument broke out after they tried telling me that would void my warranty. When the dust settled we took our car and were on our way. Six months later we get a letter in the mail saying were due for our six month service, I ignored this and did the service myself. Then a few days later my phone got a SMS from the dealership stating “Your Hyundai I20 number plate ABC123 is booked in for a service on June 11 at 8am” I rang the dealer to tell them off and they told me it was a mistake and to ignore it. Six months latter the same thing happened again. If i were not more on the ball i could have assumed my wife booked this in and would have dropped the car off. How many people have been sent texts for services they have not booked but fell for the trick, assumed it was automated or that a partner had arranged it and dropped the car off none the less. Not even a grey issue, out right unethical.

This is how a dealership maximises profit on hours charged out. Legally an apprentice must be supervised by a qualified tech or mechanic. Define supervised? In order for all apprentices to be supervised you would assume they must have one qualified guy per apprentice. Assuming even that is the case thats one for one. Fifty percent of any dealership mechanical staff will not yet be qualified but somewhere through a four year apprenticeship. There is no way of knowing if your car is given to an apprentice. This is required of course in order for the apprentice to learn but our experience from working on the floor at various dealerships is that in most cases they are not supervised until they ask for help, thus things are often missed or overlooked due to lack of experience and supervision.Obviously the apprentice is cheaper in wages then a qualified tech so its financially better for the dealer to have lots of them, when they complete the apprenticeship most are let go and have to find employment elsewhere to make way for the new round of cheap labour and thus keep the salary costs down.
When your paying your bill for a job that took three hours, I can assure you, your paying three hours at the normal rate which is often $110-$150 an hour. But there is no discounted hourly rate to allow for the fact that your car was serviced by an unqualified bloke who for the best part was unsupervised. 

First let me explain how the system works. You call up and book your car in for a service at this point you will be appointed a service advisor however you don’t know it (and it hardly matters) The idea is that one person is the person you will deal with the whole way through the process. On the day that you are booked in you will deal with this same person. Then the car will go into the workshop and mechanic will do the service required and look over the car for any other issues and write them on a job card. Then the job card goes back to the service advisor who will call you to inform you of any additional repairs the car may need and get your authorisation to do them. At this point the up sells get added to the list and your led to believe that the up sells are urgently needed and you are none the wiser.

It needs to be said that these up sells are not complete scams. They are what we call preventative maintenance and are not completely useless. However they are not required at every service and are very rarely needed on brand new low kilometer cars. Why is this stuff considered dishonest selling? Our experience at various dealers is that the consumer is lied to in order to get these up sells. Told “we have your injectors out of the car and feel they need cleaning” is an outright lie. In some engines to remove an injector is a many hour job. As if mechanics are removing them and the part of the fuel injector that needs cleaning is internal part of the injector and can’t be seen anyway.
Here is where the penny drops, service advisors are paid a bonus for every up sell they make. The more they can sell to the client at the end of the week the more money they take home. So what are the common up sell items.

  1. Automatic transmission fluid flush
  2. Air conditioning disinfectant
  3. Power steering flush
  4. On car fuel system cleaner/ injector flush

All of these items are good for the upkeep of your car but with each one costing around the $200 mark thats a possible extra $800 on top of a service you may be getting advised is needed. We have experienced the advisors will not try and sell all of these at once but rather one or two per service so that next time they can sell you the others.

Also be mindful of getting sold an automatic transmission oil flush on manual vehicles, or power steering flushes on cars with electric steering (they have no fluid) We have seen this happen.

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