Does EVERYONE Pay Dealer Prep Charge?
Thread Starter
Almost a Member!
Joined: Mar 2002
Posts: 39
Likes: 0
From: Miami Beach
E320 - 2003
Does EVERYONE Pay Dealer Prep Charge?
FL dealerships seem to impose a mandatory dealer prep charge ($300-$500) into every contract. I never had this when I lived in CA.
Have any of you been able to successfully make your dealer waive this? Or is this one of these non-negotiable items?
I'd appreciate your feedback from around the U.S.
Have any of you been able to successfully make your dealer waive this? Or is this one of these non-negotiable items?
I'd appreciate your feedback from around the U.S.
Member
Joined: Dec 2002
Posts: 101
Likes: 0
From: Santa Cruz, CA
'03 E320
Dealer Prep
I'm with MCO - I haven' t paid this type of charge.
I have seen this on the "Add-on" stickers some dealers use, but think they only collect when demand is high and supply is low. In CA, some dealer stickers have even stated "Additional Delaer Mark-up/Profit"
In general, the dealer profit should cover all sales expenses, including preparing for customer delivery.
Suggest that one negotiate from dealer invoice or manufacturers sticker.
I have seen this on the "Add-on" stickers some dealers use, but think they only collect when demand is high and supply is low. In CA, some dealer stickers have even stated "Additional Delaer Mark-up/Profit"
In general, the dealer profit should cover all sales expenses, including preparing for customer delivery.
Suggest that one negotiate from dealer invoice or manufacturers sticker.
Senior Member
Joined: Nov 2002
Posts: 454
Likes: 0
From: NC
'03 Mercedes E320
In this area (NC, VA), there's typically a "Documentation Fee" supposedly for title and office paperwork, in addition to DMV charges. It's all part of the equation, prominently posted, etc. Most are $150 to $250, all makes. No charge for "prep".
A never ending debate: how much a dealer should charge is like arguing how much one profession/skill should make versus another. If my dentist wants $600 for a root canal and cap, should I offer him $300 or walk?
A never ending debate: how much a dealer should charge is like arguing how much one profession/skill should make versus another. If my dentist wants $600 for a root canal and cap, should I offer him $300 or walk?
Member
Joined: Dec 2002
Posts: 93
Likes: 0
From: USA
2007 E350 Sport
dealer prep
I call it the "fudge factor" and consider it to be a full profit item for the dealer. In my state, on the purchase form it is usually in bold print at the end of the form where items such as tax and doc. fees are placed. On my Mercedes it was not negotiable, but I refused to pay it on my son's G35 and "got away with it".
Trending Topics
MBWorld Fanatic!
Joined: Nov 2001
Posts: 1,783
Likes: 0
From: Sunny South Florida
1995 Jaguar XJS Convertible
It is bogus.. I do not plan on paying it either... From my contract:
Administrative Fee: $495.00
FL Tire and Battery Fee: $6.50
Tag: $225
The dealer does not use the $495 to pay for s**t as far as I am concerned. If it were a common fee used at all USA dealers, then I could see the point, but it is not.
Florida car dealerships... They basically SUCK.
Administrative Fee: $495.00
FL Tire and Battery Fee: $6.50
Tag: $225
The dealer does not use the $495 to pay for s**t as far as I am concerned. If it were a common fee used at all USA dealers, then I could see the point, but it is not.
Florida car dealerships... They basically SUCK.
MB World Stories
The Best of Mercedes & AMG
New Mercedes-AMG SUVs Arrive With NEW V8 Engine: 12 Things You Need to Know
Verdad Gallardo
8 Oddball Mercedes Ideas That Actually Made it to Production
Verdad Gallardo
Dubai Tuner Gives the Mercedes G-Class An Entirely New Look
Verdad Gallardo
Six Gift Ideas Your AMG Loving Dad or Grad Will Cherish
7 Craziest Things AMG Gas Ever Built
Verdad Gallardo
New Electric Mercedes-AMG GT 4-Door Coupe Unveiled: 10 Things You Need to Know
Verdad Gallardo
6 Mercedes Models That Did NOT Age Well (But Are Somehow Still Cool)
Verdad Gallardo
Manual Mercedes? 6 Times Sindelfingen Let Drivers Have All The Fun
Verdad Gallardo
Mercedes SLR McLaren 722 S Is Extremely Rare Example Modified by McLaren
Verdad Gallardo
Senior Member
Joined: Dec 2002
Posts: 285
Likes: 0
From: Ohio
2003 E320
Re: dealer prep
Originally posted by Carnaught
On my Mercedes it was not negotiable
On my Mercedes it was not negotiable
Senior Member
Joined: Nov 2002
Posts: 454
Likes: 0
From: NC
'03 Mercedes E320
All these fees seem to be the result of pricing demands to be "$x" over invoice, so the dealer says OK to that but the manager knows he has some back end money to cushion the deal or provide a profit. It's probably posted or preprinted on the sales agreement, but often overlooked during negotiation.
Interestingly, as well, most dealerships do not include these fees in the profit calculation when they pay sales people on commission. There is usually a formula like this: Cash tendered excluding fees plus actual cash value of trade (ACV), less invoice (which likely also has advertising costs for a regional dealers association and charges even for the gas in the car from the factory), less "the pack" (which is an overhead figure charged to the salesman, anywhere from $100 to $500)= Profit. Profit times x% is the payment to the salesman unless they are on a flat fee.
The salesman usually does not participate in holdback nor any fees for prep, doc, etc., nor any back end money the manufacturer sends to reimburse for expenses. That's why money for surveys or other "spiffs" are important to the guy on the floor. My salesman told me a "C" nets him about $300.
Interestingly, as well, most dealerships do not include these fees in the profit calculation when they pay sales people on commission. There is usually a formula like this: Cash tendered excluding fees plus actual cash value of trade (ACV), less invoice (which likely also has advertising costs for a regional dealers association and charges even for the gas in the car from the factory), less "the pack" (which is an overhead figure charged to the salesman, anywhere from $100 to $500)= Profit. Profit times x% is the payment to the salesman unless they are on a flat fee.
The salesman usually does not participate in holdback nor any fees for prep, doc, etc., nor any back end money the manufacturer sends to reimburse for expenses. That's why money for surveys or other "spiffs" are important to the guy on the floor. My salesman told me a "C" nets him about $300.
Senior Member
Joined: Dec 2002
Posts: 285
Likes: 0
From: Ohio
2003 E320
Originally posted by jim256
The salesman usually does not participate in holdback nor any fees for prep, doc, etc., nor any back end money the manufacturer sends to reimburse for expenses.
The salesman usually does not participate in holdback nor any fees for prep, doc, etc., nor any back end money the manufacturer sends to reimburse for expenses.
Senior Member
Joined: Nov 2002
Posts: 454
Likes: 0
From: NC
'03 Mercedes E320
Gethen: That's correct, while it's really all the dealer's money, his deal with the salesman normally does not include the fee side of the business--that's overhead; and holdback is usually netted against floor plan interest and other charges each month between the factory and dealer so little money normally changes hands there. Obviously there are dealers and deals that could include back end money for the salesman, but at least in this area they don't. The secret is to sell a used car at a high price which was bought for a low figure(low ACV)!
They also typically don't get any part of the financing or lease profits. That is shared only with the Finance Manager.
I'm not condemning the dealer: he's the guy/girl who is into it for the $2 million showroom MB convinced him to build, and he's the guy who has to make payroll for the entire 100 person+ dealership. Industry figures peg dealer investments at earning 2% or less--during a time 10% was easy on investments. I spent a lot of time and energy pondering an investment in a dealership, and it was just not worth it but it sure gave me a lot of due diligence information about how you can or can't make money. Many stores can be bought for little more than the debt outstanding, but there's a lot of cash in and out, and a lot of risk. The dealer only gets to "pocket" what's left after a lot of overhead and variable expense, the salesman's commission being only a very small part.
They also typically don't get any part of the financing or lease profits. That is shared only with the Finance Manager.
I'm not condemning the dealer: he's the guy/girl who is into it for the $2 million showroom MB convinced him to build, and he's the guy who has to make payroll for the entire 100 person+ dealership. Industry figures peg dealer investments at earning 2% or less--during a time 10% was easy on investments. I spent a lot of time and energy pondering an investment in a dealership, and it was just not worth it but it sure gave me a lot of due diligence information about how you can or can't make money. Many stores can be bought for little more than the debt outstanding, but there's a lot of cash in and out, and a lot of risk. The dealer only gets to "pocket" what's left after a lot of overhead and variable expense, the salesman's commission being only a very small part.
MBWorld Fanatic!
Joined: Nov 2001
Posts: 1,783
Likes: 0
From: Sunny South Florida
1995 Jaguar XJS Convertible
Originally posted by jim256
My salesman told me a "C" nets him about $300.
My salesman told me a "C" nets him about $300.
Senior Member
Joined: Nov 2002
Posts: 454
Likes: 0
From: NC
'03 Mercedes E320
Most dealerships show the door to salesman who cannot sell 10+ cars per month, and the C is the minimum deal, while an E or S is obviously better. A used car is usually the best pay. Car salesmen, however, are not highly paid, and the successful ones are successful for a number of different reasons--not always because they have just the lowest price.
Used cars can net a few thousand dollars to the salesman. The key to used cars is their uniqueness. A good salesman can show or convince you that there's not another one just like the one he has--he can build value-- while you and he both know the brand new E320 Sport with the stone interior is at 3 dealerships within 100 miles. Same car, same everything. Price is it unless he can make you really want to deal with him for intangible reasons.
That does not even address job turnover. A good poll would be whether your salesman was there a year after you bought your car. Hopefully MB is better than most, but my experience has seen the same salesman move between 2 MB dealers here, a second move to the Cadillac store for a better commission deal, and the third was on the job a month when I met him but he is a local MBCA member. Luckily, my tie has been the general manager who "only" moved between the 2 MB stores. But even he went from A to B, back to A and then back to B!
Used cars can net a few thousand dollars to the salesman. The key to used cars is their uniqueness. A good salesman can show or convince you that there's not another one just like the one he has--he can build value-- while you and he both know the brand new E320 Sport with the stone interior is at 3 dealerships within 100 miles. Same car, same everything. Price is it unless he can make you really want to deal with him for intangible reasons.
That does not even address job turnover. A good poll would be whether your salesman was there a year after you bought your car. Hopefully MB is better than most, but my experience has seen the same salesman move between 2 MB dealers here, a second move to the Cadillac store for a better commission deal, and the third was on the job a month when I met him but he is a local MBCA member. Luckily, my tie has been the general manager who "only" moved between the 2 MB stores. But even he went from A to B, back to A and then back to B!
MBWorld Fanatic!
Joined: Oct 2002
Posts: 3,690
Likes: 2
From: Washington State
E-500
A while back, in a casual telephone conversation with my salesman, he mentioned that the "profit" on my E500 was $800.00. His commission would a percent of the $800. I think he told me 25% of net profit or $200. The "pack" must have been large.
In the context of our conversation there was no reason for him to not be truthful. I questioned it and he double checked it on the computer printout that was given to him. I had a very hard time believing this could be true. That would be worse than the $300. on the C that Jim talked about. I have to think that there is some other compensation involved here.
I know that I did not negotiate that great a deal as I ordered in September when MSRP was the norm.
As I remember, I got $1,000 off MSRP, wood steering wheel, winter mats, 2 hats and 2 mugs.
Ed
In the context of our conversation there was no reason for him to not be truthful. I questioned it and he double checked it on the computer printout that was given to him. I had a very hard time believing this could be true. That would be worse than the $300. on the C that Jim talked about. I have to think that there is some other compensation involved here.
I know that I did not negotiate that great a deal as I ordered in September when MSRP was the norm.
As I remember, I got $1,000 off MSRP, wood steering wheel, winter mats, 2 hats and 2 mugs.
Ed
Last edited by etenn; Jan 22, 2003 at 05:42 PM.
Senior Member
Joined: Nov 2002
Posts: 454
Likes: 0
From: NC
'03 Mercedes E320
The only other "standard" program I know of, while recognizing that each dealership can be different, is a "bonus" based on cars sold per month. The one I was working on had $500 after 10 cars, on up to $2500 at 25 cars per month. This was an American make. Only one guy got to 20 with any regularity. Most were at 12-15, since they left if they couldn't do 10-12. The economics were not there for a family income at low sales. My data was in 1997. The top guy then was doing $60K.
There's also a "minimum deal" where the salesman gets a minimum commission regardless of profit. Some might be $100! 25% of the "calculated" profit is very normal. Pack levels are what cause many salesmen to move from job to job.
If you get a chance, read the want ads for car salesmen sometime. Demos are gone for most, most are all commission, some training with a starting salary, and promises based on your ability. It's tough.
There's also a "minimum deal" where the salesman gets a minimum commission regardless of profit. Some might be $100! 25% of the "calculated" profit is very normal. Pack levels are what cause many salesmen to move from job to job.
If you get a chance, read the want ads for car salesmen sometime. Demos are gone for most, most are all commission, some training with a starting salary, and promises based on your ability. It's tough.
Senior Member
Joined: Oct 2002
Posts: 296
Likes: 0
From: New York
2003 E500
TxDOT should be able to confirm/deny that. Sounds like bull.
My dealer in CT had, preprinted on their purchase order form, a 'vehicle conveyance fee' of like $200 or $250. CT makes them also pre-print "this fee is not charged by or paid to the state of Connecticut" just so they can't bamboozle you.
Since I was already more than $3k below sticker I wrote it off as a traditional car scam and let them have their easy $200.
Some hills aren't worth dying for.
But if they tried to bone me with MSRP, I'd fight for every inch of ground.
My dealer in CT had, preprinted on their purchase order form, a 'vehicle conveyance fee' of like $200 or $250. CT makes them also pre-print "this fee is not charged by or paid to the state of Connecticut" just so they can't bamboozle you.
Since I was already more than $3k below sticker I wrote it off as a traditional car scam and let them have their easy $200.
Some hills aren't worth dying for.
But if they tried to bone me with MSRP, I'd fight for every inch of ground.
MBWorld Fanatic!
Joined: Nov 2001
Posts: 9,588
Likes: 0
From: Richmond, BC, Canada
2010 Prius & Miata MX5 PRHT, 2010 Toyota Venza AWD, 05 C55 AMG, Yamaha 1100 Custom, Honda 250 Reflex
In Canada, the norm is....
They charge a lump sum of CDN$1,500 (US$975) for freight and PDI (pre-delivery inspection) together regardless of the model MB you are buying (brand new).
How does this compare to the practice in your State?
How does this compare to the practice in your State?
