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By admin, June 21, 2007 11:48 am

Many argue that dealership prices are 4 to 6 times higher than local shops. This is farfetched. That would mean that $100 at a local shop would be $400 to $600 at a dealership. Dealerships arenÂ’t run by the sharpest businessmen, but this kind of pricing discrepancy would put dealers out of business, fast. The sources calculating such pricing gaps are never quoted, so I am not sure from where such data comes, but letÂ’s look at whatÂ’s really going on.

First, 98 % of ALL service centers are overcharging. This includes dealerships, local shops and franchises. Stating that dealerships charge four to six times higher unfairly singles out this portion of the industry. We need to watch out for every type of service facility. While itÂ’s always easier to focus on the big, faceless name of a dealership, itÂ’s unwise. Your local mechanic who you pass in the grocery store is just as likely to rip you off.

Surprisingly, in many respects, a dealership is often less expensive. To be clear, I am not siding with dealerships. Again, no matter what type of facility one services a vehicle, some type of price-gouging will occur. Having said that, here are some common myths about dealership prices.

Myth One: The parts are more money.

This is not true. Dealers, for the most part, stick to MSRP (manufacturer suggested retail price) guidelines. Guidelines, as abused as they are, are better than none. Local shops have no guidelines. They can charge whatever they want.

We’ve all been taught that aftermarket parts are less expensive than factory/MSRP parts—this is not true. A frequent “case in point” is air filter prices. Below is a sample from one of many actual invoices:

• Dealership/MSRP Price: $17.00 (factory fiber filter)
• Local Shop/Aftermarket Price: $32.00 (aftermarket paper filter)

TipÂ…always compare youÂ’re aftermarket part price against MSRP, youÂ’ll be surprised just how much your local garage is charging you for inferior parts.

Myth 2: The labor “time” is higher.

Actually, many dealers follow manufacturer recommendations and industry standard multipliers. In other words, theyÂ’re not just shooting from the hip. The labor “time” (i.e., how long it takes to repair something—1, 2, 3 hoursÂ…etc.) may be lower than the resulting times from the labor price-gouging tricks practiced by your local garage.

This is not to say that dealers don’t practice labor tricks—they’re the masters! It is to say that they are more inclined to follow suggested guidelines.

Myth 3: Dealers always rip people off.

In the automotive service industry, every type of service center rips you off, dealers are no exception.

-Theodore P. Olson (Ted)
http://repairtrust.com/

Ted holds extensive certifications from Mercedes-Benz, Toyota, General Motors, ASE (Automotive Service Excellence) and more. Over a twenty-year period in the automotive service industry, he has served as a technician, shop foreman, shop manager, shop owner, service advisor, service manager, and service industry consultant.

Other Works by Ted Olson Include:

• ARREST the Automotive Service Industry!
• Maintenance Myths: A Step-by-Step Guide to STOP Getting Ripped Off!
• Auto Repair: The Shocking Truth About Who’s Ripping You Off and Why!
• Automotive Service Pricing Strategies—a fair pricing guide for service centers
• Being the Best—a comprehensive customer service handbook for service advisors
• Service Center Personnel—an auto repair informational for general service staff
• Service Mission Statement—a philosophical proposal to improve customer service

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