Frustrated new-car shoppers are using Facebook forums to compare drive-away prices – to make sure they’re not being overcharged.
An increasing number of new-car buyers are using social media such as Facebook to compare prices amid a record rise in RRPs – and make sure they are not overcharged on the vehicle itself, or being slugged with excessive dealer delivery fees.
The number of Facebook groups dedicated to in-demand cars that are in short supply has surged during the pandemic, as stock shortages push up prices and blow out wait times.
Frustrated by long delays, changing delivery dates – and successive increases in recommended retail prices and dealer delivery fees – an growing number of Facebook forums dedicated to certain in-demand new cars have appeared over the past year or so.
On such forums, it is increasingly routine for participants to canvas other members on prices they paid recently for certain models with specific options – and for customers to share their final drive-away invoice cost.
New-car prices vary by state due to the different stamp duties in each jurisdiction.
But the Facebook forums do help new-car buyers spot excessive dealer delivery charges – and highlight dealers who offer fairer prices.
Some savvy dealers also sign up to the same Facebook forums, in the hope they might be able to win some business from a customer who has been quoted an excessive price by someone else.
As Drive reported last year, some General Motors dealers have been accused of charging in excess of $25,000 for the dealer delivery fee on a new Chevrolet Corvette – while other dealers charged a fee of $2000 or less on the same car.
In some cases, dealers cancelled orders after initially signing up customers to a fair price – only to relist the same car for sale at a higher price, once they realised supply was tight and demand was off the charts.
Car companies are powerless to stop dealers charging more than the RRP – and they also cannot mandate dealer delivery fees.
In the US, Ford has tried to cap price premiums by monitoring transaction prices closely – and rewarding dealers who do the right thing by supplying them with more stock, and penalising opportunistic dealers who overcharge, by limiting their supply.
Despite the name, dealer delivery is an arbitrary charge and does not cover the cost of getting the vehicle delivered to the dealership.
Dealer delivery fees are a separate source of profit.
The cost of transporting a new vehicle to a showroom is covered in the dealer’s invoice price.
That means, the cost a dealer pays to a manufacturer to buy a vehicle includes the cost of having the car delivered to their showroom door.
Dealer delivery fees were invented decades ago as a separate revenue stream.
Back in the day, new cars required a level of expertise to prepare them for sale.
Today, most modern cars can be prepared for delivery within three hours, say dealer sources.
The preparation covered by the dealer delivery fee includes removing any plastics designed to protect the vehicle when in transit, processing the registration paperwork and fitting registration plates, and giving the car a clean prior to the handover to the customer.
Industry insiders say, at best, the cost of dealer delivery should be no more than $300 to $500, yet many dealerships charge in excess of $1000.
Some luxury brands charge in excess of $2000 – for largely the same preparation work as a non-luxury car.
Dealer delivery fees have risen sharply over the past two years amid the chronic shortage of new cars during the pandemic, and the subsequent spike in demand.
Critics of dealer delivery fees point to the fact that dealer delivery fees were effectively obsolete or “ripped up” when there was an over-supply of new cars, which prompted sharp discounts in the decade leading up to the pandemic.
Now, widespread use of social media platforms such as Facebook are giving consumers better bargaining power.
Although it has taken time, new-car buyers are increasingly coming to terms with the fact that most dealers are currently selling new cars at full retail prices and with full dealer delivery fees – because demand is so high, stock levels are so low, and waiting times for most popular models stretch from three to 12 months.
However, new-car buyers are becoming better educated about the difference between full retail – and overcharging on fees such as dealer delivery.
Members of the Drive editorial team are participants in a number of such forums and have seen firsthand how prices shared on Facebook have kept a lid on the costs for some in-demand cars – and called out dealerships that overcharge.
The Australian Automotive Dealers Association (AADA) says it encourages “better price transparency.”
“Customers now have access to better price transparency than ever before, with online social media forums and comparison websites,” said the CEO of the AADA, James Voortman.
“We always encourage customers to shop around, and to take advantage of competition among brands and dealers.”
Some dealers canvassed by Drive said they have increased dealer delivery fees on certain models due to “the simple forces of supply and demand.”
However, other dealers canvassed by Drive said they had not increased their dealer delivery fees during the pandemic “because one day the pandemic will be over, and those customers will hopefully remember you looked after them.”