Sunday, November 25, 2007
Sheep, Wolves, and Doc Fees
Being off this past week for the Thanksgiving Holiday we decided to visit some dealerships and look at scooters in the 50cc to 150cc category, maybe even something used would be fine. Of course I'd prefer a restored 1960 Heinkel Tourist but the budget won't go that far.
In the course of the day yesterday we visited three motorcycle shops and one scooter shop.
At the first shop we found a nice, used 2004 Yamaha Vino 50cc edition and also a left over new 2005 50cc Piaggio. The nice, clean Vino was priced at a very tempting $899 and the Piaggio was marked at $1500 out-the-door. "Ok," says I to the sales person, "How much out the door for the Yamaha?" I already did the numbers in my head and knew with normal Arizona tax and license it should have run out at about $1000. The answer: Same out the door as the Piaggio: $1500. I expected that the dealer would add some sort of phony baloney "doc fee" (vehicle registration documentation preparation fee) to the price and of course the usual sales tax and license fees but a little more questioning led to the fact that the "doc fee" was "...about $350 because we pay a company to do the documents for us and that's almost what they charge us." My thoughts, unspoken, were "Excuse me but that is a flat out lie. You know it, I know it, so why did you insult me like that? It was bad math too because your "doc fee" was closer to $500." We excused ourselves and left.
I understand that motorcycle dealers are scrambling for profit in a slowing market but why do they think they have to low ball me a price and then think they can make it up by lying to me about the doc fee? Just ask the appropriate price for the bike, for goodness sake. I don't doubt that many of the buying public are as dumb as a box of rocks (politicians count on it) but that doesn't mean that we all are. Aim high and respect your customers, treat them like they have a brain and can do math because many of us do and can.
Next store: Looking at a nice Aprilia scooter we find the asking price to be reasonable but again dealer greed gets the best of the dealer and I'm told the "doc fee" is $245. I suggest to the salesman that based on how long it takes to do motor vehicle paperwork and submit it, whomever is doing the work is making more per hour than the best technician back in the shop. I've done dealer vehicle registration paperwork in ye olden days when it was filled out by hand right in front of the customer. It took about 10 minutes and I doubt that the process has gotten slower in the last 35 years. In fact here in Arizona it's all done one a simple PC linked to the Motor Vehicle Department. $245? I've watched it being done on the computer and it's 5 minutes from data entry to the printer spitting out the temporary "paper plate." The salesman tells me about the $245 "We don't have a choice, we give most of that money to the DMV anyway." One more time: Excuse me but that is a flat out lie. You know it, I know it, so why did you insult me like that? Once again we walked.
Third store: Another "system house" (as we called such places in the olden days) owned by a "dealership consolidator" where they attempt to process customers like sheep through a shearing shed via a canned process which emphasizes "Make it easy to buy!"
Friends, dealers are entitled to run their business efficiently, train their staff, and give good service to the customers. Dealers are entitled to make a fair profit on their goods. I know there are dealers like that out there but they seem to be slipping into oblivion, overwhelmed by rapacious dealer "consolidators / integrators," and manufacturers who are so desperate to move units that they can't let themselves think about what the end purchaser is actually experiencing on the sales floor.
Dealers are not entitled to treat customers like ignorant, numbered, animals to processed in the most efficient manner. Listen, my dad was a car salesman for about 30 years; I grew up in car dealerships and I understand know how the sales business works and it is a tough business. Heck, some of my earliest memories are of hanging around the Chrysler - Plymouth - De Soto dealership where my dad was the general manager. Yeah, De Soto...I'm THAT old.
There is indeed a technique to selling things, even an art, but the techniques being pushed at motorcycle dealerships are sales methods that were considered disreputable by honest car dealers forty years ago. These days the car business and many motorcycle businesses are so twisted that they don't even realize their own lack of ethics anymore and they certainly have not a clue about building a lasting, two-way business relationship with their customers.
Modern "best practices" on the dealership sales floor and sales office bring to mind a video I saw recently of a Middle Eastern cleric explaining the proper way to beat your wife. Apparently it didn't occur to him that beating one's wife is morally reprehensible to most people in the first place. Low ball pricing, grinding on customers, "de-horsing" them, selling price inflated add-ons and inflated finance and insurance rates ("F&I income") to people who don't want, don't understand, or worse, cannot afford them, is wrong.
Once again, I have digressed so back to our story:
Store three quoted retail price for the scooter and $245 for a doc fee which I found interesting since they are owned by the same concern as store one and presumably operating under the same rules as store one. Maybe at the third store I didn't look like as big a rube as I did at the BMW / Vespa store? I'll remember to dress better next time I visit the BMW shop, maybe they'll think I'm smarter. No matter, once again I was told that the doc fee merely represented "our cost to process the vehicle registration paperwork." And again: Excuse me but that is a flat out lie. You know it, I know it, so why did you insult me like that?
In addition to the phony doc fee, store three also wanted a total of about $400 for freight and set up on a $1899 Honda Metropolitan 50cc scooter. I know the small units don't have much margin in them but really, adding $600 of pure B.S. profit on top of a $1900 scooter? You guys must be listening to the sound clip of the Michael Douglas character "Gordon Gekko" in the movie "Wall Street" over and over and believe that "Greed is good..."
Dealers do pay a small freight charge to get the bikes to them and they do have to spend a little time putting the bikes together. Anyone reading want to offer up how much assembly and prep time actually goes into a 50cc Honda scooter and whether the job is done by a master technician?
The dealer has a right to recover his costs if they are not adequately covered by the margin built into the MSRP or agreed upon selling price of the bike but marking the bike way down to zero profit and then recouping the loss using inflated fees and interest charges "on the back end of the deal" is misleading and really closer to dishonest. Why would anyone want their business to operate in a such a questionable fashion unless, like "Gordon Gekko" they really do believe that "greed is good" and no longer are able see the fundamental moral problem?
In the end we didn't buy anything, didn't really expect to when we left the house but then many people don't when they wander into a bike shop or car dealership. I can say quite truthfully though that if the dealers had made it "easy to buy" as a certain sales guru preaches, we'd have bought. But they didn't make it easy to buy, they lied to me and tried to rip me off instead of just asking me to pay a fair price for the scooters.
For a look through the dark side of the bike biz, click here. The article is about car sales but trust me, the bike business, at least in the big dealerships, is no better and frankly less sophisticated than the car guys they are seeking to emulate. Many of the smaller bike dealers are even clumsier in trying to set up their own system house and in one case that comes to mind, I can see his store slowly dieing from his efforts. Couldn't happen to a nicer guy, either. Yes, I'm being sarcastic again.
If you want to see the actual theory behind how many motorcycle dealerships are operated just Google the phrase "motorcycle industry consulting" (or "Spanish Inquisition") and read around for a bit, follow the links, and prepared to be vaguely queasy. It's all about controlling the sales floor and a multi-step process to reap big profits: A certain number of salespeople for a certain amount of floor traffic, a certain ratio of sales managers to sales people. Sales managers are expected to add a certain amount of $ to the deal or at least "make the close" and then turn it over to the F&I guy who is expected to add certain amount more on the back end of the deal. If you walk and don't buy they will do three call backs to your phone number because they know a certain percentage can be induced to re-visit the dealership and a certain percentage of the those folks will buy. It's a numbers game, friends, and you're a number.
Do your research and you'll understand why you're being treated as you are at your local "powersports store" and you'll also be better equipped to not be scammed by some dealers who see you as a sheep waiting to be fleeced.
And another word to shoppers: The legitimate dealer has a right to make a living! Grinding every last bit of profit out of him doesn't keep him in business and there when you need parts and service. There should be some fair give and take. Sadly, at this point dealer/customer culture is so corrupted it's about as likely to be fixed as certain Middle East problems. A lucky few motorcycle dealers and their customers will learn or have learned to live in peace and even friendship but for most it's going to be war to the end of time an no one wins.
Our final visit of the day was to a shop dealing only in scooters. We'll save that visit for another blog entry. In the mean time, anyone know where we can find a Yamaha C3 at a fair deal?
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"When my mood gets too hot and I find myself wandering beyond control I pull out my motor-bike and hurl it top-speed through these unfit roads for hour after hour." - T.E. Lawrence
An Important reminder from the past:
"I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations." - James Madison