Dealer fees. Whats acceptable?

Just to reiterate, I'm not "complaining" from my personal vantage point. MV Agusta thankfully does really well to support their dealers and work with them on margins, rebates, and promotions that don't all come out of the dealer's pocket.

I know some dealers have such fine margins that when they sell a typical liter bike, they're often profiting less than $1000 on a $15,000+ deal. If you make hypothetically $700 profit on a $15,000 sale, that's 4.67% margin. I've heard some dealers say their pricing compared to invoicing is as low as 2%. Just paying the bills, labor, etc. for the day are going to run you past $700/day meaning unless you're selling a minimum of a bike a day, you're in the red immediately. That's just for small shops. If you're a mega store, the daily operational costs are wildly higher, but of course you're pushing volume out the door. A small shop is not typically moving 30 bikes a month.

I do COMPLETELY agree it is a case-by-case basis for understanding who "could" survive further reduced income and who wouldn't. My point was focused on our known experience that dealers are closing rather frequently due to not being profitable enough. If the plan is to make them even less profitable, I think it logically follows that even more dealers would be going out of business.

I still think the better solution is to stop the system that pits dealer against dealer trying to advertise lower prices and use hidden fees to make up their margins. Instead, build more into the MSRP, enforce MAP pricing strictly, and let quality customer service and good experiences drive customers through the doors of their choice of dealer.
 
HRCkt said:
Like I said, this dealership became a monster because they don't charge any of it. We don't even charge the destination fee that Honda hits us for. I remember when Griffith started this business model inside a little tiny family owned dealership and started selling so many units so fast within a few months he bought an old grocery store and opened the first massive dealership. From there, they have built a completely new building in a different location and became what they are today. We sell more Goldwings then anyone in the world simply because we are cheaper. It's amazing how far people will travel to save money
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Ok so just to clarify.....
CRF110f for example. MSRP is $2699 with a $300 destination charge. So, what does a customer pay for this at your dealership? Asking for a friend :)
 
Tiller15 said:
Ok so just to clarify.....
CRF110f for example. MSRP is $2699 with a $300 destination charge. So, what does a customer pay for this at your dealership? Asking for a friend :)
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MSRP plus a small local business tax that the county gets us on everything we sell. On the 110 you're looking around $30-35. You would be OTD here for under $2,750. I'm also down to 4 (from 20 last week) if "your friend" wants to call me and put a deposit on one of them :D
 
LukeLucky said:
Just to reiterate, I'm not "complaining" from my personal vantage point. MV Agusta thankfully does really well to support their dealers and work with them on margins, rebates, and promotions that don't all come out of the dealer's pocket.
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Apologies for not being clear. I wasn't aiming my response at you; rather, at the topic as a whole.

I know some dealers have such fine margins that when they sell a typical liter bike, they're often profiting less than $1000 on a $15,000+ deal. If you make hypothetically $700 profit on a $15,000 sale, that's 4.67% margin. I've heard some dealers say their pricing compared to invoicing is as low as 2%. Just paying the bills, labor, etc. for the day are going to run you past $700/day meaning unless you're selling a minimum of a bike a day, you're in the red immediately. That's just for small shops. If you're a mega store, the daily operational costs are wildly higher, but of course you're pushing volume out the door. A small shop is not typically moving 30 bikes a month.

I do COMPLETELY agree it is a case-by-case basis for understanding who "could" survive further reduced income and who wouldn't. My point was focused on our known experience that dealers are closing rather frequently due to not being profitable enough. If the plan is to make them even less profitable, I think it logically follows that even more dealers would be going out of business.
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All fair points. And like I said, without comparing the balance sheets, it's hard to know who's crying wolf and who's being honest.

I still think the better solution is to stop the system that pits dealer against dealer trying to advertise lower prices and use hidden fees to make up their margins. Instead, build more into the MSRP, enforce MAP pricing strictly, and let quality customer service and good experiences drive customers through the doors of their choice of dealer.
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The irony of this is that much of what an OEM could do, especially with respect to price, is litigated out of their hands via the dealer franchise laws which dealers typically lobby for protecting. And while the dealer franchise law history rightly lays blame at OEMs (for past missteps) dealers have a responsibility in the issue by lobbying for more restrictive franchise laws but then being disappointed in the behavior of their peers that those same agreements would attempt to mitigate.
 
onesixsix said:
The irony of this is that much of what an OEM could do, especially with respect to price, is litigated out of their hands via the dealer franchise laws which dealers typically lobby for protecting. And while the dealer franchise law history rightly lays blame at OEMs (for past missteps) dealers have a responsibility in the issue by lobbying for more restrictive franchise laws but then being disappointed in the behavior of their peers that those same agreements would attempt to mitigate.
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I think motorcycle (and other minority vehicle dealers) end up falling victim to whatever the automotive industry set as their preferred standard. No amount of motorcycle dealer lobbying will overcome the automotive industry dealers' desires. Even then, I'm not sure the motorcycle dealers would fully back it. I would assume the mega superstore dealers have more money / power to affect the change, but being a mega superstore means they're shielded from the personal relationships small dealers thrive on.

Perhaps the someone somewhere in the gov will follow Canada's direction with regard to advertised pricing mandates. It happened in Canada already, so it isn't impossible for it to happen here. I'd support it. From what I understand in Canada, a dealer can be held legally to sell a motorcycle for the advertised price (plus standard taxes for the area). Meaning if someone walks in the door and the dealer thought you could add in a bunch of random fees, the dealer could be forced to sell the bike for the advertised price by the courts. Of course it would be better if dealers simply adhered to the law / policy and DID sell the bikes for the advertised price (in countries where such a law exists). I wonder if dealers can lose their license if they're found guilty of breaking this law in Canada?
 
LukeLucky said:
Perhaps the someone somewhere in the gov will follow Canada's direction with regard to advertised pricing mandates. It happened in Canada already, so it isn't impossible for it to happen here. I'd support it. From what I understand in Canada, a dealer can be held legally to sell a motorcycle for the advertised price (plus standard taxes for the area). Meaning if someone walks in the door and the dealer thought you could add in a bunch of random fees, the dealer could be forced to sell the bike for the advertised price by the courts. Of course it would be better if dealers simply adhered to the law / policy and DID sell the bikes for the advertised price (in countries where such a law exists). I wonder if dealers can lose their license if they're found guilty of breaking this law in Canada?
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Currently the law you mention is not in place here in Canada, or at least it's not being enforced - some dealers list price with all fee's other than taxes, but most list MSRP still.

I also have never heard of the "holding a dealer to an advertised price" law - it's happened to me twice in the past 3 years where I was told something then the price moved, once I reached out to the Manufacturer directly, and once I let it go and moved on - to my knowledge there's no such law here.
 
younglion said:
Currently the law you mention is not in place here in Canada, or at least it's not being enforced - some dealers list price with all fee's other than taxes, but most list MSRP still.

I also have never heard of the "holding a dealer to an advertised price" law - it's happened to me twice in the past 3 years where I was told something then the price moved, once I reached out to the Manufacturer directly, and once I let it go and moved on - to my knowledge there's no such law here.
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That info came to me recently from the head of sales for KTM Canada. I wasn't aware it existed, but then I googled it and sure enough it does. Like you said it doesn't seem to be getting enforced thoroughly, or perhaps consumers just aren't aware of the law and aren't asking authorities to step in when dealers violate it?

It looks like it is a very recently passed law. This was the link I found: https://www.omvic.ca/buying/your-ri...advertising is,and licensing are not included.

I'm sure there's better links / information out there...
 
LukeLucky said:
That info came to me recently from the head of sales for KTM Canada. I wasn't aware it existed, but then I googled it and sure enough it does. Like you said it doesn't seem to be getting enforced thoroughly, or perhaps consumers just aren't aware of the law and aren't asking authorities to step in when dealers violate it?

It looks like it is a very recently passed law. This was the link I found: https://www.omvic.ca/buying/your-rights/all-in-price-advertising/#:~:text=All-in price advertising is,and licensing are not included.

I'm sure there's better links / information out there...
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Not to be negative, but that reads like a toothless initiative. Mostly because it puts all of the onus on the consumer to spot the violation, report it, and not do business with that dealer.
 
onesixsix said:
Not to be negative, but that reads like a toothless initiative. Mostly because it puts all of the onus on the consumer to spot the violation, report it, and not do business with that dealer.
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It's certainly not flawless execution, but it is a step in the right direction. That's why I was curious what happens to dealers who've been reported and found in violation of this law? Maybe that referenced consumer support team is nothing but a powerless group that'll call the dealer and say "naughty naughty". Or maybe it gets investigated and turned over to authorities and dealer licenses are suspended... no idea really.
 
LukeLucky said:
That info came to me recently from the head of sales for KTM Canada. I wasn't aware it existed, but then I googled it and sure enough it does. Like you said it doesn't seem to be getting enforced thoroughly, or perhaps consumers just aren't aware of the law and aren't asking authorities to step in when dealers violate it?

It looks like it is a very recently passed law. This was the link I found: https://www.omvic.ca/buying/your-rights/all-in-price-advertising/#:~:text=All-in price advertising is,and licensing are not included.

I'm sure there's better links / information out there...
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Ahhh....that's not a federal law, it's a provincial initiative that only applies to Ontario. I'm in BC and there is no such act/initiative here.
 
HRCkt said:
Like I said, this dealership became a monster because they don't charge any of it. We don't even charge the destination fee that Honda hits us for. I remember when Griffith started this business model inside a little tiny family owned dealership and started selling so many units so fast within a few months he bought an old grocery store and opened the first massive dealership. From there, they have built a completely new building in a different location and became what they are today. We sell more Goldwings then anyone in the world simply because we are cheaper. It's amazing how far people will travel to save money
Click to expand...

I remember when we were closing and I was selling bikes for exactly what I had to write the check to Honda for. A customer told me Tennessee was cheaper than that. I pointed west and advised him to start driving.
 
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