Car Dealers Hiking Hidden Fees to Cover Losses

Posted: Jun 24, 2008 10:53 a.m.

It's a buyer's market for cars this year.  With auto sales at their lowest level in a decade, and dealers sitting on excess inventory, it seems like this should be an easy time to negotiate a good deal on a car.  Yet, somehow, prices on new cars are rising.

The culprit?

Those fees that dealers tack on after you've agreed on the final price of the car. 

Edmunds Inside Line reports, "The weak dollar, escalating materials costs and unfavorable exchange rates for almost all imported models means manufacturers' profit margins are being squeezed -- so despite a lousy market that normally would dictate lowered prices, many base prices actually are going higher."  Increasingly, dealers are resorting to a "sneaky increase" to squeeze more profit out of the few sales they manage each month: "Jacking up those destination and delivery charges."

Auto Observer found delivery charges ranging "ranges from a low of about $560 to an astounding $40,000."

Okay, that last fee is for delivery of the million-dollar-plus Bugatti Veyron, and Veyron buyers probably don't mind paying the cost of two Mini Coopers to receive their 1001-horsepower machines.  Still, some of the numbers Auto Observer found don't make sense at all.

"While Toyota Motor Corp.'s Lexus upscale division currently charges a comparatively reasonable $765, and General Motors Corp.'s Saab unit -- with all models imported from Europe -- is holding on at $775," Chrysler is charging "a withering $970 destination charge on the barely alive Crossfire coupe."  Porsche manages to import its cars from Germany for about $860, but Cadillac "is slamming the Escalade buyer for $900" to haul the SUV from Texas.

Auto Observer speculates that dealers may be raising the fees because "Quietly hiking the delivery charge…may be one of the more effective tactics to effectively raise prices without setting off consumers' alarm bells."

Inside Line notes, however, that even dealer fees are negotiable.  "If you're heading out to buy, closely check the price of this year's model versus last year's," they recommend.  "If the base price and/or destination charge is up, there's probably more room to negotiate the total price."

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