Hidden extras cause delivery pains for buyers
Often you would hear rumours that overseas dealers were being told by car companies to jack up their delivery and sundry other costs in order to discourage such activity. Hearsay? Possibly, but sometimes even a rumour is enough.
What we’re looking for is not price-fixing though, but price transparency and a consistent attitude from car dealers when it comes to posting those prices. Whether those prices should differ from dealer to dealer is a contentious issue.
In fairness to dealers, most are working off a margin of around eight per cent on the MSRP of a new car, and if bullish customers come in with a perception that they’re going to get a 10 per cent discount or better, then a dealer has to have some extra pricing structure in place, or the car will be sold at a loss. Again though, transparency is everything.
In 1995, Fiat Ireland introduced a policy called “Open Book Pricing”. Fiat thrashed out an agreement with its dealer network that they would all charge a set price for delivery and PDI and then published a set of full, on-the-road prices. It was also tried, with some unfortunate consequences, by Opel in 1996 under the title of “Up- Front Pricing”. Significantly, no-one else took that approach, and that led to the plan being abandoned.
“The only reason we stopped doing open book was because we had hoped to set a precedent, but no-one else followed,” says Adrian Walsh, MD of Fiat Ireland.
“It was nothing to do with VRT, in fact Revenue were very happy with the system and liked the transparency of it, but it made our prices look, optically, somewhat higher than that of the competition in a very price-sensitive area of the market, so we dropped it.”
Oddly, this is a view at variance with some people who were part of the Fiat organisation at the time and who have since left the company, who aver that it was the Competition Authority who smelled a price-fixing rat, and ordered the programme shut down. Who is correct? Hard to tell at this remove, but it’s clear that the pricing of delivery and related charges can cause rancour.
It’s certain that Opel’s “Up-Front” pricing strategy was stopped by the Competition Authority back in 1997, which even went as far as raiding Opel’s offices to seize files – the documents relating to it are in the public domain, but the Fiat situation seems to be more cloudy, and down to the recollection of individuals.
There should really be no major difference in getting a car to one dealer or another. Yes, costs of transport, or local rates or rent costs or whatever can vary for individual dealers, but they should balance out. Perhaps the Irish car trade as a group, importers and dealers alike, should simply develop a standardised price for delivery and related charges.
If VRT really is an issue, then don’t add it to the price of the car, but display it clearly in the dealership. If all that proves impossible, then at least can we have the individual charges listed and published so that consumers can make an informed decision?