McKinney car dealerships differ concerning “add-ons”

by Brett Ryder of McKinneyNews.net

After being kicked out of Honda Cars of McKinney (HCOM) for asking questions that apparently weren’t supposed to be asked, I found myself lost, at least for a moment, in a glorious bubble of giddy glee. “If asking tough questions and getting kicked out of a joint is a measure of a (journalism) man,” I found myself thinking, “then perhaps I haven’t been cutting through the crap near enough.”

Journalists aren’t, contrary to what many businesses have come to expect, cheerleaders, i.e., pompom waving blind enthusiasts not willing to pull out the hammer every once in a while and start banging in an effort to see what falls apart.

Speaking of falling apart…

I dropped by HCOM last week to see if they had any Fits on their lot. Gas costs have started pinching my wallet more than a bit and I thought the Honda Fit (MPG = 27-34) might be worth checking out.

Upon arriving at the dealer, I noticed something that concerned me.

Virtually every car on the lot had one of those obnoxious dealer add-on stickers affixed to its windshield along side the manufacturer’s suggested retail price. Now I’m not usually one to spoil a good laugh or not participate every once in a while in a good practical joke, but thousands of dollars worth of dealer add-ons on just about every vehicle on the lot? I wasn't laughing.

The little car stickered from the factory at $16,740, and at that price, the little girl was pretty well loaded and ready to hit the highway.

Uh-oh. Not that fast. Apparently HCOM isn’t as confident in its product as am I.

So, here’s the list of add-ons HCOM affixed to several (if not all) of its Fits:

I walked into HCOM and asked to speak to a manager. A few moments later, Mr. Rick Dailey arrived on the scene. I told Dailey I was a reporter and that I wanted to ask him a few questions. Dailey showed me to a table, we sat down.

I began. I asked Dailey to explain why virtually every car on the lot had a list of dealer add-ons. Oddly, Dailey suggested I ask my editor (Angie Bado) to answer my question. Bado, Dailey said, had purchased several cars from HCOM. (What???) Then Dailey said something about Honda cars coming from the factory without a lot of options. (With virtually every car on the lot loaded with add-ons, who is opting for the "options" -- the dealer or the customer?)

I tried a different tack.

I asked Dailey to tell me what paint sealant was/is, i.e., what the sealant consisted of. Dailey, acting a bit astonished that I would ask such a question, asked me if I wanted specifics. I said yes.

Dailey never did answer my question.

I told Dailey that Edmunds.com is of the opinion that dealer add-ons are ripoffs that do little more than line dealership pockets with extra cash. Dailey didn’t reply.

The four to five minute surreal encounter ended with Dailey telling me he wouldn’t answer my questions and that I needed to “do some research.” (I have no idea what kind of research he was referring to. Was he suggesting that HCOM isn’t doing anything any other dealer isn’t doing vis a vis its extensive list of add-ons? I really don't know.)

I tried to press on, but Dailey was having none of it. He stood up and told me to leave the dealership.

So much for trying to get a few questions answered. I didn’t even get to ask Dailey about the $3,000 “market adjustment” fee that was slathered on at least 3 Fits on his lot, or what the $495 fabric sealant was, or if the $495 “deluxe” floor mats were made of crushed rhinoseros horns and sprinkled with fairy dust.

I drove down the road and stopped at two other dealerships. The absence of dealer add-ons at both places was conspicuous.

I asked Eldorado Mazda night desk manager, Rick Ziegler, to give me his impression of dealerships that affix astronomically priced add-ons to virtually all their vehicles.

[Add-ons] are marked up significantly,” Ziegler said. “We don’t want to do it here, we don’t think it’s necessary.”

Ziegler said the dealership occasionally adds window tinting to a few vehicles on the lot without customer request. He said he thought the tinting a reasonable add-on in this part of the country.

I jumped over to Eldorado Chevrolet and talked with the manager there, Lance Dawson.

Dawson, citing a verbal courage born of honesty – “I’m not afraid to sit down and talk with you because everything we do is aboveboard” – spoke rhetorically and coyly.

“What is paint sealant?” Dawson asked. “Is it wax? I don’t know. And they’re gonna charge you $500? What is fabric protectant? I don’t know. Is it Scotchgard?”

What Dawson did know was that his dealership doesn’t do either. Oh, Dawson added, mats come with just about all Chevy vehicles.

Then Dawson proposed a hypothetical.

Suppose, he said, one dealership tacks on a bunch of add-ons that put thousands of dollars of profit in its pocket. Then supposed the same dealership runs a $5,000-off sale in the newspaper (not mentioning they’re working off a marked up price INCLUDING all the exorbitant add-ons). Another dealership may have the exact same car minus the add-ons, but that dealership is advertising “only” $2,500 off.

“Which ad is somebody going to go after?” Dawson asked.

His point? Add-ons allow a dealership to artificially inflate any sticker price making it appear as though they’re offering the better deal.

Some might be tempted to call HCOM a bunch of hogs, but that wouldn’t be right. Some might be tempted to call them opportunistic crooks, but I certainly wouldn’t go that far. Some might – and some have – called them “thieves.”

But then there’s the problem of (willing?) participation. It takes two – as far as I’m aware -- to play the car buying game.

ADDENDUM--------------------------------------------

Nissan of McKinney's General Manager, Chris Godwin, was gracious enough to talk to me at length about dealer add-ons. Godwin said his dealership slaps an add-on sticker on more than 95 percent of its cars.

Why?

Well, Godwin wasn't bashful. The dealership has to be profitable and add-ons give him that margin.

Virtually every Versa on his lot had the following additions:

Godwin said the EPP (environmental protection plan) consists of Zach Tech (sp? I couldn't find anything of the sort on the Internet), a "unique polymer based [paint] coating that forms a cohesive bond to the paint" that controls for paint oxidization. It's not, Godwin said, merely a wax job. He also explained that all tires at the dealership are filled with nitrogen (hence the $39.99 charge). Nitrogen filled tires deflate less rapidly and hold tire pressure longer, he said. Oh, and the $1194.99 includes theft-guard ID window etchings for all windows on the vehicle.

Back to profitability.

There is virtually no chance, Godwin said, of buying a Versa from his dealership (or any other economical car) without the add-ons given the current market. He said heavier, less economical vehicle sales have gone south because of increased gas prices. He also said manufactures weren't prepared for this eventuality leading to short supplies of smaller cars.

Big vehicles have have higher profit margins, he said. Smaller vehicles don't. Simply put, Godwin said his dealership is trying to adjust for this turn of events by adding add-ons to all its smaller vehicles to make them more profitable and to recoup some of the lost earnings larger vehicle sales typically bring in.

What about Edmunds.com suggesting add-ons may very well be a rip-off?

"Unless you can see things from the inside out, it's only an opinion," Godwin said.

And don't think you can walk in and tell a dealer -- or at least Nissan of McKinney -- that some online auto expert suggested $500 over invoice is a fair profit for the dealership. It all depends, once again, on the market (and the vehicle you want). If it's an economical car, good luck -- you probably ain't gonna get it, Godwin said. But if it's a humongous gas guzzler you're interested in, well, who knows?

Still, the voices cry out from the wilderness...and here.