For many of us, our cars are not just a mobile jukebox for road trips. They are our freedom! Freedom to go where we want - when we want. It is how we run errands, get the kids around, and commute to and from work. You may even need your car to perform your work duties.
At some point it has happened to all of us ... your car has broken down. The stress of, "How am I going to get the kids to daycare and get to work?" is only part of the problem. There is also the stress of, “what is wrong?” and, “how much it is going to cost to fix it?”
I am Adam, a partner in P3 Services and I was a dealership “heavy line tech”, or “mechanic.” I was also a “service advisor”, the guy behind the counter charging you for your service. I was a “service adviser” for a smaller shop and a “warranty claims adjuster”, the guy who tells your insurance company what is a “reasonable charge”. I know a thing or two about broken cars and getting them fixed. In today’s blog I am going to show you how to minimize your out of pocket expenses while making sure your car gets repaired correctly. These tips are not only for costly transmission and engine repairs, it can be used for alternators, sensors and other repairs as well.
Rule #1: if your car is less than 10 years old you should be taking it to the dealership.
Yes, I know what you are thinking.
“Wait! Adam! The dealer is a rip off! They charge too much! I will save money by taking it to a smaller shop!”
These are myths for the most part. I have been on both sides of the industry and know the practices of both and will show you how to avoid being taken advantage of when the repairs strike.
First, a few words you need to know:
Dealership: A specially trained provider that repairs a specific make/model of car
Aftermarket: A repair shop that might be working on a performance (turbo) newer vehicle right next to Grandpa’s ’73 rusted pickup truck.
Labor Guide: The standards in the industry are: Motors, Mitchell, and Chiltons. They are the only 3 nationally recognized labor guides for most shops and warranty companies. Every shop in the country has the book or online book to be able to look up labor times.
Price Matrix: a premium added on to the MSRP (manufacturers’ suggested retail price) of common (or not so common) automotive parts. (HINT: You don’t have to pay this!)
Sublet Fee: An extra charge required to send your car to the dealer for the computer update! Aftermarket shops do not have the equipment to do the computer updates.
1. Dealership labor rates vs. aftermarket shop labor rates.
The dealer charges $125 an hour. Joe's garage only charges $100. It’s less money to go with the aftermarket shop right? Many times this is FALSE! Auto repairs are billed on what is called a "flat rate" meaning the tech gets paid by how long the job is supposed to take; not the actual time he works on your car. A standard diagnosis charge to figure out what is wrong with your car is usually 1 flat rate hour. The dealer tech works only works on your type of vehicle. They are factory trained. Because they only work on one or two brands, they also know them inside and out. They see the same problems on the same cars, day in and day out, and are able to provide a correct diagnosis in a fraction of the time it may take an aftermarket technician.
For example: your speedometer on your Dodge minivan quit working, the check engine light is on and your van won’t shift gears. The dealer tech knows this is likely an output speed sensor issue. He grabs the scanner to confirm the output speed sensor code is the problem. He has spent 10 minutes, and knows for a fact what is wrong with the van. He knows he can replace the sensor in about 10 minutes then take another 10 to reset the fault codes and turn off the check engine light and update the computer with the factory scanner. He will charge 1 hour to diagnose the problem, .5 hour to replace the failed sensor, and 1 hour to reset and update the computer program for the 30 minutes he spends on your car. Not fair you say? Wait for what happens at Joe’s Garage.
The tech at Joe's garage does not have a dealership scan tool or the training. He may spend an hour or two to diagnose what the problem. He will charge 2 hours diagnosis, 1 hour to install the part and still need to charge a “sublet fee”. (An extra charge required to send your car to the dealer for the computer update! Aftermarket shops do not have the equipment to do the computer updates!)
2.5 hours at $125 = $250 at the dealership
3.0 hours at $100, + $125 sublet fee = $425 at the local garage.
It would have been cheaper and faster to take to the dealership in this case and many others I have seen.
2. How to save on the parts costs.
The industry standard is to put an additional mark up on the parts to make a little extra profit. In most cases dealer parts are more expensive; however, they are much better quality and specifically designed for your vehicle. Many times aftermarket parts will not perform the way they should or may fail sooner, resulting in more issues and costs in the future. Aftermarket shops often get the parts from the dealer because that is the only place they are available in some cases. Then, they mark those up. They also mark up the aftermarket parts. I have seen time and time again where a consumer paid $125 to Joe's garage for an aftermarket part they could have gotten themselves from the dealer over the counter for $85.
After 30 years in the auto industry I still prefer factory parts to aftermarket - unless it saves me a ton of money to go the other way. I am not saying dealerships are totally innocent. Most dealers use a price matrix system - added on to the MSRP (manufacturers’ suggested retail price). Not fair? You are correct! If GM says the sensor should be $50 why should you have to pay $75? You shouldn't and don't have to! As a claims adjuster for a warranty company my job was to negotiate the repair costs with the shops doing the repairs. I would ask for the part number and confirm the MSRP and simply tell them this is all I can pay for the part. You can do the same thing! Ask the Service Advisor or Parts Counter Rep directly and specifically - are you charging MSRP or are you charging a matrix mark up? They are not going to lie to you. If they say MSRP then you are being charged reasonable and customary charges. If they say they use a matrix simply say that isn't going to work for you. Tell them you will only pay up to MSRP or you will take your business elsewhere (another dealer or order the parts online from a dealer that will sell for MSRP and include shipping.) As the consumer, you have the power and they need your business to keep them in business.
When performing warranty work for the factory, they only get reimbursed a small about over cost (less than MSRP) for the parts they use. They discount parts below MSRP for many of the aftermarket shops that buy from them, and they lower the price to MSRP for every aftermarket warranty claim they put in (as that's all the service contract will pay for). They will, in fact, do the same thing for you- all you have to do is ask. If they say no, then be assertive and ask to speak with the manager. They will negotiate and take a profit more times that they will let you walk and make nothing at all.
3. Saving on labor charges
The Service Department is the meat and potatoes of the dealerships and what keeps the doors open. Many times a part isn't that expensive; however, the labor charges to install it turns a $50 part into a $1000 job. When being given an estimate for repairs after the diagnosis, ask them for the parts and labor breakdown. They may say $100 in parts and $500 in labor (4 hours at $125 per hour). This next sentence is your money maker. Ask them "which Labor Guide do you get your labor times from?" The standards in the industry are: Motors, Mitchell, and Chiltons. They are the only 3 nationally recognized labor guides for most shops and warranty companies. Every shop in the country has the book or online book to be able to look up labor times. The fact is that mot shops and techs just make up the times without looking in a book. Have them show you where they looked up the time, request they refer to the printed guide and how they came up with the labor times. Whey they pull open the motors guide and it shows 1.0 hours diagnosis and 1.8 hours to install the part, that (and only that) is what you should be billed. At that time explain to the Service Adviser that you are willing to pay MSRP for the parts and the labor out of the labor guide they use at the shop. In this case Motors shows 2.8 hours at $125 the part at $75 at MSRP. Instead of $600 the bill is now $425.
Don't think this is asking for a discount or something they will not do. I did it every day 40 times a day for 9 years. The dealer gets to make a profit with reasonable and customary charges, and you - as the consumer - should not have to pay more when they do this daily for the people who know how to ask.
In summary taking your car to the dealer may save time and money for your auto repairs. Often times the dealer can get parts faster, can diagnose and repair it faster, which means getting you back behind the wheel of your car sooner. They use better parts and have more expertise at fixing your particular auto, which means fewer mistakes. Dealerships generally come with a 12month/12,000mile warranty on parts and labor; whereas, Joe’s Garage might only warranty 90 days.
When dealing with the Service Advisor, and before you get started (or allow them to even look at the car), express that that you will only pay MSRP for parts. Explain that you would like to have labor times confirmed from the Labor Guide they use at their shop (Motors, Mitchell or Chilton). If they are not willing to do this - find a different shop. There are dealers and aftermarket shops everywhere who depend on your business and most are willing to take reasonable and customary charges versus losing the business to the shop down the street.
The key to saving and not being taken advantage of is knowing what to ask and demanding they don't over charge you. That simple folks. Engage below with you’re your questions or comments! We would love to hear from you!