The main submerged cost for the new car buyer are a necessary nuisance. Catherine Cronin reports on delivery charges
The fine print can spoil even the classiest of car advertisements. It's a bit like the health warning on cigarette adverts.
The caveats come in the fine print and one of them generally is about the price - the car can be yours, but not at the "ex-works" price in the ad which excludes delivery and related charges.
The first point is that cars can't be bought directly from the factory. Once you stroll to the dealership, you find that between €350 and €900 has been added for delivery. Sometimes misunderstood but rarely questioned, this charge is the main submerged cost in buying a new car.
However, other submerged costs lurk in the background. A charge for metallic paint tends to be automatically added when you ask for a quote, especially with cars supplied in a limited number of matt colours.
Metallic paint aside, the delivery charge feels like having to pay €400 for a car-wash with the number plates thrown in. To most buyers, it's small in the context of the overall price, typically between 1 and 2 per cent of the price of a small family car, and generally just accepted as part of the costs of securing the wheels of your dreams.
For the dealer it's an attempt at recovering costs. "The dealer has to pay the costs of transporting the car to the dealership," says one multifranchise sales manager, "and then it's not just off the transporter and over to the customer."
When salesmen talk about delivery and related charges, he says, they're generally taken to include transport costs to the dealer which are not cheap, registration plates, pre-delivery inspection (PDI), valeting - new cars come covered in a protective wax - and VAT.
"The inspection and safety check can take about an hour," he says. "It includes diagnostics, checking oil, water and brake-fluid as well as other safety features such as indicators, lights, tyre pressure and that - and a visual inspection."
The charges also help with other things such as filling the petrol tank or discretionary details in executive cars such as special floor mats or maybe a customer gift.
Delivery charges are left totally up to the dealers as they do the work and have a labour cost, says Tony Neville for OHM, one of Ireland's largest car importers which has franchises for SEAT, Saab, Chrysler, Jeep, Daihatsu, Jaguar, Jeep, Cadillac and Corvette. "All our cars get a PDI by the dealers," he says. "The inspection sheets for some cars, such as Saabs, can run to several pages."
Customers can find charges which differ slightly even for the same cars in two different dealers. They will also be puzzled by the facts that delivery charges for smaller cars are slightly lower at some dealers, but not at others - or by the absence of lower charges at dealers near Dublin port, Rosslare or Ringaskiddy where the cars come in.
"The brand, the market and the number of dealers in an area influence the amount," according to the sales manager. "When we sell one of the brands here, the transport charge is a standard cost. We absorb everything else, such as the on-site safety inspection which costs about €100, as well as the plates and the valet. Some dealers in less competitive areas do differently."
At €850, the BMW delivery charge is at the upper end and the amount is standard across its range. Clare O'Neill of BMW Ireland, explains: "It covers the cost of the PDI at BMW's British distribution centre before the cars are shipped here, the valet, the plates, membership of the Mondial breakdown service - and then dealers here take delivery."
In the past few years, delivery charges have crept up, coincidentally as dealer margins have tightened. "Buyers may see delivery charges as the dealers' ways of making more money," says a retired dealer, "but at the end of the day, what concerns them is the actual amount they will end up paying for the car."
The delivery charge is all part of the pricing strategy, he says. "It's a good tool to have especially in the country where most punters tend to negotiate. It's an important part of the haggling margin and allows a salesman to be seen to be giving a discount.
"By the time you've sold the new car, you'll have pretty much given away the delivery, but it has helped preserve the sales margin. And, if a customer doesn't look for a discount, all the better."