Monday, May 25, 2009
Most know the most glaring auto repair pricing abuses: Service centers overcharging $100’s even $1000’s for repairs, or charging for repairs that were never done at all. To be sure, this still happens every day. However, there are many other techniques which involve flying just low enough to avoid detection. The savvy service centers increase the price so as not to set off any alarms. It has become so common that it’s not just an accepted industry practice, but even service customers have accepted paying higher prices.
Knowing how ingrained price-gouging is within the automotive service industry, it’s shocking (although understandable) that even service customers have succumbed to excessive car repair prices. I frequently hear service customers’ state: “Yeah, I know I was ripped off, but my car’s fixed now.” Or, “I know they charge too much, but they’re convenient.” This is insane! To accept auto repair price-gouging is to allow its continuation.
The difficult part, of course, is how to stop it. Given that the automotive service industry is so big and powerful (and so frightfully necessary) how does one battle such a force? Perhaps the first thing to understand is the degree to which this type of stealth-like price-gouging occurs. A two-decade undercover investigation has revealed that 98% of all repair shops (dealerships, local shops, and franchises) are price-gouging their customers in one form or another. The following exchange, between a service manager and service advisor, provides an idea of the “scope of scamming” below the radar.
A service advisor asked his manager how to bill more hours per month, which is another way of asking how the advisor can make more money. The service manager casually stated: “Simply add an additional two tenths to every ticket you write.” In other words, every customer this service advisor “helps,” he was instructed by a superior to add a “little” extra. So if the labor rate is $100 per hour two tenths would equal $20. Rather than pay $100 per hour, the service customer would actually pay $120. $20 doesn’t sound like much compared to the gross injustices we all know.
However, whether it’s an overcharge of two cents or $20, it’s too much. If you visit a shop practicing this strategy alone (there are hundreds of strategies, many applied simultaneously), you may end up paying over a $100 or more by year’s end. What’s really shocking is that being ripped off $100 over a year’s time is actually minor! Try $500-$5000