Wednesday, June 29, 2011

Never Take a Used Car to a Dealer for Repair!

Once your car is out of warranty, NEVER take your car to a dealer for service!

As noted in this video link on CNN, many new car dealers are quite frank about their latest practice - "converting" existing service customers into new car customers by making a "value proposition" to them when they bring their car in for service.

What does this mean?  Well, like Mafia enforcers, they "make you an offer you can't refuse." You bring in the car for inspection or routine maintenance, and you are told, that, horror of horrors, that old clunker will need thousands of dollars in repairs to make it "safe to drive." Why not bail out now and buy a brand new car?

The problem with this scenario is the blatant conflict of interest - the car dealer wants to sell you a new car, so they have every incentive to pad the repair estimate and to make the car sound unsafe and worn out.  After all, they want you out of that clunker!

An independent mechanic, on the other hand, has no such hidden agenda - and his labor rate is often half that of the dealer, and often his parts costs are far less.

What do I mean by this?  Let me give you two examples, involving friends cars.

1.  Steve and Edie have a 1998 BMW 323iC in Boston Green.  Steve comes to me after taking the car to the dealer.  I have a nearly identical 1997 328iC in Boston Green (above), and having four BMWs, I know how the cars are put together, as I do all my own maintenance on them.

In New York, cars have to pass a safety and emissions inspection, and the local BMW dealer says that Steve and Edie's car won't pass unless it has over $3000 in work done.  This is a lot of money for a car with a book value of $6000 on a good day.

What are the items that need to be repaired?

1.  Oxygen sensors
2.  Camshaft Position Sensor
3.  Rear View Mirrors (alleged to be "cloudy")
4.  Stiff Steering - new rack and pinion

I look at the car.  The oxygen sensors are fine, but if the mechanic had bothered to open the hood (as opposed to using the code reader on the OBD II data port) he would have noticed that a torn intake elbow (Parts cost:  $15, labor, 15 minutes) was what was generating the oxygen sensor message.

The camshaft sensor is about an hour's work and the part is about $100.  The rear view mirrors was a joke.  We simply took it to another inspector who looked at them and said they were fine - the dealer wanted over $500 to replace the mirror glass.

And the stiff steering? a corroded flex joint in the steering shaft that loosened up with some WD-40.

So the car passed both emission and safety inspection with flying colors - after about $300 in parts and a few hours labor - which an independent mechanic would have charged maybe $300 for.

So where does the dealer get a $3000 repair bill?  They pulled it out of their ass, is where.

And of course, when this $3000 estimate was presented, the service manager brought in a salesman who helpfully suggested that they could lease or buy a new BMW for low, low monthly payments.  In fact, the $3000 would go a long way to paying the first year's lease payments!  And they would take their "old clunker" in trade for $3000 to cover the document fees and lease down payment.

Needless to say, Steve and Edie didn't fall for this gag.  They didn't have that kind of money anyway.

But lesson learned - new car dealers are great for warranty work, but they suck and older car repair.  Their cost structure is too high and they have a blatant conflict of interest in that they want to sell you a new car.

2.  Frank and Claire have a 2002 Mercedes S-class with 110,000 miles on it.   For an S-class Mercedes, this is not a lot of mileage.  They take it to the dealer for "regular service" and are handed a 15-page $5000 repair estimate on everything from the windshield washer ($750) to a new rear-view mirror assembly ($800) to ball joints ($1500) and a serpentine belt and tensioner ($700) to repairing the glovebox door ($250), to new motor and transmission mounts ($1000) to valve cover gaskets ($1000)

The car runs fine, and while it may need some of these issues addressed, the prices quoted are whack.  The dealer quotes $250 just for a windshield washer pump!  This is ludicrous.

And the pitch is the same.  Sell the old clunker before it bankrupts you!  $5000 in repairs goes a long way toward lease payments on a new C-class!  And out of the goodness of their heart, the dealer will give them $5000 - half the book value - on the S-class in trade.

Frank and Claire are no fools, and they walk away.  But many other people don't - and cite fears of "high repair bills" as a reason to lease one new car after another.

Yes, you might have "high repair bills" if you take a used car to a new car dealer for repairs.  But that is only because their repair cost structure is insane and they pad the snot out of the bills to make it seem like buying a new car is a "sound" proposition.

So, how do you avoid this mess?  Simple.   Find a good local independent mechanic who can repair your car.  A good mechanic is not cheap, but he will likely be nearly half the cost of the insane prices that dealers quote.

Once a car is out of warranty, there is no really good reason to take it back to the dealer, other than for a recall.  Even a "legitimate" dealer who isn't trying to snooker you into buying a new car is going to have a labor and cost structure that is double the independent shop down the street.  So going to a dealer will be staggeringly expensive.

Cultivate a relationship with a good local independent mechanic.  And don't be afraid to get a second opinion, when it comes to repair work. 

And never, ever take a used car to a new car dealer for repair!