.....or things to keep in mind when purchasing your Smart.
I’ve seen and heard many of you complaining about “doc fees” or “document fees” that Smart Dealers across the country are charging. Many of these comments come from not knowing the facts or simply unaware of how a dealership functions. After being in the dealership business for 25+ years, mostly in Parts and Service management, I hope my ‘take’ on this will help.
Opening up a new dealership, no matter who the manufacturer is, is no easy task and certainly not inexpensive. Just to get a franchise, you must have your personal and business finances scrutinized thoroughly by the manufacturer and ‘if’ you pass, must pay a franchise fee, purchase land for construction of the facility and after that, hire a staff that may have to work for less than their normal salary just so that the dealership can get up and running.
Once the dealership IS up and running, then you have monthly expenses, such as utilities, building cost, floorplan (the monthly payment a dealer must pay for the vehicles in inventory), insurance and payroll just to name a few. However with a ‘normal’ manufacturer, you have a full lot of new vehicles and used cars (either traded in or bought at an auction) for sales income, parts and service for fixed operations income and since you're selling new and used cars, your Finance Department which makes money for you as well. Not so is the case with your average Smart Center.
In case you haven’t noticed, Smart Centers are NOT stocked with many new vehicles just waiting to be sold because there is a waiting period of 9-12 months or MORE to get one of these cars. With no light being seen at the end of the tunnel for the dealer, this only makes the opening of a Smart Center even more costly.
At your Smart Center, the dealership Owner or Dealer Principle, has gone out on a limb and literally has millions of dollars invested in their store with essentially NO vehicles to sell and practically NO parts sales and service work to offset their expenses. As some of you may or may not know, most dealership employees from sales staff to technicians, are paid based on SALES. No sales = no pay, so therefore to keep employees the dealer must give the employees a ‘guaranteed’ salary for a specified time period. So how can the dealer offset this debt? Through ‘doc fees’. Unfortunately the amount of these fees hardly offsets the entire out-of-pocket expenses for the dealer, but they do help keep them afloat.
Please keep this in mind when purchasing your Smart. These guys, for the most part, do NOT have deep pockets from which to dig. The profit margins on these cars are, like the cars themselves, very small and until they get many more on the road coming in for parts and service, the dealers are, in most cases, losing money each and every month just to keep their doors open. The bottom line is that they’re NOT out there to ‘rip you off’ as some believe, but to simply survive.
So, be kind to your Smart Center and they will gladly return the favor for many years to come…….
.....or things to keep in mind when purchasing your Smart.
I’ve seen and heard many of you complaining about “doc fees” or “document fees” that Smart Dealers across the country are charging. Many of these comments come from not knowing the facts or simply unaware of how a dealership functions. After being in the dealership business for 25+ years, mostly in Parts and Service management, I hope my ‘take’ on this will help.
Opening up a new dealership, no matter who the manufacturer is, is no easy task and certainly not inexpensive. Just to get a franchise, you must have your personal and business finances scrutinized thoroughly by the manufacturer and ‘if’ you pass, must pay a franchise fee, purchase land for construction of the facility and after that, hire a staff that may have to work for less than their normal salary just so that the dealership can get up and running.
Once the dealership IS up and running, then you have monthly expenses, such as utilities, building cost, floorplan (the monthly payment a dealer must pay for the vehicles in inventory), insurance and payroll just to name a few. However with a ‘normal’ manufacturer, you have a full lot of new vehicles and used cars (either traded in or bought at an auction) for sales income, parts and service for fixed operations income and since you're selling new and used cars, your Finance Department which makes money for you as well. Not so is the case with your average Smart Center.
In case you haven’t noticed, Smart Centers are NOT stocked with many new vehicles just waiting to be sold because there is a waiting period of 9-12 months or MORE to get one of these cars. With no light being seen at the end of the tunnel for the dealer, this only makes the opening of a Smart Center even more costly.
At your Smart Center, the dealership Owner or Dealer Principle, has gone out on a limb and literally has millions of dollars invested in their store with essentially NO vehicles to sell and practically NO parts sales and service work to offset their expenses. As some of you may or may not know, most dealership employees from sales staff to technicians, are paid based on SALES. No sales = no pay, so therefore to keep employees the dealer must give the employees a ‘guaranteed’ salary for a specified time period. So how can the dealer offset this debt? Through ‘doc fees’. Unfortunately the amount of these fees hardly offsets the entire out-of-pocket expenses for the dealer, but they do help keep them afloat.
Please keep this in mind when purchasing your Smart. These guys, for the most part, do NOT have deep pockets from which to dig. The profit margins on these cars are, like the cars themselves, very small and until they get many more on the road coming in for parts and service, the dealers are, in most cases, losing money each and every month just to keep their doors open. The bottom line is that they’re NOT out there to ‘rip you off’ as some believe, but to simply survive.
So, be kind to your Smart Center and they will gladly return the favor for many years to come…….
Get out the Kleenex! Firstly, the doc fees are total add on BS. In most cases they mean jack since the vast majority of units sold by other makes are sold BELOW MSRP so the add on is mitigated. If the smart centers are not happy with mark up, that's really too bad! They went into it with their eyes wide open. Are you saying that centers that only charge $50 doc/dealer fee are going to lose money???? Yeah right! As a parts and service man you must also realize that parts and service are the back bone of the dealer's profit. Additionally, smart centers virtually have no floor plan costs except for their demos. Do the math, a $500 doc/dealer prep fee represents almost an additional 4% mark up for the dealer.
Hmmmmmm.....another point however is that most of these dealerships are Mercedes-Benz who should be well established. 1200 applied to get Smart Car Franshises only 75 total will be picked for now. Those 75 should have the means $$$$ to make this happen without passing an unasked for assist from the consumer.
I see your point, Jeepster but I think in this case the dealerships should be able to carry the burden.
Announcement of a dealer for Nashville is "still about two months away," Smart USA spokesman Ken Kettenbeil said. Last fall, Kettenbeil had said a Smart dealer was likely to be announced before Thanksgiving. On Tuesday, he wouldn't say what has caused the delay here.
He would not speculate on who will get the Nashville franchise but added that it's not likely to open this year. The company said 67 dealers have opened out of a planned 74.
Dealers and auto analysts say the cost of opening a Smart store — estimated to run at least $700,000 — is hard to justify when gross profit on each vehicle sold is $1,000 or less, and the cars are in very short supply.
Some dealers are wary
Making a business case for a Smart dealership would be difficult for most dealers, said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book. "They are coming at a good time, with the high fuel prices. But there is a fear it could be a flash in the pan."
"The longevity of the Smart brand in the United States will depend on their ability to offer more than one model down the road," Nerad said. "But I'm hard-pressed to think that a two-seat vehicle as a lone model can sustain a dealership, especially a low-priced vehicle."
At the Louisville store, which is a stand-alone operation, the company does not expect to make a profit selling new Smart cars, Swope said.
Swope said the markup on the Smart car is only about $1,000, and dealers have fixed costs that come out of that meager gross profit.
The prospect of losing money probably is why no one has stepped forward yet to put a dealership in Nashville, Nerad said.
"This is a toy car for the affluent," Nerad said. "Some are buying it so they'll have a green car. But for these people, it's a third or fourth car in the family."
Are you saying that centers that only charge $50 doc/dealer fee are going to lose money???? Yeah right! As a parts and service man you must also realize that parts and service are the back bone of the dealer's profit.
first, YES they DO lose money. just how much do you think a Smart dealer 'nets' in one month? even with minimal staff (a GM, Sales Manager, 1-2 Salespersons, 1 tech, 1 parts employee and 1 clean up person, you're looking at 6-7 employees and without very many cars to sell, that's alot of payroll to absorb, not to mention all the other expenses. yes, they have no 'floorplan' as most dealers, but they DO have to cover the cost of their demos, which they are NOT allowed to sell.
i do agree with you "Carnut" in that 'some' of these dealers that are associated with other franchises, such as MB, haave an easier time of it because they can 'borrow' from their parent store. but for those like the one in Indy that have no 'big brother' to borrow from, it's tough. as 'Karl Roth' said: "Never met a business that did it for reasons other than make money........Charities help people in need and so it should be..." i'm sure even YOU don't go to work for free......
as for your comment about parts and service are the 'backbone', ABSOLUTELY! however when you have little or no cars on the road, you have little or no parts and service sales and therefore little or NO PROFIT! thank you for proving my point.
finally, you mentioned that if they don't like the way it is, then they should essentially 'get out'. ok, if they all felt that way, you wouldn't have any Smart Car Centers to bad mouth.
maybe if you don't like the 'doc fees' YOU should ask for a refund of your $99 reservation fee and go buy something else....OR wait a couple years when dealers have plenty of them in stock and the demand does not outweigh the supply.
Hmmmmmm.....another point however is that most of these dealerships are Mercedes-Benz who should be well established. 1200 applied to get Smart Car Franshises only 75 total will be picked for now. Those 75 should have the means $$$$ to make this happen without passing an unasked for assist from the consumer.
I see your point, Jeepster but I think in this case the dealerships should be able to carry the burden.
This is the situation with my dealer. Its attached to MB of Fairfield... a very well established dealer that gets plenty of buiness. Add to to that, thats its part of a multi-brand Penske dealership. I certainly dont feel for them.
Most, if not all dealerships I am sure are attached to an auto group. I doubt that their are really any that are just someones sole buiness. I dont think Penkse would want any of his dealers to have any risk of folding, would be bad PR.
Hmmmmmm.....another point however is that most of these dealerships are Mercedes-Benz who should be well established. 1200 applied to get Smart Car Franshises only 75 total will be picked for now. Those 75 should have the means $$$$ to make this happen without passing an unasked for assist from the consumer.
I see your point, Jeepster but I think in this case the dealerships should be able to carry the burden.
just my opinion (and you all know what THOSE are, right?), it's quite possible that the Smart dealers are in the same boat as the consumers. imagine that you sign up and get approved for a franchise with the belief that you'll have cars on your lot to sell ANYONE in six months or so, yet here 4 months after opening, there is STILL a 12 month waiting list? yes, all these dealers knew going in what it may be like, but may have based that on inaccurate info.
i believe it's going to be 'slim pickins' for the 75 dealers out there who took a huge chance on Smart and i would hate to see ANY of them close because they simply just lost too much money and the well went dry.
oh, and let it be known.....i DON'T WORK FOR A SMART DEALER! i've placed my reservation for my Smart, but i'm employed at a Jeep Dealer.
maybe if you don't like the 'doc fees' YOU should ask for a refund of your $99 reservation fee and go buy something else....OR wait a couple years when dealers have plenty of them in stock and the demand does not outweigh the supply.
so by now EVERYBODY knows about these 'doc fees' going in, just as 'Carnut' eluded to about the dealers buying a Smart Center.
that being said, anyone not like the doc fees, go buy something else. i hope you do so that i can get MY car sooner........
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