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There is a crisis going on at our dealerships.  And it’s called “Addendums”.  This is a sore subject with many, as everyone has different viewpoints as to the functionality of addendums.  You’re required to keep reading this blog.  It costs you $50, but it’s required.  Everyone has to pay that reads it.

Sounds pretty stupid, huh?  Dealers are using addendums to generate additional profit per vehicle (likely because they are far too weak to sell them without making it a “requirement”).  It’s sad and pathetic.  Accessory sales, aftermarket, and all of the accompanying bumps should be done on the sales floor, in the finance office, from the parts counter, in the service drive, or on the lot… because it is offered.  Not because it is necessary.

Many dealers place addendums on their vehicles solely because their competitors do the same and it is “just what they do around here”.  They say “If you can’t beat ‘em, join ‘em.”  But I’m urging you… if you can’t beat them, don’t join them. Beat them in a few years when they’ve sullied their reputation from the antiquated business practices of yesteryear.  Ask around the dealership.  My guess is the Managers that don’t have to explain to the customers about the addendums love them (for the profit aspect), but the salespeople who have to apologize for the addendums hate them (because of the customer frustration aspect).

I’ve sold “environmental protection packages”, pin stripes, Vin Etch, and every other trivial upsell available.  I sold them because of sales skills.  If you want someone to pay for something, sell it to them.  Don’t require it.  You aren’t the government and pin stripes aren’t taxes.  I never allowed a sticker on a window to force the issue on the customer.  It doesn’t build trust.  It builds unhappiness.

I’m currently purchasing a vehicle as I write this.  They’ve had the deposit on a vehicle I was promised in 4-6 weeks.  Here I am, 10 weeks later… still no word (but that is another blog).  However, because this (giant, nation-wide group that everyone knows) dealership requires every customer to purchase a $799 addendum (for paint protection and some worthless “security theft” styled sticker), I do to.  After all, the vehicle is being built for me so it’s not as if it is coming from the factory with this.  Even when I refused the additions, they said it was required and I couldn’t purchase the vehicle without them.  AND I have Ford X-Plan pricing. (Once again, all of this will be in another blog when I take delivery.  Oooh, how the hellfire will rain down when that happens).  Nonetheless, it is required.  I don’t want it.  And that makes me strongly dislike the dealership I’ve chosen to do business with.  Nevermore.

If addendums are required, so must negative reviews, I believe.  And I’ve NEVER read a review from a customer that says “I was really happy they placed an additional $800 required fee onto the car at purchase for some features I never wanted or asked for.”  Show me this review and I will relent.  This has grown to be a crisis where we have stopped relying on sales skills and started relying on shitty loopholes and bad dealership practices.  Away with it.  Away with it all.  Sell the additions like a professional and stop force-feeding your customers what they don’t want.  Stop the addendum crisis.  Or you’ll get what is coming to you. 

I can’t be the only person that despises these practices.  What say you?

Views: 826

Tags: addendum, addendums, automotive, car, consulting, dealer, dealerknows, joe, training, webb


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Comment by Joel Casser on April 1, 2013 at 2:42pm

Last year I had to deal with a really stupid addendum.  A friend of mine purchased a Chrysler 200 from a dealership in Freehold, and being in the business and knowing this was the first time she ever went car shopping, I asked to look over her paperwork.  Lo and behold, shadier than a pushcart full of umbrellas.  Not only did they do the provisional spot with calling her back in to say her payment's doubled since they couldn't approve her for the 0% financing, but there was an addendum for $3,000 for things like window guards. 

I went back down there with her to return the vehicle, letting them know that I'm in the business and wasn't going to stand for any shady crap, and they still tried to backroom me.  I was willing to give them one shot to make things right, including removing the addendum.  After the obligatory 10 minute wait (funny because when the F&I guy came back I was on speakerphone with another Chrysler dealer getting a deal hammered out), he comes back in and starts off with "We'll remove the addendum, but then we can't absorb the bank fee, that's $1,300..."  I literally threw the keys on the table and dragged my friend out. 

I'm not really surprised by the behavior of this particular dealership, they've got tons of negative reviews online, plus they tack on a $900 "Internet fee" onto every used car.  It makes me wonder how some of these places stay in business.

Comment by Tom Gorham on March 30, 2013 at 7:33pm

Sometimes I get this feeling of Deja Vu all over again.  Is there nothing new under the sun?  I would think that if you order a car, the options and prices are locked in.  Period.  Anything else would be illegal.

Addendums are nothing new.  Back in the 90s, there were dealers who rustproofed every car.  If you didn't want it, you didn't have to buy the car.  Fair enough.

Dealers have the right to accessorize cars.  It is a way to showcase and sell accessories.  But no one is forced to buy that car.

No one has the right to add accessories or anything else to a car that has been ordered without it.  I would walk away from such a deal on principle, never mind the price or incentives.  By accepting it, we perpetuate the practice.  Give your business to an honest dealer.

Comment by Joe Webb on March 30, 2013 at 5:20pm

Jim R - Thanks for all the great information.  What a wealth of data I may hit them with later.
Manny - I don't like trying to use my (mediocre) status in the industry to try and strong-arm a dealer so I would personally feel uncomfortable sitting down with them.  If I learned it was about commission for the salesperson, I'd simply offer to give him a Visa gift card for the loss of addendum bump, but I doubt that is the only case.
And yes - Ty is growing up way to fast.  Thanks for sharing the pic :)

Chris - You're dead-on about doc fees.  In Chicago, mine was $53.  The doc fee here is $799.  Thankfully, Ford X-Plan prohibits dealers from charging more than $299, but it is still a bump.

Comment by Jim Radogna on March 30, 2013 at 4:19pm

Yes they can Manny. For hard to get vehicles I can see the point, but I see plenty of dealers that add big markups for run-of-the-mill cars too. IMO, just because it's legal doesn't mean it's a good business practice, but what do I know?

Comment by Chris Hanson on March 30, 2013 at 3:47pm

Good point Jim, most of the dealership that I come across that use addendum's, do not have the correct price online.

Comment by Jim Radogna on March 30, 2013 at 3:36pm

Almost forgot to mention the most important thing about addendums:

If the vehicle has added accessories or added mark-up, most states require that the advertised price must include those adds (for the most part, the advertised price must include everything except government fees and sometimes doc fees). Many dealers list their new cars on their websites and third party sites at MSRP, therefore they are generally required to sell the car at MSRP or less. Failure to do so on a vehicle with an addendum is an advertising violation. Some states allow for a disclaimer that states that the MSRP is for comparison or informational purposes only and is not the selling price, etc...but if this disclaimer is allowed, it needs to be on all advertisements. Failure to sell at an advertised price is a MAJOR violation and can get a dealer in deep doo-doo.

Comment by Jim Radogna on March 30, 2013 at 3:20pm

I haven't written an article Manny, but here are some pointers on addendums that will keep the regulators off your back:

The sticker should disclose that the supplemental sticker is the dealer's asking price, not the manufacturer's suggested retail price.

MSRP should be clearly and conspicuously disclosed on the sticker.

The sticker should show each item not included in MSRP with the price of each.

When the sticker price exceeds MSRP plus the price of the items added by the dealer, the difference should be stated and described as "added mark-up" or a similar term.

Dealer-added charges should be reasonable and not artificially inflated (it should be the dealer's regular asking price for such accessories).

The sticker should not be designed or formatted so as to create confusion with the manufacturer's window sticker.

The sticker should be filled out COMPLETELY and faded or unreadable stickers should be replaced.

The sticker should be right next to the manufacturer's window sticker (not on the other side of the vehicle).

And for the geniuses at Joe's local dealer - addendums are for accessories already added to the vehicle and functional - not accessories that they plan to add later...

Comment by Chris Hanson on March 30, 2013 at 3:19pm

I am surprised that you still purchased it once they said you "had to" Joe.  $800 is worth the drive in my book.  Addendum's are so common at so many dealerships but I do get that your situation should be different because you ordered it.

That said, at least you get something for the $800 :)   .......can you imagine paying a doc fee of $799?  I remember the first dealership I walked in to do training and I saw a doc fee of $599 - now there's some profit.  I just couldn't believe my eyes.  Selling cars 8 years in MN with a doc fee of $20, then at some point, it was raised to $40 and people would complain and complain.  "$40??  Whats that's for??"  Speaking of that, what was the doc fee on your purchase?

Comment by Jim Radogna on March 30, 2013 at 1:48pm
Thanks Manny. It's a shame that a few greedy operators make the entire industry look bad. Inevitably, they're going to try and screw the wrong customer and either a regulator or a consumer attorney is going to get involved. Of course the media coverage will be nationwide and the industry will get yet another black eye. For anyone who wonders why the car business is so over-regulated, this is the answer.
Comment by Jim Radogna on March 30, 2013 at 12:43pm

The additions are required? On a vehicle that hasn't been built? Wow! Can't wait till the Florida Attorney General's office hears about that ;-)

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