Ford Australia powerless to stop excessive dealer delivery charges

Ford Australia seems powerless to prevent its network of showrooms from charging excessive delivery fees to dealers on in-demand vehicles such as the next-generation Ford Ranger – even though the North America headquarters has taken steps to stamp out there this behavior.

Next Generation Australian Buyers 2023 Ford Ranger began sharing their billing costs on social media to compare dealerships’ excessive delivery charges.

Due to ongoing chronic inventory shortages due to production and shipping slowdowns caused by the coronavirus pandemic, a number of showrooms of most major automotive brands have begun charging above-the-line fees. average for delivering dealerships in order to increase their profits – even if they are already selling vehicles at full retail price without discounts.

Search by Conduct found that most Ford dealerships in Australia quote between $1,200 and $1,900 for nominal dealer delivery charges, but a number of customers have posted their invoices on social media which show dealer delivery charges clearly excessive ranging from $3,000 to $6,000.

Some Ford dealers who participate in social media forums have tried to defend the examples of price gouging – citing the forces of supply and demand – but customers stabbed with exorbitant fees have been encouraged by other group members online to shop.

In North America, the Ford Motor Company has issued a warning to its dealer network advising that showrooms that are stuck charging excessive fees or “mark-ups” will receive a reduced allocation of in-demand vehicles.

However, Ford Australia has so far refrained from issuing the same warning or taking similar action here.

In a statement to Conducta Ford Australia spokesperson said: “Although dealership delivery charges are set independently by dealers, we would like to remind customers that we have over 180 dealerships nationwide and they are urged to work with a dealer of their choice.

“We also have a new online configurator at ford.com.au, so customers can enter their postcode, configure their vehicle and get an estimated drive-through price, which includes an estimate of dealer delivery costs.

“This configurator is currently available for Ranger – and Everest and Raptor will be added within weeks.”

In response to this statement, Conduct then asked Ford Australia if it planned to take the same action as its North American headquarters in limiting the allocation of vehicles to dealers who overcharged. Ford Australia declined to comment.

Conduct understands that Ford Australia is powerless to set dealer delivery charges as it is considered anti-competitive behavior by consumer and business watchdog, the Australian Competition and Consumer Commission (ACCC).

The current wave of price hikes has sparked debate over the merits of a non-negotiable fixed price business model.

Critics of dealer delivery charges argue that the cost of preparing a new motor vehicle for sale should be included in the profit margin already built into the car’s RRP.

Unlike the term “dealership delivery charge”, this charge does not cover the cost of transporting a new motor vehicle to the dealership.

Instead, transporting the vehicle from the shipping docks to the showrooms – or dealer holding lots – is already covered by the cost charged by the dealer for each new motor vehicle.

Dealership delivery charges are actually a separate source of profit and were largely eliminated prior to the COVID-19 pandemic because there was an oversupply of new cars and not enough customers.

In those days, the first thing that often disappeared on a customer invoice when a discount was applied to a new car was the dealer’s delivery charge.

However, dealer delivery charges have come back into the spotlight over the past couple of years as showrooms take advantage of chronic inventory shortages and long wait times.

A dealer, addressing Conduct speaking on condition of anonymity, who was critical of dealers’ excessive delivery charges, said: “You can skin a sheep once, but you can shear it a hundred times.”

New-car dealers who have taken a dim view of the recent surge in overcharging, say Conduct the industry must consider the long-term impact of excessive fees on each showroom’s customer base.

Conduct knows at least one big brand – Swedish company VOLVO – which has a maximum delivery charge of $2,995 on most models in its dealership contracts (some only incur a $995 charge), but dealers can reduce or eliminate this charge at their discretion.

Conduct understands that the ACCC is reviewing dealer delivery charges as part of its ongoing review of the automotive industry.

Although the ACCC has launched several investigations – and mounted a number of successful court cases – involving the auto industry since 2015, automakers and car dealerships remain the biggest source of consumer complaints, according to the watchdog. .