The Australian division of US car giant Ford has issued a statement following recent examples of excessive dealer delivery fees on the new-generation 2023 Ford Ranger ute.
Ford Australia appears to be powerless to stop its showroom network from charging excessive dealer delivery fees on in-demand vehicles such as the new-generation Ford Ranger – even though head office in North America has taken steps to stamp out the behaviour there.
Australian buyers of the new-generation 2023 Ford Ranger ute have begun sharing on social media their invoice costs to compare excessive dealer delivery charges.
Due to the ongoing chronic stock shortages as a result of production and shipping slowdowns caused by the coronavirus pandemic, a number of showrooms across most major automotive brands have started to charge above-average fees for dealer delivery to boost their profits – even though they are already selling vehicles at full retail prices with no discounts.
Research by Drive has found most Ford dealers in Australia are quoting between $1200 and $1900 for the nominal dealer delivery charge, however a number of customers have posted on social media their invoices which show clearly excessive dealer delivery fees ranging from $3000 to $6000.
Some Ford dealers who participate on social media forums have attempted to defend the examples of price gouging – citing the forces of supply and demand – however customers stung with over-the-top charges have been encouraged by other members of online groups to shop around.
In North America, the Ford Motor Company issued a warning to its dealer network there advising showrooms who are busted charging excessive fees or “markups” would receive reduced allocation of in-demand vehicles.
However, Ford Australia has so far stopped short of issuing the same warning or taking similar action here.
In a statement to Drive, a spokesperson for Ford Australia said: “While dealer delivery fees are set independently by dealers, we are keen to remind customers that we have more than 180 dealers nationwide and they are welcome to work with a dealer of their choice.
“We also have a new online configurator at ford.com.au, so customers can put in their postcode, configure their vehicle, and get an estimated drive-away price, which includes an estimated dealer delivery charge.
“This configurator is currently available for Ranger – and Everest and Raptor will be added within a few weeks.”
In response to that statement, Drive then asked Ford Australia if it planned to take the same action as its North American head office by restricting vehicle allocation to dealers who over-charged. Ford Australia declined to comment.
Drive understands Ford Australia is powerless to set dealer delivery fees because it is deemed anti-competitive behaviour by consumer and business watchdog, the Australian Competition and Consumer Commission (ACCC).
The current spate of price gouging has sparked debate about the merits of a non-negotiable, fixed-price business model.
Detractors of dealer delivery fees say the cost to prepare a new motor vehicle for sale should be included in the profit margin already baked into the RRP of the car.
Contrary to the name “dealer delivery fee”, this charge does not cover the cost of transporting a new motor vehicle to the dealership.
Instead, vehicle transport from shipping docks to showrooms – or dealer holding yards – are already covered in the dealer’s invoice cost of each new motor vehicle.
Dealer delivery fees are in fact a separate source of profit and were largely eliminated in the lead-up to the COVID-19 pandemic because there was an over-supply of new cars and not enough customers.
At that time, often the first thing to disappear on a customer invoice when a discount was applied to a new car was the dealer delivery fee.
However, dealer delivery fees have been thrust back into the spotlight over the past two years as showrooms capitalise on chronic shortages of inventory and long waiting times.
One dealer, speaking to Drive on condition of anonymity, who was critical of excessive dealer 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 spate of over-charging, told Drive the industry needs to consider the long-term impact excessive charges will have on each showroom’s customer base.
Drive is aware of at least one major brand – Swedish company Volvo – which has written into its dealer agreements a maximum dealer delivery fee of $2995 on most models (some only attract a $995 fee), however dealers are able to discount or eliminate this fee at their discretion.
Drive understands the ACCC is reviewing dealer delivery fees as part of its ongoing scrutiny of the car industry.
Despite the ACCC launching several investigations – and mounting a number of successful court cases – involving the automotive industry since 2015, car companies and car dealers remain the single biggest source of consumer complaints, the consumer watchdog says.