Are on road costs a rort in NZ?

Forums › Transport (cars, bikes and boats) › Are on road costs a rort in NZ?

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Master Geek
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#1292978 28-Apr-2015 14:50

It's a rort.

Here's a video that explains what's included in the dealer delivery charges, what they actually cost the dealer and what you should offer to pay (if anything):

https://youtu.be/oe4zn985IUc

Edit: Embedded YouTube video wasn't working

Geektastic

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#1293018 28-Apr-2015 15:34

tigercorp:
Geektastic:
floydbloke:
Geektastic: Since you can't really avoid having the things the ORC represent, why don't they simply allow for them in the car price? What's the point of separating them?

To make the sticker price more attractive.

Seriously? $1000 or less might change the attractiveness?! How tight would you have to be for that to be so?!

How stupid would you have to be to choose to pay $1000 more when you have choice?

That isn't what I said.

Why does making the car cost $49,000 or $50,000 on the sticker and charging/not charging ORC make any difference to the attractiveness of the car as a purchase? The amount of the cheque is the same - and neither case stops you negotiating.

Geese

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#1293019 28-Apr-2015 15:34

Geektastic:
Geese: I've bought 5 new motorcycles in last 4 years, and have found some dealers charge $350 ORC, some round up to $500. When asked why it costs more than actual cost of REG/WOF/petrol, I am told it includes assembly (as they come in crates without wheels on, handlebars, on, etc) and road testing.

Do you still have them, or do you just get through motorcycles faster than I get through jeans?!

Haha, I do about 2,000km a month so I wear them out!

I've noticed a basic principal when selling vehicles, via Trademe. For an example, a vehicle is "worth" $3,000, but needs to have say $1,000 spent on it, if you give people the choice generally just see the bottom dollar and would rather pay $2,500 as is, than $3,000 with the $1000 work done.

So when it comes major service time, generally, people would rather have a discounted price, rather than double the difference spent on servicing so it is in top condition. Well I find time and time again anyway.

Hence I have no trouble selling, and then just buy the next new model. So far by this method, I've had 46,000km motorcycling the last 3 years, no breakdowns, new bikes, and lost a total of $2,450, for that time.

floydbloke

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#1293031 28-Apr-2015 15:53

Geektastic:
tigercorp:
Geektastic:
floydbloke:
Geektastic: Since you can't really avoid having the things the ORC represent, why don't they simply allow for them in the car price? What's the point of separating them?

To make the sticker price more attractive.

Seriously? $1000 or less might change the attractiveness?! How tight would you have to be for that to be so?!

How stupid would you have to be to choose to pay $1000 more when you have choice?

That isn't what I said.

Why does making the car cost $49,000 or $50,000 on the sticker and charging/not charging ORC make any difference to the attractiveness of the car as a purchase? The amount of the cheque is the same - and neither case stops you negotiating.

If I saw two ads in the newspaper from different dealers advertising the exact same make, model, but one is $1000 less than the other, I expect I would naturally be drawn to the cheaper one first.
I'm not a marketing expert, but I think that's how it works.

Sometimes I use big words I don't always fully understand in an effort to make myself sound more photosynthesis.

Geektastic

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#1293039 28-Apr-2015 16:03

floydbloke:
Geektastic:
tigercorp:
Geektastic:
floydbloke:
Geektastic: Since you can't really avoid having the things the ORC represent, why don't they simply allow for them in the car price? What's the point of separating them?

To make the sticker price more attractive.

Seriously? $1000 or less might change the attractiveness?! How tight would you have to be for that to be so?!

How stupid would you have to be to choose to pay $1000 more when you have choice?

That isn't what I said.

Why does making the car cost $49,000 or $50,000 on the sticker and charging/not charging ORC make any difference to the attractiveness of the car as a purchase? The amount of the cheque is the same - and neither case stops you negotiating.

If I saw two ads in the newspaper from different dealers advertising the exact same make, model, but one is $1000 less than the other, I expect I would naturally be drawn to the cheaper one first.
I'm not a marketing expert, but I think that's how it works.

I was assuming we were talking about new cars, which are usually the same sticker price in all dealers.

Geektastic

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#1293041 28-Apr-2015 16:05

Geese:
Geektastic:
Geese: I've bought 5 new motorcycles in last 4 years, and have found some dealers charge $350 ORC, some round up to $500. When asked why it costs more than actual cost of REG/WOF/petrol, I am told it includes assembly (as they come in crates without wheels on, handlebars, on, etc) and road testing.

Do you still have them, or do you just get through motorcycles faster than I get through jeans?!

Haha, I do about 2,000km a month so I wear them out!

I've noticed a basic principal when selling vehicles, via Trademe. For an example, a vehicle is "worth" $3,000, but needs to have say $1,000 spent on it, if you give people the choice generally just see the bottom dollar and would rather pay $2,500 as is, than $3,000 with the $1000 work done.

So when it comes major service time, generally, people would rather have a discounted price, rather than double the difference spent on servicing so it is in top condition. Well I find time and time again anyway.

Hence I have no trouble selling, and then just buy the next new model. So far by this method, I've had 46,000km motorcycling the last 3 years, no breakdowns, new bikes, and lost a total of $2,450, for that time.

I wish. Sadly, motorcycles are verboten for me. I take warfarin and the Minister of Finance says the risk is too high that what would be survivable for the average would not be for me.

She has consented to my having a Can Am Spyder at some point though!

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ilovemusic

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#1293064 28-Apr-2015 16:53

MikeB4: To refer to these charges as a "rort" is incorrect, they are in the vast majority neither fraudulent nor dishonest. These are up front declared real costs of putting a new car or and ex overseas used car on the road. They are avoidable either by doing the work yourself (except WOF) or
negotiating these prices. If a dealer wont budge then walk, it's a very competitive market.

Most new car dealers get coy when you ask for a specific breakdown of on road costs beyond the stipulated registration fees.

oxnsox

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#1293076 28-Apr-2015 17:57

If you're paying cash the dealer will be less negotiable on ORC.
All dealers make money on the financing, so if you buy with finance they're more likely to be flexible on the ORC

mattwnz

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#1293081 28-Apr-2015 18:18

oxnsox: If you're paying cash the dealer will be less negotiable on ORC.
All dealers make money on the financing, so if you buy with finance they're more likely to be flexible on the ORC

There are many opportunities for the dealer to add on extra margins, and one is finance. Best to keep everything separate, and get your finance separately if you need to borrow to buy it. From my experience, they won't ask you about financing until you have already agreed on price. Then they will try to upsell you on higher margin addons such as special paint costings to make cleaning the car easier, or parking sensors etc.

mattwnz

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#1293083 28-Apr-2015 18:22

Geektastic:
tigercorp:
Geektastic:
floydbloke:
Geektastic: Since you can't really avoid having the things the ORC represent, why don't they simply allow for them in the car price? What's the point of separating them?

To make the sticker price more attractive.

Seriously? $1000 or less might change the attractiveness?! How tight would you have to be for that to be so?!

How stupid would you have to be to choose to pay $1000 more when you have choice?

That isn't what I said.

Why does making the car cost $49,000 or $50,000 on the sticker and charging/not charging ORC make any difference to the attractiveness of the car as a purchase? The amount of the cheque is the same - and neither case stops you negotiating.

When checking an advert you do have to check if onroad costs are included, and then you have to check with the dealer on what the onroad costs actually are, as they vary significantly. That is really the issue, should ORC be standardised, so consumers can compare apples with apples, as otherwise you actually don't know what the full price is with ORC unless you enquire with the dealer.

mattwnz

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#1293085 28-Apr-2015 18:35

Dingbatt: The whole "plus ORC" rort, or advertising technique, is the same in my mind as the computer sales outfits that have their pricing "plus GST". Even if there is an inclusive price written in smaller font somewhere I believe it is misleading for a retailer to do this.
When I challenged a store manager about this his response was that they sell to other businesses, also if they put the inclusive price then they would look more expensive than their competitors. My response to the former is that if people can't subtract the GST from the retail price then maybe they should not be in business. And the latter may need government regulation to ensure a level playing field. On 1 October next year it will be 30 years since GST was introduced in NZ, isn't it about time this advertising 'technique' was stamped out?
Having completed the above rant, at least it's not as bad as the USA, where the ticket price doesn't include state or federal tax, or things like a recycling levy (California) that can make what looks like a good deal not so good after all.

To bring it back to topic (sorry for the detour) it is not only new cars but used imports as well where the cost of import compliance is also added afterwards as part of the onroad costs. As far as I am aware those costs are known when the vehicle is sitting on the lot, so should be included in the ticket price.

Edit: Grammar repair.

I think the whole plus GST thing is fair enough if their main market is businesses. Businesses therefore do only pay the GST exclusive price if they are registered. Otherwise the price is being advertised at an amount that is higher if they add GST, and it also make the businesses prices appear higher when comparing with overseas sellers. So that is widespread, and it is a known 15% addon. With PC shops that sell to comsuers, such as Apple, or Big box retailers who target consumers, their price will usually include GST. But ORC costs can vary significantly as they aren't a set standard. So when you see +ORC, they should either be a set standard fee, or they really should do a break down with the price IMO.

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CitizenErased

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Master Geek
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#1293086 28-Apr-2015 18:39

Are there car brokers in New Zealand or is the market not big enough? My brother-in-law recently bought a new VW Golf in Melbourne and got 12% off the sticker price by going through a broker, plus no dealer delivery charges.

mattwnz

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#1293088 28-Apr-2015 18:43

CitizenErased: Are there car brokers in New Zealand or is the market not big enough? My brother-in-law recently bought a new VW Golf in Melbourne and got 12% off the sticker price by going through a broker, plus no dealer delivery charges.

Good question, I haven't seen any, but they seem to be big in Oz. You can get good discounts here too if you a good at negotiating. My last car I got over 20% off the new car price, and really you need to get a good percentage off to counteract depreciation when you drive it off the yard. Apparently you can get better deals if you buy near the end of the month as they report their sales back to head office monthly, at least that is the case in Oz. So if their volumes are low for the month, they maybe prepared to do a better deal to increase their sales volume. Not sure if that is so much the case in NZ.

Geektastic

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#1293091 28-Apr-2015 18:57

oxnsox: If you're paying cash the dealer will be less negotiable on ORC.
All dealers make money on the financing, so if you buy with finance they're more likely to be flexible on the ORC

That's true - I was recently offered $4k off the sticker price on a Signature Class Toyota Highlander but only if I bought it on finance!

Geektastic

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#1293092 28-Apr-2015 19:01

CitizenErased: Are there car brokers in New Zealand or is the market not big enough? My brother-in-law recently bought a new VW Golf in Melbourne and got 12% off the sticker price by going through a broker, plus no dealer delivery charges.

I haven't seen one. My mother just bought a new Audi in the UK using one and saved about 15% and was extra chuffed because they were able to get her one in some ghastly purple colour she took a fancy to!

I made zero headway negotiating on the new Outback. The only way the dealer would consider discount was if I bought more than one!

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