If you Google “what is dealer delivery” most results will guide you to blogs or stories about it being a rip-off, unjustified and just pure profit built into the price of each new vehicle. Reality is that most (and soon to be all) vehicles are imported and freighted and there’s a cost in getting them to the dealership and preparing them for sale. Delivery consists of many things. Before you can take delivery of your new car, the vehicle needs to go through strict quality checks.
The vehicle firstly has to be sourced from the factory (locally or overseas) or from another dealership.
If the vehicle comes from an overseas factory, the vehicle is transported via ship. On arrival, the vehicle goes through customs and compliance. This can take up to 2 weeks as there are thousands of vehicles arriving every week. The customs process is a vital process, this ensures there are no foreign objects on or in the vehicle. During compliance, badges are compliance plates are fitted to the vehicle.
Most of the time dealers have to order more stock than their facilities can physically store so we have to locate a lot of vehicles off-site usually at the shipping port or other 3rd party logistics facilities. This is costly and all a part of the delivery costs averaged into all new vehicles. The vehicle is then is transported to the dealership when required for showroom or yard stock, customer orders or as a demonstrator. At this time we have specially trained staff to check your vehicle to make sure it is pristine condition. Once passed, our pre-delivery technicians prepare the vehicle. This includes checking the vehicle bumper to bumper, fitting accessories, checking fluid levels are correct, and of course a last minute road test and taking pictures for online listings. Out admin staff also spend time preparing registration, insurance, stamp duty, number plates, transfer of ownership and uploading the vehicle details, specifications and images to online websites.
Car Detailing and Profit Margins
The final stage of pre-delivery is where the vehicle really comes to life. The final detail! We only use the best products and carefully trained staff to look after the vehicle. The final detail can take up to 6 hours. Once finished the vehicle is ready and prepared for sale.
The margin on new cars are incredibly small. Without delivery charges, dealerships could not pay admin staff, costs of the buildings and utilities. We have to build in some profit somewhere in the price, this is identical for any consumer goods. We even have to pay GST on the delivery charges which like all the many elements make up delivery costs, reduces the idea that it purely to add profit.
What You can Negotiate
When you hear people say you can negotiate on delivery costs with a dealer, this is only partly true or not true at all. To be able to offer a discount on new vehicles we look at the total profit from the car which includes accessories and factory margins and rebates, every vehicle is different. We also take into account the resale value of your trade-in and increase the value of that rather than reducing the new car margins. Trade-ins are rarely based on the official "Red Book" value these days, it's all about the condition of the vehicle, Kms travelled and it's resale value or appeal to a specific segment.
Hopefully, this helps you understand that Dealer Delivery is not just another charge but it is incredibly important to making sure a new vehicle is prepared properly. It involves a lot of different elements which costs the dealership money. The only difference to all consumer goods is that the Auto industry has been transparent about categorising this additional costs element into the price rather it being hidden in the total retail price of an item.