A friend of mine recently asked me why I was so worried about the Destination charge when my dealership representative promised me not to charge it. As the issue is complicated I feel it only proper that I explain it here for all to see that it's not a knock against any dealership or Justin Maynard, who I can't recommend more!
Technically, the dealer doesn't charge the destination fee, NNA (That's a link to the Nissan North America private dealer website) charges it and generally the dealers pass that on to the consumers. I don't know if I've made this clear but I really like Justin Maynard, who wrote up my offer, and I would buy from him again in a heartbeat. In fact, I have great respect for Mohamed, Carlos, Sharron, Bruce, Chris, Brian, J.D. and any other LEAF specialist I've spoken with in the area and hope to be posting my reasons for the agonizing decision I made to choose Nissan of Chantilly someday soon! In fact, it's my sworn promise if I don't take possession of the LEAF I ordered that I will make absolutely sure Justin is able to sell it for a tidy profit in my stead. And I'm sure just as orphaned Chevy Volts have been selling within 36 hours, any area LEAFs will do just as well.
Now, I'm sad to say many dealers don't know that the destination charge is not part of the price quote or MSRP. I don't consider this their fault. This is a fairly new process and mistakes, if made, are never done as a means to pull the wool over the customer's eyes. Much as car dealers may be maligned for some reputed antics, remember they are human beings and are doing their best not just to sell you a car but to make you a satisfied customer so that you will come back again and again. Be thankful that we have so much choice of dealership here in the Mid-Atlantic region; it's this competition that contributes to keeping most dealerships honest.
Now, we don't know the Invoices for the 2012 Nissan LEAF but as estimated on the My Nissan LEAF website, We know the profit margin on the vehicle itself is about 4.24% for a total of $1,582, which matches what Bruce at Herb Gordon Nissan quoted me last month. Contrast that with the Accessories, also known as Port Options, which have about a 20% profit margin over MSRP. For example, my car order, with fully-loaded options, comes to about $282 profit for the accessories in addition to the $1,582 profit for the vehicle for a total of $1,864 net profit. The dealer doesn't get a penny of the Destination charge, however, and so any reduction in the remaining $850 cost comes directly out of their profits. It won't eliminate the profit, but it will reduce it to $1,014, still a tidy sum.
Now, as I said, the Dealer can't control the Destination charge, which is why, when you order your car, on the Nissan Customer Dashboard, you see this disclaimer:
MSRP excludes tax, title, license and $850 destination charge.
Again, this isn't from your dealer, this is directly from Nissan North America; don't blame your sales person! Tax, title and license, obviously, will vary from state to state so it's not fair to include that in the price. You did expect to pay sales tax and registration fees, didn't you? So Destination is yet another charge on top of this, which your dashboard has listed since the time you ordered as a warning to you. The value of the Destination Charge may vary from state to state, but Nissan can calculate that and report it on your Order Details page just fine. It's quite reasonable for them to charge it — after all, they're shipping the car all the way from Japan — but despite having said all this, I don't have to like it.
Now, when Justin and I discussed the quote he was going to send me, we agreed no extra charges, that Transportation, Destination and everything else would be covered under MSRP. And I honestly think he truly believed that at the time. I of course noted MSRP would still not include Taxes, Title and Licensing, as it never should, and we agreed there too. This is why whether I take the car or not, I am happy to offer him and his wife dinner for 2 on me to say thinks for being such a good sport in this process. But that still begs the question, will I take the car?
Well, I've listed some reasons against the 2012 LEAF vs. the potential for the 2013 LEAF here before and so part of my hesitation to take possession stems from that discussion. In the end, as I calculated in the My Nissan LEAF forums, my car's take-home cost should come to 1 of 2 costs:
- $39,848.39 (Destination Charge rolled into MSRP Profit)
- $40,723.89 (Price includes $850 Destination Fee)
Both prices include tax, title and registration; license plates aren't included since I will try to order my plates through the DMV separately. I do have a plate in mind but because named plates are so competitive in Virginia, I'm not going to post it here, but I will say it's related to one of my other blogs.
In any case, I wanna keep my car cost under the dreaded $40,000 mark. And that's why I may just walk away. My current car is a 2001 Toyota Avalon (now an 11 year old car with over 180K miles on it) and although fuel efficient for it's class at the time, it's no hybrid, never mind electric. I'm itching for a change but I've waited this long, I can wait a bit longer, especially when faced with a $1,062.53 annual property tax bill. But at the time I paid around $35,000 for the vehicle, very near to MSRP since I did my research tough I gave a little back on the port options like a glass breakage sensor. In my book, that was an expensive car, but it had leather seats, a 6-disc CD changer (which has been broken for about half the life of the vehicle thus far), heated seats, sleek design and a quiet, smooth ride. All in all, it's a nice car and I got what I paid for.
The LEAF, by contrast, is a souped up compact with a lot of nice bells and whistles, like RFID entry and CARWINGS and lots of other features not available in 2001 that are now standard on even the smallest cars. What you're paying for on the LEAF is a freedom from the pump — that and a really bad Yen to Dollars exchange rate. You could save hundreds in fuel cost by charging at home vs. paying the ever-rising price of gasoline, but then knock a G off that for the Car Tax and how many years does it take to equalize the expense? Well, I'll save that calculation for another post, but it will take some time even with the Federal Tax Credit of $7,500 which I can take advantage of early next year if I take possession of the LEAF in November.
So that's the calculus; and now you know. So what do you think? Should I take the car even if it cracks $40,000? Should I walk away? Should I wait for a Tesla Model S, which can take full advantage of my 19kW EVSE and get 300 mi (483 km) per charge? Should I just take the LEAF and flip it in 18 months for a late-model-year 2013 LEAF with the 6.6kW charger option? Or should I just convert it to a Lease for 3 years with a $500 or so annual premium on my 24K miles per year requirement? What should I do?
A couple of comments - first, you say not to blame the dealer for the destination charge. Well, if some dealers are passing it along to the customer and others are not, then it is certainly something they can control in order to make the sale. So I think it's fair to blame them!ReplyDelete
As for me, I was mentally prepared to spend about 35K out the door, back when I thought I might get an SV for an MSRP of around 32K. Now that the actual out the door cost is closer to 40K due to Nissan's 1500 bump on the 2012 model + 850 destination + 600-1000 "dealer fees" (at least in FL), I've had to rethink it and decided not to go ahead with it for now.
You might say if you can afford 35K, then you can probably afford 40K, so just go for it - which is true, but you've got to draw the line somewhere. I'll check back next year on the price of the 2013 model and hope that Nissan hasn't sold 200K cars yet.
Thank you StrangerTides and you know, given that last bit about the $600 to $1000 in dealer fees, I am *totally* with you; don't just walk away, *run*! I have asked a number of area dealerships to charge MSRP and many have agreed. One even in Florida said he would after a customer cajoled him into it. MSRP can be had in the sunshine state, this I know. But it seems there's no one down there to keep the dealers honest like me up here in the Mid-Atlantic! Mind you, one of my EVA/DC members has a residence down there so I suppose he could have, but I digress.ReplyDelete
Now, the proper way for a dealer to remove the destination charge is to knock $850 off MSRP from the top. Then the car shows as $850 cheaper but the Destination charge is still added bringing the cost back up to MSRP. If the dealer knocks off the Destination charge — and I'm not saying mine will, just that that was the suggestion made at the time — then that's what the dealer is effectively doing: knocking $850 off the price and thus eating into his profits.
The long and short of it is, all dealers are *supposed* to pass the Destination charge onto us, and if my guy rolls it into the MSRP price it's only because of all the work I do to promote the LEAF and other electric vehicles free of advertising. If another dealer is knocking off the charge, he's not doing it right. For every LEAF order, there is that disclaimer I quoted and thus for every order, the Destination charge is on top of the agreed to price. It's as simple as that and every dealer *should* know it but alas NNA has been remiss in informing it's men and women on the ground of all of these nuances in this new purchasing model.
And I totally agree: if you were planning to pay $35K, you were planning to pay just that! $1,500 for the SV and being force-fed Cold Weather when *you're* *in* *Florida* is just ludicrous! I was planning to pay $37,500 or so, so my up is only $2,499.99 and I find that easier to swallow for a fully-loaded SL. But for an SV: highway robbery! Sorry you got shafted there StrangerTides.
But one last question for you: did you accept the quote or do nothing? Because if you did nothing, you could pass on that dealer and switch to one that you call first and get them to agree to MSRP. For instance, if you're near Miami there's always Bill Seidle ( http://www.billseidlenissan.com/ ) who I mentioned will attempt to sell at above MSRP but if you pester them about it will back down and agree to it.
Anyway, I hope that helps and I'm really sorry you're getting so mistreated! It shouldn't be this hard to go electric! Someone should write a blog about it!
I didn't even end up doing the RAQ since I couldn't even get a verbal agreement that I could live with from any of the dealers I tried. I'm in the West Palm area - I read about Bill Seidle later on MNL, but I have to admit that even if I could get MSRP, with tax, etc. it's still going to be higher than I'm comfortable paying right now.ReplyDelete
Interesting, you are from NOVA and have ordered a Nissan LEAF! I am from the Fairfax area and put my order in for a 2012 LEAF SL last week. The destination charge comes with any car you buy and is always outside of MSRP. I was able to negotiate MSRP minus 1/2 the destination charge at Brown's Nissan. They had the highest ratings in the area (BTW, *always* stay away from *any* Rosenthal dealership).ReplyDelete
I can't say I'm happy paying MSRP for a car, but this is a difficult car to get. The cost OTD will probably be $40K (I have no options except floor mats). I also know they are going to do the dreaded (and totally BS) "processing fee" of $390. I'm guessing I'll have to eat that too, but I'll see if I can cut it down considering the profit they are already making. :(
I'm so happy to hear you were able to negotiate something nice with Sharon at Brown's Fairfax Nissan. As you can see, I featured Browns in a previous post: http://aecn.timehorse.com/2011/03/meet-your-dealership-browns-fairfax.html and very much trust Sharon as a great person and representative of Browns. I only wish I had time to write my features for Herb Gordon, Criswell, Passport Alexandria, Nissan of Chantilly and Brown's Sterling (now Dulles) Nissan.ReplyDelete
I've heard some stories about Rosenthal and they were late to the LEAF certification and have been playing phone tag with Mohamed which is kind of frustrating but I hold no grudge.
Now, where there wasn't a quote system, as described last month (http://aecn.timehorse.com/2011/07/greater-washington-dc-nissan-leaf.html ) dealers were able to give huge discounts because a dealership could dominate its market and thus bring more business through those discounts. Now, a dealership is only allowed a limited number of cars, which effectively has taken away their incentive to compete on price, which of course benefits them but hurts us. And also it's more of a socialization where everybody potentially can sell some LEAFs, which benefits the smaller dealers to the detriment of the larger ones. Long and short of that, MSRP is about the best we can hope for until the car goes into general release. When a LEAF is sitting on the lot for a month unsold, prices will go down, but we're nowhere near there yet.
Now, when I walk away, Nissan still keeps my $99. It's lost forever because I asked them to build the car. The Dealership will still get the car at the same price, be able to sell the car at a tidy profit because it's still in very high demand, so really the only one not benefiting is me, but I figure ya gotta pay to play.
Anyway, the Processing Fee should have been covered in either the disclaimer or the price quoted on the Nissan Website. Are you sure they're charging that, or are you just assuming since I agree that's what they always do. Personally, in this case as it's not covered under the Nissan North America Dashboard disclaimer, I think you could argue it. Great job though getting Sharon to go halvesies on the dreaded Destination fee! I only hope Justin is as understanding when my VIN is assigned.
Processing fee from Koons Nissan is $499. Total BS. Of course, I didn't find this out until after I placed my lease order (since they don't disclose any of the fees to you up front). I'm thinking about cancelling my order.ReplyDelete
Oh, good golly! Carlos is doing you wrong after that plea on the MyNissanLEAF forums? I'm so sorry. But you will loose your $99 deposit if you don't take delivery. But I'd not sweat $99 in this case. The $5,000 Tesla deposit, that's I'd sweat, but not $99 for NNA.ReplyDelete
I actually am working with James Suthard. I stopped by the dealer to hammer some things out because he was too slow to email. I was being really flakey about lease vs buy / SV vs SL. I ended up saying I wanted to buy and not take any chances with not having a QC, so went with the SL.
Generally, I loathe dealerships as their job is to maximize profit. The reason I said $390 above is because I asked if there are any other fees :
"No, we won’t be charging other fees on this besides the bare minimum, tax, tags, proc. Fee. That’s it."
Catch that little slip in? :) When asked if that fee could "go away" :
"I wish, but sadly, no, even if I “waive” it I still have to pay it myself as that goes straight to corporate : ( We can work on it, can maybe cut it some when the car comes in."
Typical BS. I'm guessing they don't really care if I buy the car as they can turn around and sell it.
$38,270 - $425 + $390 - $36,649 = $1,586 profit
I'm not aware if Nissan is providing a dealer holdback or not. I guess on a car that cost this much, ~4.5% profit is reasonable. Would prefer something like 3% though. I'm bracing myself for when the car comes in...I hope they honor the price they gave me w/o any "fees".
BTW, they said Nissan would give me back the $99 if I cancel since they can "easily sell the car". Not sure?
Thanks for the update Alex. I don't have a firm number on the Invoice price at the dealership for the 2012 LEAF like we did for the 2011 and haven't had a chance to contact one of my dealer friends to get an update. I'm hearing at the EVA/DC the $99 isn't refundable and given your experience at the dealer, I generally think alas, I may be right. Now I don't know James Suthard off hand though I may have met him. Sharon is the official LEAF specialist at Browns Fairfax and if you'd done the order on the Internet only, you'd most likely be dealing with her. But she may have been out at the time you ordered and James was filling in.ReplyDelete
That said, I think with the $425 discount and the $390 processing you still came out ahead but not by much, I'm sorry to say.
All this trouble and you *still* can't get the car in green!
I saw James on the Nissan side of the portal when I was at the dealer, so he took care of it all. Edmunds has the invoice price of the 2012 and all the options, but we can't be sure about dealer holdback. I'm guessing there is none.ReplyDelete
Wouldn't buy the car in green...was considering Ocean Blue, but it stated there was an added delay.
BTW Jeff, how long did it take for your portal to show a delivery date? Mine still says "pending". Also, you know anything about L2/L3 charging in NOVA? I'm thinking there won't be any L3 chargers any time soon, but I went with the SL anyway.
Well, Alex, let's see if I can answer your questions in order. The person on your dasboard is the person you bought from and if you bought from James not Sharon, that's who it will be. He gets the commission, I'm sure. Thanks for the info on Edmonds, they're a great font of information so I'll look into that and update the options list for the 2012 model: http://aecn.timehorse.com/2011/07/what-options-are-available-on-2013-leaf.html (ignore what the URL says, that's for 2012).ReplyDelete
Interesting that Ocean Blue is now in high demand; used to be red, though I ordered red and seem to have no delay; I think the red delays mainly applied to the 2011 model year. But I'm quite fond of a green LEAF but will probably forsake my right to Toll-Road HOV and go with the Autumn Foliage plates which will tie the car in to it's LEAF identity quite nicely! :)
As for when the site was updated with November, let's see when I posted...
I ordered on 28 July and my status was updated 10 August, so about a fortnight. Since you just ordered, I'd expect you to see month of November or December in a couple of weeks.
Good luck and thanks again for the info!
For those of you still following this thread, I updated the page to include the invoice Alex suggested I retrieve from Edmunds and now know the total profit on my vehicle would be $1,864 if they don't roll some of these corporate charges into their profits. And that's such a tidy profit, rolling the destination charge in still leaves them over half of the profit, so let's hope Justin play's ball.ReplyDelete