Car Repair Prices: Who Charges More, Dealerships Or Local Shops?

by: Theodore Olson


Many argue that dealership prices are 4 to 6 times higher than local shops. This is farfetched. That would mean that $100 at a local shop would be $400 to $600 at a dealership. Dealerships aren’t run by the sharpest businessmen, but this kind of pricing discrepancy would put dealers out of business, fast. The sources calculating such pricing gaps are never quoted, so I am not sure from where such data comes, but let’s look at what’s really going on.

First, 98 % of ALL service centers are overcharging. This includes dealerships, local shops and franchises. Stating that dealerships charge four to six times higher unfairly singles out this portion of the industry. We need to watch out for every type of service facility. While it’s always easier to focus on the big, faceless name of a dealership, it’s unwise. Your local mechanic who you pass in the grocery store is just as likely to rip you off.

Surprisingly, in many respects, a dealership is often less expensive. To be clear, I am not siding with dealerships. Again, no matter what type of facility one services a vehicle, some type of price-gouging will occur. Having said that, here are some common myths about dealership prices.

MYTH 1: The parts are more money.

This is not true. Dealers, for the most part, stick to MSRP (manufacturer suggested retail price) guidelines. Guidelines, as abused as they are, are better than none. Local shops have no guidelines. They can charge whatever they want.

We've all been taught that aftermarket parts are less expensive than factory/MSRP parts—this is not true. A frequent “case in point” is air filter prices. Below is a sample from one of many actual invoices:

Dealership/MSRP Price: $17.00 (factory fiber filter)
Local Shop/Aftermarket Price: $32.00 (aftermarket paper filter)

Tip…always compare you’re aftermarket part price against MSRP, you’ll be surprised just how much your local garage is charging you for inferior parts.

MYTH 2: The labor “time” is higher.

Actually, many dealers follow manufacturer recommendations and industry standard multipliers. In other words, they’re not just shooting from the hip. The labor time (i.e., how long it takes to repair something—1, 2, 3 hours…etc.) may be lower than the resulting times from the labor price-gouging tricks practiced by your local garage.

This is not to say that dealers don’t practice labor tricks—they’re the masters! It is to say that they are more inclined to follow suggested guidelines.

MYTH 3:

Dealers always rip people off.

In the automotive service industry, every type of service center rips you off, dealers are no exception.


About The Author

Theodore P. Olson holds extensive certifications from Mercedes-Benz, Toyota, GM, and ASE. He currently works as a service industry consultant. Ted is the author of eight books and numerous articles on the automotive servcie industry. http://www.repairtrust.com.