Motor dealerships are at their most creative when called upon by an unhappy customer to break down the “on the road” or “service and delivery” fee which they’ve quietly added to the deal.
Charging of this fee has become standard practice in the industry, despite the fact that the National Credit Regulator is adamant that it is an illegal practice.
When it comes to adding “extras” to a vehicle credit agreement, the regular says the National Credit Act only allows for fuel, number plates, and the licensing and registration of a vehicle – plus an amount to cover sending an agent to stand in the queue at the motor licensing department.
But the “extras” fee – mostly referred to on contracts as a “service and delivery” fee – is a standard amount for each dealership, ranging from R3,500 to as much as R10,000.
When Leon Pather of Mpumalanga expressed interest in buying a new R273,000 Haval H2 SUV from Haval Fourways, his quote included a R4,500 “delivery fee” as well as a licence and registration service fee of R1,500.
When he asked for a breakdown of the “delivery fee”, he was told – in an email which I’ve had sight of – that it covered wheel alignment, a pre-delivery inspection, carpets, fuel, a gift and administration.
Apparently the dealership doesn’t get that a gift is not a gift if you charge the recipient for it. It’s a compulsory paid-for extra.
I wonder how many of those people who post photos of themselves next to their new cars, wrapped in lavish ribbons and bows, realise that.
Charging customers extra – a lot extra, which is then subject to a lot of interest – for checking that a car is working as it should, washing it and preparing the sales documentation is the motor industry’s “normal”.
But ask a car salesman if he’d be happy to pay an appliance company a few hundred rand more than the advertised price, to cover the storing, checking and cleaning of that flatscreen TV; drawing up the paperwork and phoning the SABC to check whether they had a valid TV licence, and they’d be appalled.
No-one is suggesting that dealerships shouldn’t pass on their costs to their customers, only that they do so transparently, by including them in the advertised price.
In October 2017, the NCR issued compliance notices against both BMW Financial Services and VW Financial Services, compelling them to credit customers who had the fee added to their agreements.
The regulator also vowed to “continue to conduct industry-wide investigations to root out illegal charges and fees consumers are charged”, but we’ve heard nothing since.
Both BMW and VW’s vehicle finance divisions have disputed the contents of the NCR’s compliance notices, and they, along with the rest of the vehicle finance industry, are still merrily adding those fees to every vehicle finance contract.
The NCR told me last week that the compliance notices are still “pending before the National Consumer Tribunal”.
Asked what advice the regulator had for consumers who objected to having their car finance deals bloated by a fee for having their vehicles checked, washed and adorned with ribbons and bows, the response was: “Consumers should not sign for any fees or charges that they do not agree with, and when in doubt about any fees they should contact the NCR. The on-the road fees are not fees provided for by the National Credit Act.”
Yes, well, that’s good to know, but try telling a dealership salesman or manager that and you’re likely to be told: “Well, it’s compulsory; the whole industry does it.”
If you buy a Suzuki, GWM, Haval or Mazda from one of the IPOP Motor Group’s Jo’burg dealerships, you can expect three extra charges to be added to your agreement, as Sadhna Jugwanth discovered.
She was asked to pay R1,437 as an “other extra” which turned out to be a “compliancy fee” – the cost of the dealership ensuring that it complies with current legislation – a R4,140 service and delivery fee, and another R1,250 licence fee.
All that on a vehicle with an advertised price of R170,000.
Tellingly, dealership staff seldom go through these extras with customers – they just appear, as vague as can be, on the contracts.
But here’s the thing – if you’re insistent enough, and they want the deal enough, the fee will be at least substantially reduced.
A few months ago Felicity Calverey emailed me after being asked by a VW dealership in Cape Town to pay a R3,950 service and delivery fee on a second-hand Up! It included licensing and registration, a valet, and “80-point check”.
I advised her how to contest it, and she got back to me a few days later to say the fee had been reduced to R1,975...