Dealer Add-On’s, Real or Fake?

When you are shopping for your next vehicle, look for the "addendum" sticker affixed to the vehicle. It will look like a smaller version of the vehicle's Monroney Label (window sticker) which comes from the factory. Many dealers use this Addendum Sticker to add items to vehicle. For instance, you might see an Appearance Package, which includes pinstriping, paint sealant, and mud guards. Or there might be charges for wheel locks, a spoiler, rims, or sun roof. All of these items have been added to the vehicle by the dealer with the hopes of raising the margin of profitability.

On a typical vehicle, the mark-up from the Dealer's Invoice Price to the MSRP (Manufacturer's Suggested Retail Price) is usually around 8%-10% of the MSRP. So if you have a $20,000 MSRP, the Invoice would be $2,000 less - or$18,000.

That means that the dealer has purchased the vehicle from the manufacturer for $18,000 and it is listed for sale at $20,000. It also means that the consumer can traditionally negotiate some or all of the $2,000 in mark-up.

So how can a dealer either create more potential income, give the consumer a bigger discount than the competition, or change the vehicle so his/her vehicle is unique? The answer - add on's which are itemized on the Addendum Sticker.

The question the consumer needs to ask - "Is this really part of the vehicle? Or can it be removed?"

If the items added are "hard" items like a sun roof - it cannot be removed from the vehicle. The vehicle has been altered in a way so that the vehicle can only be sold with the item. Pinstriping on the other hand, is a $10 item that some dealers try to add $300 of mark-up. Items like pinstriping are weak ploys by the dealer to create a false mark-up and should not be considered by consumers when negotiating for their vehicle. Either tell the dealer to remove it entirely, find another vehicle without those additional items, or find another dealership.

Most times, these items are added to new vehicles in an effort to fight price compression and the one-price nature of new vehicles. That being said, there generally is more than one of the same vehicles in your market at more than one dealer. Remember, the buyer has the power of the purse. If the dealer won't budge; walk.