Dealer Advertising/Marketing Fee???

As I was told by Prius Team, a dealer in Colorado does in fact have to pay an advertising fee to its Toyota sales region for each Toyota sold.

It's just that you, the purchaser, have never seen it (unless you've seen the dealer's actual invoice for the car).

 

Dealer: would you like coffee, floor mats, or advertising with your Prius ?
Me: No, but thanks for asking.

Honestly, the notion of passing on marketing charges to the end consumer is flawed. No wonder TV is aflush with so much commercial garbage. I seem to remember my 5th grade economics lesson describing the interplay of advertising and volume sales. Keep my wallet out of the calculation.

My stock response to dealers who pass on the bad news that fees are non-negotiable is this: "I understand, no problem. Drop the car price by that amount."

 

When is the last time this ever was posed to you? It is only a question here because of the Prius Priority Program pricing.

TDAs have been subsumed in the MSRP and have been paid by the dealers for years. If you want to say that you won't pay those fees, the dealer can always agree or disagree, but in the end it just won't matter. If the dealer doesn't want to do the deal, the dealer won't. Regardless of the discussion, the dealer has to pay those fees, so there won't be a sale that doesn't account for the TDA.

It is almost the same as overhead costs, except that the overhead costs have to be paid regardless of whether cars are sold. The TDAs are assessed and paid for each car sale.

 

Wow. I see a lot of good answers and a lot of very wrong answers.

So here is the real skinny on dealer advertising fees. It is CHARGED to dealers. It is built into the invoice of every car. If you buy a car for invoice, you have paid the ad fees. This fee is not for the dealer to advertise in the local paper. It is the region that uses the money to buy ad space on TV to announce their rebates, programs, etc. The dealer has ZERO choice whether to participate or not. We all do. The cost varies by region, but it is usually around 2% of BASE invoice before options. It has a maximum of $500. Again, this is just in the chicago region, and I can't see what the fees are in other regions, so I can't be of any help to the GST and SET regions as to the $991 cost.

For those that have said it is a bogus charge and the consumer doesn't have to pay it, that is true. However, you won't be buying a Toyota or any other vehicle sold in the US as EVERY MANUFACTURER charges ad fees to the dealer. GM, Chrysler, Ford, Honda, Toyota, Kia, Mitsubishi, Mazda, Hyundai, all have the fees. Even the Prius Team, the ones who have 90% of the control over the pricing has said exactly what it is and that dealers are forced to pay it.

It is not a fee that gets tacked on top of the MSRP. It is charged, behind the scenes, on the invoice. It is just like holdback. If you see a real invoice, you will clearly see the TDA (dealer ad fee), Holdback, Gas, and other assorted little fees.

And it is not something new. It has been on every car for the last 16 years, at the very least (as long as I have been in the business).

Hopefully, I answered most of the posts and cleared it up for some of you.

 

Thanks for clearing this up Jabber, but here in Houston, whatever you negotiate, they still try to tack on that extra fee to boost their bottom line. Even when you pay MSRP. Its shady, but then, Gulf State Toyota is a shady outfit.

 

A priori: my comment was not directed at TDA specifically, but any fee in general. If the end-consumer does not put price pressure on middle-man profit, who will ?

 

Well said.

All these fees, charges, etc. are transparent to the buyer--unless you negotiate a "cost +" deal. Then the dealer will include these in the cost. When negotiating a discount from MSRP deal, they are a moot point (except...it appears...in Houston ).

 

Holdback is a kickback from Toyota to the dealer for selling a car. It's not a fee to the dealer. If Toyota's invoice already accounts for the holdback, then, in effect, Toyota has paid the dealer the kickback before the dealer has even sold the car.

Sites such as Edmunds do not include fees in their "invoice price" because the fees are variable and often negotiable.

But whether you negotiate your "fees" or your profit (and, of course, the dealer will always say he's lowering his profit), the end price is all that matters.

 

See, that is not right of them to do that. Ad fees are included in the invoice price. So if they tack it on again, you are paying double. In that aspect, you are 100% correct Texas.

 

I never saw that when I bought my 2004 Prius or my 2007 HyCam, at 2 different dealers. GST does like to tack things on at the port, but if you deal with an internet manager and identify a car in the system, rather than buying off the lot, you can easily avoid this problem. They won't shove things down your throat so long as they haven't already done the add-ons.

 

I didn't pay it, but they tried to add it on during negotiation. By default they try to add it on every sale so the unsuspecting buyer would get caught.

 

Sorry, Sage! I was reading your post as directed at the Dealer Advertising/Marketing Fees (which I lumped together as TDAs).

 

Actually Toyota did marketing and advertising for the vehicle well before its arrival. The commercial shown herein on the home page is paid by TMS but the cost of that commercial is recovered from part of every vehicle shown. Anything on TV mentioning the Prius and the entire set of 'press events' are part of the marketing and advertising budget that's.

This is no different than any other company except for some reason Toyota breaks it out separately.

Now the local advertising you see in the paper or on radio/TV with a specific dealer name attached is paid out of that dealer's own pocket. It has nothing to do with the TDA.

 

See explanation below. It is a real cost that Toyota charges to the dealers on every vehicle sold. It's also charged on every GM, Ford, Honda, BMW, etc, etc, etc. The difference is that the others just don't break this charge down separately.

It's also done at every supermarket in yours and my neighborhoods, they just don't tell us what the charges are.

This is a different issue and I don't disagree on the added services. But yes the matter is determined locally because the regional advertising is a local issue. Nothing untoward here.

It's there. It's on every vehicle you've ever purchased from every brand. It's included in every Toyota MSRP. It's not an extra fee on top of MSRP.

^^^ THIS is the correct explanation.

 

As long as we are sure that we are talking about a fee that is included in MSRP, then I have no problem. Obviously, advertising cost is included in everything we buy. In fact, it is probably a benefit to the (non priorty) buyer to know what the dealers costs are when going into negotiations.

I reacted because I have seen some dealers that do tack on an advertising fee above MSRP. I thought that was what was being complained about. Thanks for the clarification.

Roy

 

Thanks very much to Jeff / Jabber for explaining this so well.
So the TDA fee is always baked into the dealer's car invoice and the MSRP. If the dealer charges an Advertising Fee on top of MSRP (or a negotiated net price) it is either:

1. Doubling or a portion thereof of the already-paid TDA Fee, Which can be / should be questioned and rebutted by the purchaser before contract signing.

2. An additional Advertising Fee -for the Region, Dealer, or both. A fee that could / should be questioned by the purchaser and justified by the Dealer. And can vary from $0 to the sky's limit depending on actual costs and market. Something that no doubt can be negotiated.

And to confuse matters, I would assume that some (unscrupulous) dealers can mix both 1 & 2.

Does this about cover it? I guess the key is - Forewarned is forearmed.

Let's not begin to talk about other "Fees"... or should we so the previous statement is right?

 

what was on your quotation form toyota?
i have an advertising fee on mine.