Your Car Broken Down, Dealer or Independent?
We have been asked this question for years, "When come to repairs, Dealer or Independent?", and we usually said, “Yes, they do.” Naturally, we had no evidence to support the statement; simply just a gut feeling. So we finally stopped working and did some research - details are below - and found that overall the dealers in the study charged 15 % more than independent repair shops for the same repairs.
We also discovered that the repairs which you pay for are strongly influenced by where you live. Here's what we did.
We chose 2 average vehicles (a Dodge Intrepid and a Honda Civic) and 4 common mistakes - Replace timing belt and water pump - Replace front brakes and rotors - Replace front and rear struts - Replace the alternator
After that, we commissioned Paul Murky, president of Murky Research and Development Company, to review on both dealers and independent repair shops and ask for the prices to do the repairs on each of the vehicles. He got prices from 158 dealers and repair shops throughout the country.
Disclaimer: Actually, we did not bring the cars to any of the shops, so we do not know if they would actually do the repairs for the prices quoted to us. We do not have any evidence, but from what we heard, some shops give approximate low quotes at first and then sock it to you once they have your car. But buying 158 cars to perform the real test appeared a little beyond our budget.
Non-disclaimer (for the nerds): all numbers are significant at p < 0.05
Here are the results:
The average Dealer price is $320 (about 18 percent) higher than the Independent Shop price.
The average Dealer price is $208 (about 12 percent) higher than the Independent Shop price.
There were also some pretty interesting dissimilarities in different regions of the country.
Note that: the Honda dealers on the two coasts are really socking it to us. People in the Mountain Zone are getting off easy.
Note also that: there's a much bigger range in average prices from the dealers ($2275 - $1885= $390) than there is among the independents ($1890 -$1703 =$187).
Note again that: people on the two coastlines are paying more than you folks in the middle of the nation. Also the range of average prices is about the same ($209 for the dealers and $203 for the independent shops).
Why is the Big Difference?
We did a little more research to see why the differences are so big. After all, we have the "flat rate book" - the holy bible of the industry for evaluating prices.
Here's what we found. It appears to all of us that the dealers - particularly the Honda dealers - charge labour rates outrageously. If you take a look at the charts below, which show our estimates of the labour rates in different zones in the country compared to the national averages.
So, there they are. It appears that our "gut feel" about prices charged by dealers and independent shops was correct. But our experience was based solely on prices charged around the area we service. And our proof was purely anecdotal (i.e., customers who had quotes from dealers came to our shop and told us what the dealer had quoted). Thus, we knew that around our area that dealer prices were greater than ours.
Now at least we have some evidence. Based on national averages, you would have to add about 15% to the independent’s prices to get to the dealer prices. And looking at the breakdowns by regions of the nation, the biggest difference is with Honda dealers on the East Coast - you'd have to add 23% to the regular independent’s price ($1855) in order to reach the average dealer’s price ($2275). Wow! For the Dodge, the worst circumstance is the West Coast in which the dealer price is 22% more than the independent shop’s price ($2077 vs. $1703).
What does it all mean?
Does all of this mean that you should never go to the dealer? Simply no. After all, money isn't everything.
Actually, dealerships offer some advantages. For one thing, they know more about your car than the independent shops do. That could mean they don’t have to spend a lot of time diagnosing a problem that seems unique to your car. Furthermore, the independent shop may not work on enough cars of the same brand same model as the dealers do. As seen, in terms of expertise, dealers are advantageous. Also, if there happens to be a manufacturing defect in some parts, the dealer may replace it for free and time is immediate. The independent shop will look around to buy parts, wait for shipment to arrive, thus time takes longer, maybe days or a week. Time may even be longer if the parts are going to be shipped from overseas.
You may logic that, because dealers always work on the same cars, they must get pretty good at doing the exact same repairs over and over again and therefore should charge less. But you observe from this research that they don't charge less. They charge more…because they are experts now.
So, in case you have a weird problem, the dealer is probably a better bet. But for most repairs that don't require rocket science to diagnose, the independent shop probably will do as good as the dealer, and you will save some money.