Car Repair Prices: Who Charges More, Dealers or Local Shops?

Do car repair prices at dealerships cost significantly more than local shops? At first thought, one might think, yes. Some even argue that dealership prices are 4 to 6 times higher than local shops. This is a tad far fetched, but let’s take a look…

In defense of car dealerships, the first thing to point out is that unscrupulous car repair tactics by local auto repair centers frequently cause car repair costs to far exceed dealer prices.

4 to 6 times higher just doesn’t make sense though. 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 in some form or another. This includes dealerships, local shops, and auto repair franchises. Stating that dealerships charge 4 to 6 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 One:

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

Myth Two:

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 adjustments practiced by your local garage.

This is not to say that dealers don’t manipulate labor times. It is to say that they are more inclined to follow suggested guidelines.

There are a only a handful of local shops that stick to (or even know) the guidelines.

Myth Three:

Dealers always rip people off.

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

Learn about fair car repair costs