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It's a common complaint among motorcyclists. You see a price listed on a manufacturer's website for a new bike you'd like to buy, you go to a dealer, and then you find out the actual price is higher because of setup and destination fees. Seems nobody likes that.
As it turns out, dealers dislike it, too. And with the government potentially getting involved, the stakes are getting higher.
If you've shopped for a new motorcycle you know the drill, and we see the complaints mentioned in reader comments here on Common Tread articles. Typically, the ire is aimed at the dealers, as riders grumble about "dealer add-on fees." Many dealers are tired of taking the blame for an industry practice they didn't create, and that's why one of the top priorities of the National Powersports Dealer Association (NPDA) is an initiative to get the pricing system changed.
To be clear, we're not talking about "market adjustment" fees or other markups that some dealers try to add to the price during times when certain models are scarce or in big demand. Nor are we talking about extended warranties, roadside assistance plans, additional insurance, and other add-ons that some dealers push. We're talking about the destination and setup fees that are part of virtually every purchase of a new motorcycle. The former is the mandatory charge the dealer pays the manufacturer to cover shipping the motorcycle to the dealer. It's not included in the MSRP the manufacturer lists on the website, but the dealer has no choice but to pay it, so naturally the dealer wants to recover that cost by passing it on to the consumer.
Setup is the work required to get the motorcycle from a shipping crate to road-ready, and varies depending on the model. The dealership is paying an employee to do this work and typically tries to recover that expense by charging the consumer a setup fee.
The NPDA argues that those costs should be included in the advertised price.
"While OEMs publish an MSRP that excludes freight and setup costs, they still charge dealers for freight and require technical assembly before a unit is road-ready," states the NPDA white paper on the issue. "This leaves dealers in an impossible position between advertising a legal all-in price that appears uncompetitively high compared to OEM websites, or an MSRP price that invites regulatory consequences."
Those "regulatory consequences" arise because the government may be getting involved in the issue.
The feds get involved in pricing
The Federal Trade Commission (FTC) has taken action against a variety of businesses, ranging from live event ticket sellers to hotel chains to car dealers, for deceptive advertising on prices. Basically, regulations require that the most prominent advertised price must include all required fees except for government charges. In the case of motorcycles, that would mean anything the buyer has to pay except for sales taxes and registration fees.
The NPDA argues that in addition to the "reputational burden" imposed on dealers by the current pricing system, they now face potential regulatory risk.
The solution, according to the NPDA, is simple. The manufacturers should include freight and destination charges in listed prices and reimburse dealers for setup costs. The association points to the car world, where each car comes with a window sticker that includes the destination charge and the cost of all the options installed so buyers can see the price the FTC says they should see: everything but government fees.
Will a pricing system that nobody likes finally be changed, spurred by the potential for regulatory risk? We'll see.
