How to deal with exploitative car dealerships? You have options!

Price-gouging has long been an illicit practice in the local car industry, particularly at new-car dealerships.

It refers to dealers asking for more money on top of a new car’s list price, which already includes a profit margin. This happens most often with models that have very high demand. 

The added charges are imposed either by forcing the buyer to take a financing program – where the buyer can get the car immediately at the cost of high monthly payments, which the dealer gets a cut of – or through “under-the-table” payments to agents, managers and even third-party middlemen.

AutoFun Philippines uncovered the extremes of this practice with the sale of the first batch of the 2023 Honda Civic Type R in the Philippines. Some dealers were reportedly demanding nearly ₱800,000 above the car’s ₱3,880,000 Suggested Retail Price.

Honda Cars Philippines Inc. (HCPI) told AutoFun Philippines in a statement that it absolutely does not tolerate any form of price-gouging or “bidding war” for any of its models. But this issue is also affecting buyers of more mainstream models from other brands, as well. 

So what do you do when the dealer wants to fleece you so that you can get your dream car? Here are some things you can try.

Look for another dealer

Unless you go through the gray market, the vast majority of us have no choice but to buy a new car from an authorized dealership.

But you’d be surprised to discover that not all of them are money-hungry “stealerships.”

Some upright dealers will gladly welcome jilted potential buyers from a greedy dealership. Integrity still sells, especially when savings of up to half a million pesos are on the table.

Indeed, one of our sources told us that one Honda Cars dealer sold a new Civic Type R for the list price. Sanaol, 'no? And if you have dealt with a dealership that gave you the option to pay an add-on fee or required you to avail of in-house financing to purchase a car, then you know where not to bring your business to. 

Get a different variant

If you absolutely must have that new car but aren’t too mindful about that fancy body kit or those big alloy wheels, then maybe you can look at a different variant.

This, obviously, can’t apply to limited-edition models like the Civic Type R.. Still, mainstream cars generally have a vast selection of variants, with the most in-demand ones often being “special edition” models that usually have a bunch of overpriced OEM accessories, anyway.

You could even save a whole load of money by buying a lower variant – aftermarket accessories and modifications are much cheaper, and you can dress up your car exactly how you want it.

Our resident customs contributor Francis Pallarco has a great selection of mods that you can get.

Buy a different car

Never buy a new car with just one model in mind.

Consider having a selection of vehicles within your price range. Make it a point to check out and test-drive these cars thoroughly to find out which fits your needs best.

You might discover that the regular suspension fitted to Car B would suit you better than the stiffer setup in the sporty (and highly in-demand) Car A that you’ve been looking at.

In fact, that’s how some car brands were able to snag away sales from other manufacturers that couldn’t provide cars on time.

Report to the mothership

When all else fails, go up the food chain.

All authorized dealerships are accountable to the manufacturer’s local head office, especially when issues like ticking customers off are concerned.

In the case of the Civic Type R pricing debacle, Honda Cars Philippines made its stand on the issue very clear.

"HCPI do not tolerate any bidding,” said lawyer Louie Soriano, HCPI general manager for sales, in a statement to AutoFun Philippines. 

“We have only authorized retail prices,” he added. “Dealers are prohibited from engaging in bidding activities and we ask our customers to not participate in such practices as well. Customers are requested to report any irregularity they may observe to avoid this kind of activity.”

In other words, the brand doesn’t allow price-gouging at the dealer level and forbids customers from taking part in any bidding war.

As such, you can contact the manufacturer directly by getting their phone number or email address from their official website. For Honda Cars, you can access its contact details here. 

And make sure to have screenshots of your interactions with the sales consultant or dealer, along with any paperwork that can back up your report.

What can the DTI do?

The Department of Trade and Industry (DTI) is the primary government agency responsible for protecting consumers against unscrupulous business practices.

AutoFun Philippines reached out to the DTI’s Consumer Protection and Advocacy Group (CPAG) to get information on what you can do with a price-gouging dealer.

“Ang usual po na mino-monitor yung basic commodities soap, milk, coffee, sardines na may suggested retail price,” Shirley Vasquez of DTI-CPAG told AutoFun Philippines in a phone interview.

[Translation: We usually monitor basic commodities like soap, milk, coffee, and sardines that have suggested retail prices.]

“Ang sasakyan, as a luxury item, ‘di mino-monitor ng DTI [A car, as a luxury item, is not monitored by the DTI],” she added. “But if there is deception or non-disclosure in the transaction, tulad ng [such as] hidden charges, then the DTI can step in.

In other words, you can only file a DTI complaint against a car dealership when it asks for more money after you buy the car. But before that, you will have to go through the manufacturer.

If you are still being solicited for money after buying a new car, Vasquez said you could email the agency’s Fair Trade Enforcement Bureau at ftebmediation@dti.gov.ph. Don’t forget to have screenshots and supporting paperwork.

You can also call the DTI through its official directory.

Have you ever experienced dealing with a greedy car dealership?