Lunchtime Observations: Hidden Profit Centers, Automotive Division

Recently, David Pogue wrote a piece in the New York Times where he bemoaned how wireless carriers create loads of profits through voicemail instructions that we cannot escape (although if you know how, you can disable the instructions). I mention this because I’ve run into another profit center that has raised my hackles–this time from Toyota.

Two days ago we took my car in for service (it is a 2006 Toyota Matrix, with under 23K miles). The bill amounted to around $1,300! Two of the items on the bill, to me, are examples of how Toyota milks the service profit (and I believe this is at the corporate level, not the dealer)… and I don’t think just Toyota does this — I know others do as well. It is also not a comment on the quality of their vehicles.

First, my tires had worn out, and were riding rough. I had my wife ask about this when she brought the car in, for I felt tires should last over 22K miles. According to the dealer, the tires delivered with the car by the manufacter are poor-quality tires and don’t last long. I have no way of verifying this — I just know the tires had to be replaced sooner than I thought. This was the bulk of the bill, because we ended up putting on higher quality tires so they will last long. I’m happy with the new tires, and the car rides smoother — I just wish I had been able to go longer on the old ones.

Secondly, my wife lost her car key. Now, in the old days, you could go to the hardware store — a replacement key was perhaps $5, at most. Today? Over $350 to replace the key and the fob. The key has a transponder (RFID) that has to be programmed to match the car, and the key fob for the alarm has to be programmed for the alarm system. The electronics and the metal are probably perhaps $30, plus the programming labor. But they charge $350. I guess this is because they can, but it is a major problem (especially if you lose your keys). There are other impacts of this: for example, if you lock your keys in your car or lose your keys, AAA can’t help you. You have to go to the dealer, and pony up quite a bit.

I’d say this is nickle-and-diming, but it is much more than nickles and dimes.