[rhsakarp]

Originally Posted by astrodex

I had a very strange experience car buying experience that had me question how much money does a dealer make when they sell insurance?

Any ideas how much the insurance gets them? Is such experiences common?

In my recent experience, the difference between the insurance quote I got online vs. what the dealer was offering was almost 90% !! (all other things being similar, like IDV, RSA, time duration etc.)

The insurance is just an additional service the dealer is offering, much like some accessories etc. The right of refusal is entirely yours !

[PraNeel]

After reading all the views, it is clear that:
In today's scenario the customers have become aware and hence it is imperative the communication is clear, firm and polite when the sales discussion commences.
This is not applicable to automobiles, but for all types of sales conversations.
In the above scenario, some might empathize with the dealer given the tough business conditions, while others think it is a matter of principle or freedom of choice.
While both the points are valid, in today's market the trust / respect is gone.
Customer wants to validate what he is being charged for.
The seller wants to eek out best possible margin.
Gone are the days when sellers used to offer the best deal and respect the customer intention to the best of their ability.
IMO - Customer must be clear in his / her terms of deal and put forward all the points at the start and walk away if there is no agreement.
If seller disagrees at a later date on the terms then it is his fault.
In the above scenario - the dealer should have matched the quote and retained the customer. The customer walking away and dealer refusing to sell are also valid and withstanding.

[srishiva]

This is really bad behaviour by the dealer. When you dont have multiple dealers to choose from, its not right for the dealer to have control of over such things to deny you something.

Its still the MG car that was being bought. Not the complete add-ons. Insurance is not something that the dealer has the responsibility for nor it is something that impacts the car's performance which the dealer needs to guarantee.

These are small things that authorities need to give strict warnings about and not allow consumer to be distressed with.

[Ragavsr]

When I bought my XUV300 2 months back, I chose one dealer over the other for the fact that Dealer 1 was okay with me making payment after the vehicle reaches the yard and I perform a PDI. Dealer 2 was insistent on payment when the vehicle is billed in dealer's name.

Both dealers readily matched insurance quotes from outside . So not much trouble on that front .

[manishk123]

What I usually do is get insurance rates from other vendors and then ask the dealer to match the same rate if they want me to take insurance from them. They usually come down to that figure, give or take 5 - 10%. I prefer taking the insurance from the dealer because then in case of a claim, things are smoother at their own service centres.

[Samurai]

Originally Posted by shamshers

2. DO you realise as a customer I have the right to purchase insurance any where and by refusing to sell me the car, you have just broken half a dozen IRDA laws.

This is a very interesting. But, is it true? It is illegal to refuse to sell car if the customer wants to buy insurance somewhere else? Can you point to the pertinent law or regulation confirming this?

When I look at this thread, I see two specific categories of members who are responding:
1) Members who are judging the incident only from the customer's point of view.
2) Members who are also able to see the dealer's point of view. These are usually folks with experience in running a business or being a sales person.

I fall into the second category. Unless mandated by law or by reseller agreement, any business can refuse to sell an item/service to the customer. I often refuse a sale, if the demand results in loss or opportunity cost. One may sell at a loss for strategic reasons, but customer can't insist that the vendor must sell at a loss.

I don't know how ethics enters into this transaction. If the negotiation fails, customer can walk away and dealer loses the business. As long as dealer hasn't broken any law, you can't hold him accountable.

So the real question is.... did the dealer break a law?

[SnS_12]

Originally Posted by astrodex

Any ideas how much the insurance gets them? Is such experiences common?

Originally Posted by Vijin

That is indeed strange! One of my trusted SAs told me once that dealers get around 33% of the insurance amount they charge a customer (irrespective of the insurance company). However, the profit from selling a car should be way too bigger. Probably, they are confident that the car will anyway sell, so why not sell only at maximum profit.

Well, its no secret that the insurance quote you get from a source other than the dealer would always be cheaper as many buyers are always bothered on getting discounts on the car and dealers at times would reduce the insurance amount quoted to show as discounts offered.

Also, a dealer would match the insurance amount a buyer claims to have been offered from outside to secure the deal.

Now coming to earning from insurance premium gone are the days when you could get over 30% commissions. Even back then actual commissions were never 30% flat but included riders which are paid by an insurance company for doing a certain amount of total premium business as additional perks.

The current commission structure approved by IRDA the insurance regulator is 15% on Own damage premium and 2.5% on Third party premium.

What one has to really see if a dealer is not pulling a fast one is to check the premium amount quoted at the time of booking and if its the same printed on the policy copy as this is the way a dealer will pocket a few extra thousands over a car deal which costs a few lakhs.

You always pay the full amount to the dealer including the insurance amount. But at renewal of the insurance the cheque is issued on the name of the Insurance company directly and hence this difference in premium quoted and printed will never differ.

P.s - Always check the IDV (Insured Declared Value) on the quote/policy as this is the figure on which the premium is calculated and what will be paid in case of a total loss. So always ensure the dealer/agent has not considered a lower figure to arrive at a lower premium.

Second would be add on covers like consumables and Zero Depreciation. Some insurers may offer limited zero dep claims in a year for eg only two claims a year will be considered under zero depreciation and further claims during a year will attract the depreciation as per the Insurance tariff.

[Pkumarblore]

Hi, I was with my friend at a TATA dealership to have a look at the Harrier top end and to also finalize it. The quotation had an insurance premium of Rs.71,000/-. I checked with my guy and he quoted about Rs.52,000/-. All that he wanted was an invoice copy, and the insurance would be done immediately. When I revealed this to the SA, he offered a discount of about Rs.15,000/-(if I remember correctly) on the insurance premium. Well, that says it.

[superbad]

If the car dealer has a right to maximise his profits, I have a right to choose what is most cost effective for me. If that means buying insurance from outside which is not illegal, then the dealer has no right to refuse his sale. Of course, it's a different story that he's not legally bound to make the sale to me.

[saikarthik]

Originally Posted by Samurai

I don't know how ethics enters into this transaction. If the negotiation fails, customer can walk away and dealer loses the business. As long as dealer hasn't broken any law, you can't hold him accountable.

Originally Posted by V.Narayan

Shoddy and rude behaviour by a seller is never pardonable and I don't support a car dealer metaphorically spitting on a customer and to that extent my sympathy is with member
.

True, let us be unbiased. The customer can walk away if the negotiation fails and so can the dealer refuse to sell. But bringing the negotiations to half way point knowing that some pre-planned agenda is going to be pushed is what needs to be discussed here. There are bad dealers, there are bad customers. Buying a car is a dream and many would have worked hard a lot in our country to buy one. Having an agenda an trapping a person in the middle for profiteering is almost like insider trading in stock market. There are no laws when the first crime is being committed, the law evolves and takes its own time after considerable examples of such acts.

If the dealer explains his part of deal that insurance offered by them should be taken as a package to get a car in first discussion, I think its a fair deal. But forcing after booking a car or getting a loan is just unacceptable in my humble opinion.

P.S - My experience is with a Tata Motors dealership, not MG.

[N.A.GTC]

Originally Posted by greenhorn

People here are saying customer has the right to choose insurance. While that is true, is it not equally true that the dealer has the right to serve or not serve a customer?

Originally Posted by V.Narayan

It works both ways. The dealer has as much right to refuse to sell as we have the right to choose whom we buy from.

Thank you +1

Ah, the fabled free market again! EXCEPT that it's a myth, and practically everyone knows it.

Claiming that you will only sell X if I also buy Y is really unnecessary, and puts the customer in a spot where he might have to accept a sub-par Y product (often without knowing much about it). For something like insurance, it could be really problematic (with the kind of illiteracy people have about their insurance coverage, etc.).

Let's take an example. Let's say I have an electronics store, and I say I will only sell you an air conditioner if you buy a voltage stabiliser from me. No, you don't get to choose the brand, make do with whatever model I have. You have no other choice but to take the deal. But oops, the stabiliser I've sold you is of subpar quality. Now your AC either goes bad, something catches fire, or you shell out extra money to buy a proper stabiliser. See the problem?

The bigger assumption in the above hypothetical, of course, is that it's being done throughout the market and you don't have any alternative shop to go to. But that's what will happen if dealers are allowed to continue with these practices (and sort of is already happening). Buy the bundled product, or buzz off.

Coming to the question of "rights", such bundling could possibly be violative of the competition laws, as well as the Consumer Protection Act. And as has already been stated by someone above, these persons soliciting insurance policies are not IRDAI-licensed agents. That's a violation of the Insurance Act.*

Compulsory bundling is problematic because it restricts the consumer's choice to choose its supplier.



*Based on some quick looks. My specialisation is not in insurance laws, consumer laws or competition laws.

[ashlil]

Originally Posted by Samurai

This is a very interesting. But, is it true? It is illegal to refuse to sell car if the customer wants to buy insurance somewhere else?

Yes according to this article:
https://www.livemint.com/insurance/n...680847987.html

The OP can approach IRDA or insurance ombudsman. Nobody can force a customer to buy insurance from a particular company or agency. It is anti competitive to say the least. A dealer does not have a right to refuse on insurance grounds just like a dealer does not have a right to refuse on racial grounds (e.g. a dealer cannot refuse to sell you a car just because you belong to a particular race).

[ninjatalli]

Originally Posted by Samurai

So the real question is.... did the dealer break a law?

That's a very interesting take @Samurai. A few alternate thoughts

1. Let's look at it from a more hypothetical but very much possible view (e.g. Maruti dealers in the past, Kawasaki dealer issues) - what if none of the dealers agree to sell the car without insurance? Or if you have a city with only one dealer, then what does the buyer do in that case?

Yes, in this case the OP has only one dealer experience so it is a very flawed opinion on this thread.

2. Bundled services - as a customer I choose to buy the product and/or service I want. We definitely do this for accessories, etc. While I as a customer would definitely have the ability to walk away if I don't like the deal, I wouldn't want to be arm twisted into buying a service that is clearly inflated.

Definitely, there isn't a legal angle here, but what is the (MG) brand's view? Has the OP raised this with MG itself?

Originally Posted by astrodex

I had a very strange experience car buying experience that had me question how much money does a dealer make when they sell insurance?

...

Any ideas how much the insurance gets them? Is such experiences common?

Have you reached out to MG? If you did, have you got a response or action from them?

[Herschey]

I think this should provide some insight into the kind of money that the dealerships make on insurance policies.

I just took delivery of an Grand i10 NIOS yesterday. During the negotiation process, the exact initial quote in the policy proposal document I got from the dealership was Rs. 43,114/- which included basic 1st & 3rd party premiums, Zero Depreciation cover, Engine Protection, and Return To Invoice cover. Do note that this quote did not include the No Claim Bonus (NCB) of 50% which was to be transferred to the new policy.

After mentioning that I would get the insurance done myself if the dealership isn't able to provide me with a competitive quote, they provided me with a revised quote of Rs. 27,318/- for the same policy. This quote included the transfer of 50% NCB from the old policy to the new one.

Our insurance agent was able to provide all the same covers with the same IDV for a total of Rs. 20,382/-. I was able to save Rs. 22,732/- or almost 53% from the initial quote and Rs. 6936/- or over 25% from their best/ revised quote. The money saved was promptly spent on getting the car filled up and getting a better set of wheels.

My personal experience has been that one can save a reasonable amount by not taking the insurance from the dealership. They are there to sell cars and not insurance policies. Saying that, it's always better to provide the dealer with an opportunity to match or better the insurance quotes from outside.

I would gladly never ever buy from a manufacturer in case I am coerced into the kind of conditions I read being discussed here.

[Samurai]

Market is never perfect. Sometimes it is buyer's market, sometimes it is seller's market. Sometimes, the government intervenes and changes the playing field by laying down the law to the advantage of one of them.

Bundling products/service together is trick used by marketing teams in every business. For example, when my wife was shopping for a hatch back, she wanted ABS and airbag, but not sunroof. But i10 Asta had bundled all the 3 features, for a huge extra cost. If you wanted one feature, you had buy all 3 features. So we bought the sportz trim, and gave up all 3 features. Hyundai was practically forcing sunroof on every safety conscious buyer. But we decided to reject it. BTW, our i10 completes 10 years today.

Businesses do it because it is their job to maximize profits. If bundling products/services start hurting the profits, they will stop doing it.