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its not REALLY an efficient market...the economics you learn in school don't always apply in the real world though some of the principles do. Prices are set based on the consumers' next best alternative. The dealer sets the stage...and if they set it at $150/hr then the consumers next best alternative will be to do to an indie. The Indie, in order to woo consumers away will set it just slightly below the dealers price. Say a consumer is indifferent between taking it to the dealer at $150/hr or to an Indie at $120/hr...then the Indie should charge $115/hr and woo those customers away. Setting the hourly rate at $55/hr (drastically lower than the dealer's price) will add only a marginal number of customers and the indie will actually be leaving money on the table.
So they aren't conspiring...but dealers are inflating prices because they can. Not to mention your car sits in the shop for 5 hours and your bills has a total of 6 hours of labor....hmmmmm how does that fuzzy math work out??? The dealers go by the "book" which states a serpentine belt replacement is 2.5 hours and an alternator is 3.5 hours. Just because the dealer can do it in less time doesn't mean he'll charge you less!
posted by 207.183.11...
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