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For reasons which will soon be revealed, I’ve been become acutely aware of the margins on auto options as mentioned in a previous post. The prodigious markups are obvious on some items — after all, who really believes that floor mats cost anything near the charge? How about the stereo upgrades that can be bested in aftermarket gear for less than half the price? In some cases the upgrades are worth the price because they look or feel better, but in others the value vs. the cost is debatable. In this post, I explore this question: is metallic paint really worth the price?
Most car makers still charge a premium for certain colors of paint. Saab is no different. Buy a Fusion Blue Metallic 2009 9-3 and the car will set you back US$550 over the same model with Polar White paint. On a 9-5, the same privilege will lighten your wallet by the same amount. In fact, only three colors, white, red and black, are offered at the “base” price.
Is this additional cost justified, or is the option up sell for metallic paint simply additional margin for the automaker?
First of all, let’s explore the roots of metallic paint and why automakers charged a premium in the first place.
The obvious question: does metallic paint and it’s close cousin pearlescent paint cost more than solid color paint? The answer: not much if any. Metallic paint simply has a very small amount of aluminum flake added to the formulation while pearlescent paint has an equally small amount of mica flake added. Certainly these raw materials are very inexpensive, and the remainder of the mixture doesn’t vary to any great degree. If you want to test this theory, call an automotive paint supplier and request pricing for any color in both metallic and solid. There will be no difference.
The next question: does metallic paint cost more to apply? Well, that’s debatable.
In the 1960’s, metallic paint really was something special. Without the automated paint booths that create today’s perfect finish, paint was either applied with hand-held sprayers or with full-component paint baths, neither of which guaranteed even coverage and therefore even distribution of metal flake. Therefore, paint rework was more common and more difficult with metallic colors and thus metal flake was more expensive overall.
By the late 1970’s, the environmental regulations and workforce protection laws changed paint formulations dramatically to reduce airborne pollutants released in the paint manufacturing and application processes. Faced with the differences, automotive finish experts were forced to change many established practices to make the new paint work. Because I can find almost no data on the comparative costs, I’ll give the car makers the benefit of the doubt here — let’s assume that some difference in cost existed during this period.
Therefore, there was likely some historic precedent of increased production cost for metallic paint.
Today, however, I believe that most of the cost differences for application of metallic versus solid paint are miniscule if any real difference exists. Certainly, automation is a huge advantage overall for auto builders, but no place more so than in the modern paint booths employed in all current auto assembly plants. Once the correct procedures are dialed in, all cars are produced with similar results. Sure, certain paints my need slightly different procedures, but those changes easily happen on the fly with the manufacturing computers remembering the “recipe” for each configuration.
Certainly there are many that agree with me.
From drive.com.au, Mr. Tim Colquhoun finds that auto OEM’s are keen to defend their position that metallic and “special” paint colors cost more, but paint experts differ:
Darren Kenney, owner of Kenney’s Automotive Paints in Carramar, says that there is little justification for car makers charging a premium for metallic paint.
“It’s a bit of a rip-off really,” he says. “The only difference between standard and metallic paint is that metal flakes are added to the tinter in metallic paint.”
Wikipedia has this quote, which is, in my experience, true:
Manufacturers almost always charge a premium for the “option” of metallic paint on a new vehicle, although metallics usually account for all but one or two of the colours from the palette available (only red and white are available as solid colours from many makers).
The same article goes on to say:
…many consider the price premium for metallic paint as a way to boost the base price of a new vehicle.
In the end, I find these sorts of games with numbers annoying. You can view the inflated cost of the metallic paint “option” in two directions: either the auto OEM is attempting to raise the profit of the car with a low-cost, high-priced up sell, or the maker wants to advertise an artificially low starting price. Either way it’s attempting to obscure the truth. When the consumer doesn’t have a firm grasp of the truth, the relationship deteriorates. It’s really that easy in my view.
Does it have to be this way? I think not. In fact, consider the Saab 9-7x. For the Saab 9-7x, your choice of available colors adds nothing to the price of the vehicle. That’s right: for the 9-7x, easily the largest vehicle in Saab’s line up, the additional cost for metallic paint is zero.
So, tell me this — how can this be? Does Swedish metallic paint cost more than American metallic paint? Does Saab simply think that they can get an extra $550 per car, but not on the SUV?
Your opinion, as always, is welcome.
27 responses so far ↓
1 max
// Nov 30, 2008 at 2:38 am
yup. Just an unjustified raising of the price
2 mo
// Nov 30, 2008 at 2:43 am
im not sure what they use at the saab plant, but the paint is definitately not worth 550 as the paint quality is below average.
3 vagabond
// Nov 30, 2008 at 2:59 am
I’ve been telling you people this for years.
4 Kroum
// Nov 30, 2008 at 3:06 am
The bottom line is automakers employ these tricks to keep the base advertised price of a car low. As a matter of fact, Saab is fairly good in this regard as they don’t have that many option to choose from – a lot of the equipment is standard on both the 9-3 and the 9-5.
On the other hand, BMW, Audi and the Japs have nicely posted low base model prices, but you pay through the roof for all these little options. I remember when I shopped for a new vehicle this spring, the BMW 335xi coupe came about $10K over its advertised price because of “options” such as leather. The S4 was similarly priced. Only the S5 was well equipped as a standard model with only a few options to add – but it’s base price was $10K more than the Turbo X and the 335xi.
5 Peter
// Nov 30, 2008 at 3:07 am
Wait 15 years and then we can address this. 9-7X’s will have fading paint or at least peeling clearcoat just like most U.S. market vehicles. A 9-3 or 9-5 in a metallic color will still have the same finish as today. Ask any Saab dealer which colors the rock chips first appear on and they’ll tell you: Laser Red and Black, two free colors.
Now is the metallic paint process worth $550? Absolutely not. But there is a difference in durability.
6 Robin M
// Nov 30, 2008 at 3:08 am
It would be great if Saab were one of the first not to charge extras on their paint choice.
7 Adrian
// Nov 30, 2008 at 3:17 am
Don’t forget that the three “solid” colours will probably not be clearcoated, whilst the metallics will be.
Black’s also often clearcoated, and an extra-cost option.
8 eggsngrits
// Nov 30, 2008 at 3:25 am
Peter: I disagree. The black and red are perhaps the colors that least camoflauge the chips, but the other colors are not any more durable in my experience. Red is always a tough one due to the pigments used, but they aren’t any more or less prone to scratches and pits.
About the US v. European paint, I can cite a number examples in both directions. Some European paint jobs aren’t so great and some US paint wears well. Swade’s Porsche 944 test drive reminds me of a great example — those “Guards Red” Porsches of the 1980’s faded to pink in no time and my father’s 1984 Chevy S10 work truck still has plenty of paint despite the abuse. When I was shopping for my 9-5, I rejected at least two metallic gold/bronze 9-5’s because the paint was compromised.
It really boils down to the paint and the process, which can sometimes vary from lot to lot.
9 1985 Gripen
// Nov 30, 2008 at 3:34 am
The Rose Quartz Metallic paint on my 1985 900T is exquisite. I can’t believe how 23 years on this paint looks new. Saab really does (did?) use great quality paint.
Also, the window tint on my car is original. No bubbles, no purple. Astounding. However, my indie mechanic’s ‘89 SPG has all the tint peeling off the windows badly. I don’t know if that was original Saab tint or something aftermarket though.
10 Rogan
// Nov 30, 2008 at 3:37 am
Atleast Saab doesn’t charge us for sun visors like Lotus does :-p
-Rogan
11 eggsngrits
// Nov 30, 2008 at 3:56 am
Rogan: Yes, because most cars are built where the sun actually shines.
12 Ryan McLean
// Nov 30, 2008 at 4:10 am
I *DO* know that if you have to get body work done later, metallic paint truly does take more labor to respray.
That may be correct, but the insurance repair rates are the same for all colors in most instances. EnG
13 jchan2
// Nov 30, 2008 at 4:23 am
I see it as a way to advertise a lower base price, and charging extra for metallic paint seems to be a typically European practice. I know Infiniti, Lexus, and Acura do not charge extra for metallic paint, (well, the majority of their colors aren’t extra charge) but Mercedes, BMW, Audi, Volvo, and Saab charge for any color that’s not black, white, or really bright red.
GM, Ford, and Chrysler though have picked up this bad habit… Quite a few colors at the Detroit 3 are an extra $495 or so. (the “red jewel tintcoat” on the Saturn Outlook comes to mind, as does the extra $200ish it takes to get “Jeep Green” on a Jeep)
14 Mats
// Nov 30, 2008 at 6:04 am
Just skip the paint and let the customer have the car plsaticwrapped in their color of choice when its arrived at the dealer.
The guys at SaabCentral have something else in mind…. EnG
15 saabseller
// Nov 30, 2008 at 6:10 am
Adrian is right – metallics are done twice, therefore more paint is used. Pony up the extra.
I beg to differ. There was a time when this was true, but now virtually all automotive finishes are a two-part system of base and clear coat. Only the rare bird is three parts. If you have documentation that Saab operates differently, please let me know. EnG
16 Jürg
// Nov 30, 2008 at 6:14 am
Thats why I often head for black. Great color no metallic, fair price.
17 albert
// Nov 30, 2008 at 7:02 am
It is very simple as a Mercedes-Benz salesman (not a dealer but from Stuttgart) once explained to me: “Preise sind Marktpreise” And so it is. You take the price that you can get and try to maximize your profit. And we stupid buyers pay the extra price for metallic/mica paint jobs. Ans as long as we do this, this practice will continue.
And you Amiracans: be happy with $550! In my country, where taxes are heavy, you pay a € 1.000 extra. BTW, MB, Audi and BMW charge even more.
And for all who still believe that the base paint is without a clearcoat: that is not true. On all Saab’s (even the white ones) there is no difference in the paint build-up, all are with a clearcoat on top.
18 Andrew Baculy
// Nov 30, 2008 at 7:06 am
We certainly don’t charge extra for the application of metallic paints. For multi-stage pear paints, but thats about it.
19 Bernard
// Nov 30, 2008 at 10:30 am
The metallic paint surcharge is one of those things that you can probably negotiate away if your dealer is motivated (and what dealer isn’t these days?). The important thing is the bottom line.
If pricing was really truthful, you would see a line item for “R&D and Tooling” worth about half of the car price, 10% labour, 30% for various people taking their cut, and roughly $200 for raw materials (which is the scrap value of the car).
The important thing is that you agree with the bottom line.
20 Andy Rupert
// Nov 30, 2008 at 11:43 am
I liked the article, Eggs.
Volvo charges about $495 more for metallic paint, but I don’t know how that affects durability. Despite the 10 year warranty on paint, our dealership also offers Xzilon treatment for the paint and interior to further protect against bird droppings, stone chips, and vandalism.
21 Arnold
// Nov 30, 2008 at 12:23 pm
mo, My 900 is now 15 years old, and the paint, apart from some minor stone chips, is not much different from the day I bought it. It is very good quality.
22 Arnold
// Nov 30, 2008 at 12:33 pm
I think that I like the idea of a drive away price best, and that is how I intend to negotiate any new purchase. It is fair enough to charge for options, but only when the majority of the models don’t have those features. IOW, most purchases will have to use the “option”. The extra charge that gets to me, is “dealer preparation”. Why not add electricity, rent and overtime costs on this basis?
In future, I will write a cheque for the full amount I am willing to pay in order to drive the car away, and be willing to walk away if it is not accepted. That should take care of metallic paint and charges for paper work. (Yes, paper work was another one, can you believe it?)
23 mo
// Nov 30, 2008 at 4:51 pm
arnold i am not speaking of the 900’s, those were built like tanks, but now go over and look at saabcentral in the 9-3 section and you will see many complaints about paint quality, including mine were there are small red spots everywhere, and it seems like water puddles that were let to dry on my hood and rear deck lid. its shameful how such an expensive car has such a poor paint finish.
24 saabseller
// Nov 30, 2008 at 5:27 pm
I think that I like the idea of a drive away price best, and that is how I intend to negotiate any new purchase. It is fair enough to charge for options, but only when the majority of the models don’t have those features. IOW, most purchases will have to use the “option”. The extra charge that gets to me, is “dealer preparation”. Why not add electricity, rent and overtime costs on this basis?
In future, I will write a cheque for the full amount I am willing to pay in order to drive the car away, and be willing to walk away if it is not accepted. That should take care of metallic paint and charges for paper work. (Yes, paper work was another one, can you believe it?)
No matter how low the “drive away price” is, people won’t pay it, especially Saab buyers, they will always want less. This is part of the problem with Saab, it is seen obscene that a dealer should make a profit of any amount on a sale. Then they all wonder why the trade is worth squat. If we were in the no profit/volunteer run business the sign outside would say Salvation Army SAAB. Aren’t we allowed to have a life too???
25 Arnold
// Nov 30, 2008 at 10:26 pm
saabseller, of course dealers need to make a profit. If they didn’t, who would sell and service my cars? I’m all for happy and profitable dealers (and manufacturers). It isn’t the profit that bothers me. I just want an open transaction, without all the hidden ‘extras’. Otherwise I feel it amounts to a certain amount of deception. If I am quoted a price, it should include overheads and most normal features one would expect in a price.
If most models were not metallic, I could see why that feature could be an extra, but when most are metallic, then that is what should be expected in the quoted price. In fact, the dealer could then say that he could give a discount if I chose a solid colour.
In short, I expect the dealer and salesman to make a satisfactory profit. I also expect them to be completely open, so that I don’t have to be on the alert for unexpected charges. When I am quoted a price, I expect to write a cheque for that amount, because that is the quoted price.
26 eggsngrits
// Dec 1, 2008 at 3:50 am
Well said, Arnold. I, too, do not begrudge dealers their profit, but I am disappointed that dealers often resort to trickery to get more money than the consumer is aware of or agreed to.
Saabseller, you are blaming us for reacting to years of trickery at the hands of dealers of all stripes? Whole books are written to catalog all of the little ways that car dealers attempt to fatten their wallets! Everytime another one of these areas (like this one) is exposed, consumers become more polarized to negotiate hard. If you don’t like that, I would suggest either finding another line of work or make sure that people think that they are getting a fair deal from you at a profitable level.
Of course, competitive pressure may take its toll, in which case you can’t blame the consumer for comparing and taking the better deal, can you?
I’m not sure why you feel that this is unique to Saab. I’m sure that any dealer of any marque can claim the same lack of consumer trust.
Bottom line: people want a fair deal. Provide that and you will be successful.
27 Rune (the other one)
// Dec 1, 2008 at 8:28 am
saabseller, is it the dealer who reaps the award for the metallic paint option markup, or SAAB? (probably a 30/70 split?)
I think it might be better to market the metallic colours as premium colours. Tell the customers that if they want a more special and personalized car, they can pay extra for the shiny colours.
But then the limited choice between white, red and black will seem like extortion… Customers are pushed into paying extra for a merchandise that cost the same thing to produce.
As a dealer, you are probably interested in pushing as many cars on the road, so you can make money from the annual service checkups. Getting more cars out there by being more honest about the paint, that should help your business in the long run.
Traditionally, I have the understanding that SAAB has a good reputation as far as paint is concerned. A SAAB rarely corrodes as quickly as most German cars. Part of this is due to the paint, no? (the late 80’s 900 models had some different painting technology introduced, so those would be the exception as far as SAABs are concerned?)
But, as someone who works in an industry plagued with options, I should probably not comment. In the early days, IBM made a tape streamer that could handle double capacity tapes and increase speed simply by replacing a PROM. These could be upgraded, just by replacing a chip. Production cost identical with the twice as expensive model of course. These days several software SKUs are differentiated with a mere license key. All customers have the same binary, yet a more expensive license key will unlock functionality seemingly not present in the ‘cheaper’ versions.
And to an extent, a more expensive sound system in a car could be the result of some R&D investments that need to be recouped. So even though a third-market radio costs half, it doesn’t really matter much.
But I still feel cheated about the high price of the GPS option for my 9-3. In the end I bought an ugly thing that sticks to my window, but I saved a significant amount of cash that way.
If anything, a balance need to be struck. I have cut down on my beverage intake in restaurants… In most places the food is actually quite cheap, but order a coke and you end up paying (at least!) four times as much as you would in a grocery store. The result is that I end up enjoying the meal less and do not eat out unless I have to.