I recently bought a car as well. In my case, they dropped the dealer add-ons to 3 cents (1 cent each) and said it was just ‘cuz the computer wouldn’t let them remove them completely. So it was, like, $18k for the car and a grand total of $18,000.03 factoring in the dealer add-ons.
Or at least that was the story they told me as we concluded negotiations.
But them I go to sign the paperwork, and I catch something buried in it. The bottom line is the same, of course (&18,000.03), but somewhere in the stack of papers in the middle, where the costs are itemized, I see it’s actually $15,000.03 for the car and $3,000 for the add-ons (I wouldn’t be surprised if this kind of fudging of numbers is illegal, but this is Texas so good luck filing any kind of consumer protection complaint). When I brought it up, they assured me I was getting the add-ons, so not to worry, and I of course reminded them I didn’t want the stupid add-ons. But with that, I think I figured out their game: the bullshit dealer add-ons probably allow then to do two things:
(1) I suspect the dealership itself probably gets to keep a larger percentage (maybe even 100%) of the add-on fees than it would for the sales price. I don’t know if that’s in sales *taxes, kickbacks to their corporate (dealership) overlord, or kickbacks to the car manufacturer (eg: Nissan or whoever as a branded Nissan dealership).
(2) It allows them to suppress the retail price of cars in the area, meaning they can point to those numbers (as they did to me) to devalue trade-ins, especially if they are (as in my case) a chain of one of the larger dealerships in the area and, I suspect, other dealerships pull the same trick (and it sounds like maybe they do, to the point of being an industry custom, from this thread).
*If I get bored over the holidays, I might grinch out and do some digging into this to see if it would indeed effect the sales tax paid to state or local government, and if so I might file a complaint after all because I suspect the government would be a lot more motivated to go after its own interests (taxes) than a consumer’s (consumer protection), at least in Texas.