My car needed an oil change – nothing too complicated. I have done it myself in my younger days: you unscrew the oil plug at the bottom of the engine, drain the oil, replace the oil filter, screw the plug back, pour fresh oil on top and you’re done. It takes 20min max. But who wants to get down and dirty now days? Especially when lots of places (in California) offer to do that, plus lube, plus rotating your tires and inspecting your car – all for about $20? But wait, we’re not in California anymore…

Price offer for Oil Change in California

I took our car, Hyundai Santa-Fe, to the dealer service center. Yes I know, dealers tend to be a bit pricey, but it is a year-old car, and the dealer warranty requires that I service it in “authorized service center”, which happens to be theirs…

I walked into the air conditioned lobby and asked the agent at the desk for a price quote. She punched in the license plate number and asked for the odometer reading. “You should have done the service at 15,000km, and your odometer is currently at 23,000km”, she said sternly. “I thought the service should be done after 20,000km” I mumbled, fearing my dealer warranty was about to be voided… “No, it is 15,000km!” she replied, and proceeded to work on the price quote without any comments on my warranty. In California the warranty situation would have been handled differently. Thanks god we are in Israel I thought. After all, what are a few extra kilometers between friends?

The agent proceeded to type additional data, asked a few more question and finally said: “It will be 739NIS. How would you like to pay?” I gasped for air after calculating in my head that 739NIS is about $200. “Are you sure? It sounds very expensive for just an oil change” I said. “Well, your car is worth a lot more than that, and I am sure it is worth spending 739NIS once a year to service it” was her response.

My next stop was the service manager office. “You have got to be kidding” I told him, “we both know this is a very simple task and the price you are asking for is outrageous”, I blurted. “We provide first class service, we use original parts and we are fully authorized” he replied. “Plus in comparison with what you originally paid for your car, the service charge is quite minimal” he added. “The fact that the government extorts over 100% in taxes from car owners like me doesn’t give you permission to rob me in broad daylight!” I said and angrily left his office.

Across the street was another service center. They posted a sign indicating they provide service for Hyundai cars for 40% less. I walked into their office and asked for an oil change price quote. The agent at the front desk was a bit less polished, and had to rely on help from the parts manager to put together the needed price quote. After some back and forth, I was quoted 475 NIS for the oil change. Not quite 40% cheaper, but pretty close.

I returned to the dealer’s office and presented the other price quote to the service manager. “You know they are not authorized” was his response. “Authorized shmauthorized” I said, “it’s just a simple oil change!” The service manager quickly turned to the front desk agent and whispered “give him a 20% discount, and don’t charge him for the windshield fluid”. She typed feverishly on the computer and finally said “it will be 576NIS”

I faced a dilemma: Should I just “stick it” to the dealer and do the service at the cheaper, yet unauthorized place? But what if I ever needed a warranty service and the dealer would “stick it” back to me? Should I cave in, or should I continue to fight the windmills?

As always when faced with dilemmas like that, I turn to my personal oracle. I called my wife. “Should I pay the dealer an extra 100NIS for the service?” I asked. “Of course” was her prompt reply. So I did.

What’s the moral of this story?

  1. The average annual salary in the US is about $40,000, compared with about $28,000 in Israel. Based on economic buying power, oil change in Israel should cost about $14 (=$20*28,000/40,000). I paid over 10x (TEN TIMES) more, and that’s after tough bargaining. 
  2. Israelis love to complain about the cost of living, yet we let service providers rob us in broad daylight thinking we have no other choice.
  3. Ironically, the same people who complain about the cost of living, have no problem explaining to you that paying 10x more for the service the offer makes perfect sense. 
  4. The power of monopolies, unfair competition, and price gouging can be broken only through organized consumer protest. It has been done in a few isolated cases(see The Great Cottage Cheese Revolt) and could/should be done on a much broader scale. 

Let the battle begin, and may the small person win!

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