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Well, it's more a tire place, but we have two mechanics and do a lot of garage work, too.
Here's my thoughts. First, if they did the diagnostic, you should pay them, unless you are absolutely sure they lied to you. On the other hand, they let you go with your car, so they don't have a lot of leverage.
Second, the lights aren't necessarily a lie, but they probably are. It's possible they disconnected something somewhere and the lights didn't work when they looked at them. I doubt that, for a couple of reasons. There aren't many ways to accidentally disconnect the brake lights from the front without disconnecting the whole battery or fuse box, and it just seems like something an unscrupulous, desperate manager would do.
Third, in general, don't go to chain stores for mechanic work. The best mechanics I know are at the established local shops. These are the places who have to build your trust and rely on your repeat business. Not all of them are honest, but many are. You can probably find recommendations on the Web for your town, or by visiting a parts store (they deal with the shops all the time, and know the mechanics in the area). Look for an established shop with a fixed sign, not someone who has painted a bedsheet and hung it on an old church they converted into a garage.
And even then, don't talk a lot. Salespeople are trained to read you and respond to what you say. If you are quiet, they get nervous. If they are lying to you, their first suspicion is that you are on to them. They will be less likely to try anything. Never say "I don't know anything about this car, just do what you think is best."
I have a counter guy who used to work for a national chain brake company. He's worked all over, actually. He's described the "script" in detail. They are shown tapes to teach them how to suggest repairs that aren't needed, to show that it's all in the voice and tone you use. That's, sadly, what the line about the lights sounds like to me--I don't know what kind of electronics scan would tell you what is wrong with brake lights--most of the time it's a bulb or fuse that would cost a buck or two. At worst, it's a short, and there's no electronic scan I know of that would find a short--they just have to check each stage of the wiring. Now, I'm not a mechanic, so there may be something I don't know about, but it sounds fishy to me.
Here's the basic script. You come in and ask for brakes (or muffler). They say no problem, they give you a low price estimate, but they warn that they have to check it out. Maybe they'll try to upsell you there--you want wipers with that muffler? Brakes? Fluids? Same as McDonald's, only the add-ons are thirty to sixty bucks. Once you walk out, they call you with one or two more add-ons. They try to find your spending limit, more than the actual needs of the vehicle. They love doing this over the phone, because you aren't likely to ask to see the car. But if you do, they will be vague. Insurance forbids it (that's not totally bogus, but it's close). These chains train the mechanic to act angry and offended if you question them. The manager plays good cop to their bad cop: easy Jack, they're just asking questions, they aren't calling you a liar. It works--people feel guilty for offending the mechanic, they feel more trusting of the level-headed counter person, etc.
Not all chains are like this, and not all stores within a chain are like this.
Although, if the manifold is really being replaced, that might not be a bad price, depending on where you are, and the type of car. It wouldn't hurt to call another garage and ask what they would charge. They may not be able to give you a firm price without seeing the vehicle, but they can give you an idea. They know if they give you a good price, you might give them the business.
Just my observations. Ignore any that don't apply.
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