Dodge's Markup Deterrent Dexterously Defeated by Dealers
Even though we knew the limited supply of Dodge’s SRT Demon would drive up prices astronomically, Fiat Chrysler still made a valiant effort to reduce markups by prioritizing deliveries to dealerships offering the vehicle at (or below) MSRP. Unfortunately, the plan didn’t work as intended.
This was especially true after some dealerships found a workaround by having intermediaries on eBay auction off the right to buy one of their Demon allocations. Instead of selling the car above the $86,090 sticker, which forces Dodge to omit custom nameplates and other Demon perks, they’re allowing prospective buyers to bid on the “privilege” of purchasing a Demon at the manufacturer’s stipulated value — for thousand of dollars.
According to Automotive News, buyers are shelling out $10,000 to $70,000 to acquire SRT Demons at a “fair price.”
Last week, dealers in South Carolina, Louisiana, and Tennessee auctioned the right to purchase coveted Dodge with reserves set between $10,000 and $22,500. However, earlier auctions showed some customers hitting final bids as high as $75,000.
Ebay sellers have been clear that they are only tangentially related to the dealerships, specifying they have an “outside relationship,” as if they are indicating some kind of complicated romantic status via social media. One lister explained that “there will be somebody directly from the dealership contacting the winning bidder prior to any money being exchanged so that the deal is understood from both sides.”
If that sounds sketchy, it is.
Meanwhile, the majority of dealerships should be satisfied taking the honorable route of gouging customers upfront. Though a few have also decided to list regular Challengers at unheard of prices, in the hopes to subtly pass them off as Demons. We even spotted a couple of V6 cars carrying $80,000 totals online. Those examples appear to be anomalies, however.
In June, Dodge brand chief Tim Kuniskis explained the automakers allocation strategy while urging dealerships to play fair. “We know some dealers may be tempted to sell to the highest bidder,” Kuniskis said. “But we are encouraging them to leverage the Demon as a halo for both the brand and their dealership, to bring customers into their showrooms and see everything we have to offer.”
However, when you can sell something for thousands of dollars more than MSRP it’s difficult to resist the urge to do so. Finding a loophole that also permits you to adhere to the manufacturer’s stipulations is just icing on the money cake.
A few dealerships are attempting to reach a moral compromise, though. Bill Marsh Chrysler-Dodge-Jeep-Ram in Traverse City, Michigan told Auto News its sole Demon will be sold for one dollar below sticker price, with the right to buy it being auctioned off among existing customers for the “benefit of four local charities.”
According to Marsh’s marketing director, Mike Kent, the auction alleviated a problem for the dealership, “which [is] ‘How do you maintain the integrity of one-price when the value of the car goes beyond its MSRP?’ This gets us beyond that.”
FCA said it is monitoring dealer actions in selling Demons, but confessed there was little the automaker could do beyond encouraging dealers to sell their Demons at the manufacturer’s suggested retail price.
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Since 100% of all new cars are sold at MSRP, selling one for over MSRP is totally out of line...oh, wait....never mind.
"How do you maintain the integrity of one-price when the value of the car goes beyond its MSRP?" Perhaps launch with a higher MSRP? Would it be possible to not specify one at all? Just put the cars on the showroom floor and let the market determine their value without even trying to establish a sticker price?