#DealerMarkups

The Corvette Z06 is often hailed as “America’s supercar” or the “supercar killer,” and much of the praise comes as a result of its relatively decent starting price. The 2023 Z06 has a starting MSRP of just $105,300, less than half the price of the cheapest Ferrari. With options and upgrades, it’s possible to push the price of a Z06 convertible past $160,000, but that’s only a fraction of one Illinois dealer’s asking price. Volo Auto Sales has a 2023 Corvette Z06 3LZ on sale for $375,000, more than 2.5 times the car’s $148,495 sticker price.

If you’ve even slightly considered throwing your hat in the ring to buy a new Toyota GR Corolla, you probably came face to face with the dual buzzsaws of dealer markups and minimal supply. Toyota Japan has its act much more together and appears to want to do the right thing with its buyers because it recently announced that GR Corollas would be sold through a lottery system.

Every day I see more dealer markup stories. For example, yet another Nissan Z markup story crossed our internal news wire desk this morning.

Look, we knew there was a lot of hype around the new Nissan Z. Rightfully so, as our first drive showed. And we know that quantities of any new model from any brand are usually limited at launch in a normal year -- and supply-chain problems across the industry, along with the pandemic's lingering effects on production, have made 2022 anything but a normal year for autos.

Still, the markups being charged for Nissan Z Proto Specs strike us as absurd.

You’re probably well acquainted with dealer markups by now. Supply shortages created during the pandemic have left the world with fewer automobiles and car dealerships are taking full advantage of the elevated demand. As you might have expected, this trend resulted in plenty of people overpaying or becoming cautious of a market they now see as wildly predatory.

Car manufacturers have begun asking dealerships to take it easy on the price gouging. General Motors made its plea last week and Ford has followed up by reiterating its own concerns during the company’s Q4 2021 earnings report. The Oval is worried that dealer markups are tainting its relationship with customers, with top executives making casual references to the trend back in November. Ford CEO Jim Farley is now telling dealers that they need to cut it out lest they be punished by the manufacturer.

In the last five years, I’ve visited over 2,500 dealers in 44 different states. Sometimes I think I’ve seen everything. And just when I think that, I’m invariably proven wrong.

This week, I walked through the doors of a massive dealership — easily one of the largest dealers I’ve ever set foot in (the name and make of this dealer shall remain anonymous, since the conversation was “off the record”). This dealer sells upwards of 500 new cars a month and about 200 used per month, and they’re planning to add even more floor space so they can increase their volume.

As I waited to talk to the GM, I browsed the cars on the showroom floor. Considering the overwhelming success of this store, you can imagine my surprise when I saw that every car on the floor, without exception, had an extra sticker on the window.

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.

As Hollywood writes it, when you make a deal with Satan, he bestows onto you whatever you covet most in exchange for your soul. However, there is usually some dark twist that ruins the overall experience long before you can settle into hell’s never-ending torment. If you ask him for money, it’ll be stolen from the mob and they’ll hunt you down. If you ask him for power, he’ll make you the next Adolf Hitler. The devil’s bargain is a well-established trope — you get what you asked for but cannot fully enjoy it thanks to some twisted fine print.

Fiat Chrysler’s SRT Demon Customer Acknowledgment contract functions similarly. Perhaps it’s a necessary evil because it specifically prohibits the brainless activities which would absolutely result in your 800+ horsepower drag car killing you or a loved one. That said, you could ignore all of the rules FCA carefully chose to include within the contract. But, when you do, the manufacturer has itemized and initialed proof where it explicitly forbid you from doing so.

When we announced that the Dodge Demon would have a MSRP below six-figures, the comments section was immediately populated with discussions on how that might not be the case once the strip-focused Challenger arrives in showrooms. The limited supply of early Hellcats came at a significant premium and, for a time, even gently used models were going for the manufacturer’s suggested retail price of a new one.

Gouging on the Demon seems even more assured since FCA has stated that it will be limited production to a mere 3,300 units in North America. Obviously, there is no way in hell to avoid dealer markup on a vehicle like this one but Dodge seems to think it has found a way to attenuate the matter.