#Markups

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

With vehicle prices surging over the last two years, the age of negotiating a price below sticker seems to have ended. Manufacturers are raising their rates to cope with inflation. But they’ve also noticed how much abuse they’ve been willing to endure via dealer markups. You rarely hear someone talking about how much they saved on their new car anymore. Now, the topic of interest is how much financial abuse you managed to avoid before driving it off the lot. 

With dealers having spent the last 12 months placing egregious markups on automobiles, it has become a seller’s market, to say the least. New vehicle transactions are currently averaging $6,000 more than they would have been in the previous annum. But prices had already climbed by $3,000 (year-over-year) in 2020 due to production shortfalls, encouraging fleet managers to scoop up every used vehicle they could find until secondhand cars became likewise overpriced.

It’s an abysmal situation for consumers and automakers have begun to realize they’ll be getting blamed if something isn’t done. As a result, we’ve started to see manufacturers publicly chiding showrooms for placing lofty “market adjustments” on new automobiles. Ford Motor Co. and General Motors have both made formal declarations that they’ll be penalizing dealers who issue ludicrous markups on products wearing their emblems, with Hyundai Motor Group issuing similar threats to greedy retailers this week.

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.

Earlier this week, someone sent me an addendum sticker from Mercedes-Benz of Selma, in Texas. The addendum added two line items to the sticker price. The first line item was VIN etching, at $199. That’s controversial enough, since some people have said that VIN etching is the scam of the decade – but those people haven’t seen the second item: A “Market Adjustment” charge for $125,000.

You read that right. One-hundred and twenty-five thousand U.S. American dollars – and that’s on top of the Mercedes-Benz G63 AMG’s already steep $178,000 asking price. But, frankly, it’s not the 70 percent markup that’s the most offensive thing here, It’s not even the $199 charge for the VIN etching.

Frankly, the worst part of this is that MB of Selma will very likely get their markup. And, when they do, they will deserve every single penny.

Chevrolet’s C8 Corvette has been in demand.

So much so that some dealers are commanding markups up to $100K over MSRP.

A 2014 Chevrolet Camaro Z/28 would set you back at least $75,000 MSRP were you to head over to your nearest dealership. One Los Angeles dealership, however, is charging a steeper price of admission for the honor of destroying everyone at Willow Springs and Irwindale.