Four-fifths of Americans who bought a car from a dealership last year paid more than the advertised price—a 276-fold increase in just two years.
A new study by research firm Edmunds found that only 3% of vehicles bought from US dealerships were sold at the Manufacturer’s Suggested Retail Price (MSRP) in early 2021.
The trend picked up slowly through May before skyrocketing to 82% in January 2022, up 276 times from 0.3% in 2020.
In 2021, Ford received an average $163 MSRP surcharge, although one Seattle woman told the Washington Post she was warned she would have to pay $12,000 on top of the list price for one of the firm’s hybrid pickups. she refuses to buy.
The GM Chevrolet and GMC brands received a surcharge of $625 and $677, respectively.
The prestige GMC Cadillac line last month averaged $4,048. Kia, Hyundai’s popular brand, earned an average markup of $2,289.
On average, the new markup on cars cost consumers an additional $728, with buyers reporting electric and hybrid vehicles selling for $10,000 or more.
At the beginning of 2021, only about 3% of cars sold at dealerships were at a premium. By January 2022, 82% of cars sold were markup.
In 2021, Ford received an average $163 MSRP markup, with some popular models such as the Maverick (above) receiving up to $12,000 markup.
The GM Chevrolet and GMC brands received a surcharge of $625 and $677, respectively. Last month, the Cadillac line averaged $4,048.
Ford said it will suspend shipments of its most popular vehicles, including the new F-150 Lightning pickup truck and other electric vehicles, from dealerships that inflate vehicle prices.
Ford spokesman Said Deep told The Washington Post that the company is concerned about how markups will affect their new electric vehicles and hybrids as they try to compete with Tesla, which leads the electric vehicle market.
“Lightning is very important to us,” Deep said. “This is a breakthrough in innovation for any of our trucks. This plays a very important role for our brand and all our dealerships.”
Ford CEO Jim Farley told investors at a January conference that about 10% of the company’s nearly 3,000 dealerships in the U.S. consistently price vehicles above the recommended retail price in 2021.
GM did not immediately respond to DailyMail.com’s request for comment.
Hyundai said it is “constantly reminding its dealers of the need for full transparency” on pricing and is “strongly strengthening[s]’ that the prices advertised on the Internet for vehicles should be in line with retail prices.
“We strongly discourage our dealers from pricing above the manufacturer’s recommended retail price,” the company said in a statement.
Manufacturers of obsolete cars in the US are bound by laws requiring them to sell cars through dealerships, and these intermediaries add a markup to profit from the sale.
New firms, including Tesla and Rivian, sell directly to buyers, eliminating this markup. Legacy brands are now eager to follow suit, although they are said to be aware that they risk losing the knowledge and skills of dealers who close sales to them.
Hyundai saw its popular Kia brand drop in price by an average of $2,289.
Ford is concerned that rising markups will damage the company’s reputation and will launch a new line of electric vehicles bundled with Tesla models (pictured).
Ford estimates that about 10% of the company’s nearly 3,000 US dealerships in 2021 consistently priced vehicles above the suggested retail price.
David Eagle, a Los Angeles-based auto broker who helps buyers negotiate the price of electric vehicles and hybrids, told the Post that he had trouble finding good prices for his customers last year.
He said the market was hit hard at the start of the pandemic in 2020 as dealers sat on cars for months before people started buying cars again in 2021: 15 million vehicles were sold last year, up slightly from 14.6 million. sold last year. 2020.
Eagle added that dealers are also raising prices to deal with supply shortages as the shortage of microchips hampers automakers.
Jeff Ayosa, who owns a Mercedes-Benz dealership in New London, Connecticut, told The Post that dealers have little choice but to raise car prices due to declining sales.
“I think a lot of high-end luxury buyers understand that, ‘Look, your volumes are down and historically you’ve always discounted,’” Ayosa said.
“If we now have to pay a small premium for what we want and need right now, we understand that this is the environment we are in. And you have to stay in business, and we want you to stay in business because we don’t want to go back and see the lights go out and our car couldn’t be serviced.”