Americas Dealership Markups (North America)

[Dr Zaius]

I was at one of the local Ford dealerships a couple weeks ago and they had just gotten an F150 Raptor R on the lot. I asked what the price was and the reply was MSRP plus $90k dealer markup.

It sold the same day.

 

[Norville]

I was at one of the local Ford dealerships a couple weeks ago and they had just gotten an F150 Raptor R on the lot. I asked what the price was and the reply was MSRP plus $90k dealer markup.

It sold the same day.

Well, seems like a lot of people have more money than marbles. Hope they're at least happy I suppose.

 

[emax]

I should become a car dealer in the US.

I'd only have to sell one such car a year to have a relaxed life.

 

[MileHigh]

I don't get why dealer mark ups should be a thing. Why don't the manufactururers just raise MSRP if people are willing to pay way more. MSRP is changed month by month when I was looking at cars before, so why the problem with a disconnect between MSRP and sales price?

 

[Krabby]

Dealerships in America are GREEDY, unscrupulous bastards. Simple as that.

 

[bemax]

Dealerships in America are GREEDY, unscrupulous bastards. Simple as that.

But isn’t that the free market that many US Americans want to have?
The market sets the price and if someone isn’t willing to pay that price he/she will just buy something else.
Or is there something unfair behind the obvious? Can a dealer, after you signed the contract, raise the price on his own?

 

[Krabby]

I’m not against free market systems, but in this case it is not that simple. The dealership model in many US States is legislated so that manufacturers are not able to sell directly to the consumer. So, even though the manufacturer sets an MSRP (where S stands for “suggested“), the consumer is forced to deal with a middle man who controls the selling price. It has to be frustrating for manufacturers because they are legally barred from getting involved. While there is a direct relationship between dealership and mfg, the dealers are wholly independent entities.

And it’s thing like this that sicken me. PURE GREED

 

[ADVAW8S]

But isn’t that the free market that many US Americans want to have?
The market sets the price and if someone isn’t willing to pay that price he/she will just buy something else.
Or is there something unfair behind the obvious? Can a dealer, after you signed the contract, raise the price on his own?

The free market is one of the many conundrums that is the United States of America. We argue for free market but don't have a free market. Many times we don't want the government to get involved in the free market but yet ask for the government to step in if the market pricing is extreme.

 

[ADVAW8S]

I’m not against free market systems, but in this case it is not that simple. The dealership model in many US States is legislated so that manufacturers are not able to sell directly to the consumer. So, even though the manufacturer sets an MSRP (where S stands for “suggested“), the consumer is forced to deal with a middle man who controls the selling price. It has to be frustrating for manufacturers because they are legally barred from getting involved. While there is a direct relationship between dealership and mfg, the dealers are wholly independent entities.

And it’s thing like this that sicken me. PURE GREED

Majority of all products sold have a middle person known as a wholesaler. For example, I had a friend who made a nice living selling French's mustard to grocery stores. Different stores then turned around and sold at a different prices. I think the difference with a car dealer is that there is a limited number and locations are controlled. One can not have 10 Toyota dealerships in one town like one can have 10 different grocery stores. If we had 10 Toyota dealerships in one town, pricing would be more competitive.

 

[Krabby]

Majority of all products sold have a middle person known as a wholesaler. For example, I had a friend who made a nice living selling French's mustard to grocery stores. Different stores then turned around and sold at a different prices. I think the difference with a car dealer is that there is a limited number and locations are controlled. One can not have 10 Toyota dealerships in one town like one can have 10 different grocery stores. If we had 10 Toyota dealerships in one town, pricing would be more competitive.

And when there’s 20 in an entire nation …

 

[bemax]

Majority of all products sold have a middle person known as a wholesaler. For example, I had a friend who made a nice living selling French's mustard to grocery stores. Different stores then turned around and sold at a different prices. I think the difference with a car dealer is that there is a limited number and locations are controlled. One can not have 10 Toyota dealerships in one town like one can have 10 different grocery stores. If we had 10 Toyota dealerships in one town, pricing would be more competitive.

But it is more about the shortage of a good, isn’t it?
If the truck you are looking at is available and 5000 $ cheaper in the next bigger town you would send an email and buy it there. For a car some 100 miles are not really from importance.
The problem occurs only because there is a shortage of cars or a way to long order time.

 

[Spjnr]

I guess the unacceptable part is if you order a car, wait 12-18 months for it, then the dealer whacks 10k ontop when you come to collect it.

This exact thing was happening to Bronco customers who documented it on YouTube

 

[BroncoBilly]

supply and demand fellows. lots of stellantis products out there right now being discounted in different markets across the usa as some dealers in the southeast have over a years supply of pick up trucks and jeeps sitting on their lots. Last year, 2022 model year, I bought an f150, a bronco sport and a bronco 2 door all at under msrp in Canada. Friday I picked up a 2022 Sprinter van at the msrp at the time of ordering, 18 months ago. Talked to an old friend last week that sells 2000 ford trucks a year, mostly E series, F series and transits. He said ford had orders for 150,000 super duty trucks that they couldn't fulfill in 2022 model year so don't expect to find a super duty for sale at msrp.

 

[bemax]

I guess the unacceptable part is if you order a car, wait 12-18 months for it, then the dealer whacks 10k ontop when you come to collect it.

This exact thing was happening to Bronco customers who documented it on YouTube

And that’s something I don’t understand. If you have the contract the price is set or am I wrong with this assumption?
There might be paragraphs that allow a rise when the manufacturers prices go up. But that should be all uncertainty.

 

[Stu_Barnes]

I guess the unacceptable part is if you order a car, wait 12-18 months for it, then the dealer whacks 10k ontop when you come to collect it.

This exact thing was happening to Bronco customers who documented it on YouTube

you hit the nail on the head there @Spjnr

 

[BroncoBilly]

And that’s something I don’t understand. If you have the contract the price is set or am I wrong with this assumption?
There might be paragraphs that allow a rise when the manufacturers prices go up. But that should be all uncertainty.

That has always been the case for me. The price at time of order is the price at time of delivery regardless of supply/demand isses. In fact on Friday the sales rep I dealt with at the largest MB dealership in BC told me due to current demand i could flip my new 4500 sprinter for 10-15k more than I paid if I chose to. They honoured the price quoted at the beginning of 2022 when I placed the order despite having a waiting list of potential customers that would pay more.

 

[bemax]

That has always been the case for me. The price at time of order is the price at time of delivery regardless of supply/demand isses. In fact on Friday the sales rep I dealt with at the largest MB dealership in BC told me due to current demand i could flip my new 4500 sprinter for 10-15k more than I paid if I chose to. They honoured the price quoted at the beginning of 2022 when I placed the order despite having a waiting list of potential customers that would pay more.

a perfectly fair offer of the dealer!

 

[DCPU]

That has always been the case for me. The price at time of order is the price at time of delivery regardless of supply/demand isses.

I once got an unexpected discount at delivery time. A near 10% saving on the price I'd agreed at time of order. God bless Lotus.

 

[Teak]

That has always been the case for me. The price at time of order is the price at time of delivery regardless of supply/demand isses. In fact on Friday the sales rep I dealt with at the largest MB dealership in BC told me due to current demand i could flip my new 4500 sprinter for 10-15k more than I paid if I chose to. They honoured the price quoted at the beginning of 2022 when I placed the order despite having a waiting list of potential customers that would pay more.

That ‘had’ been the case for me until last year —- I ordered a couple of wrangler 392s from different dealers. Stellantis had a ~$500 price increase between the time of order and delivery and the dealer would not honor the order price (which was MSRP) and seemed completely shocked when I backed out of the deal. Surprisingly, they gave me my deposit back. On the other on, the dealer did honor our agreed upon price —- despite that being 3% below invoice at the time of ordering and then there being a $2300 increase by Stellantis between order and delivery dates. I ended up at a little better than 4% under invoice.

Bottom line: it’s all going to to come down the dealer and my hope is we aren’t ‘assigned’ dealers and pick up the vehicle from whomever we want-

 

[BroncoBilly]

That ‘had’ been the case for me until last year —- I ordered a couple of wrangler 392s from different dealers. Stellantis had a ~$500 price increase between the time of order and delivery and the dealer would not honor the order price (which was MSRP) and seemed completely shocked when I backed out of the deal. Surprisingly, they gave me my deposit back. On the other on, the dealer did honor our agreed upon price —- despite that being 3% below invoice at the time of ordering and then there being a $2300 increase by Stellantis between order and delivery dates. I ended up at a little better than 4% under invoice.

Bottom line: it’s all going to to come down the dealer and my hope is we aren’t ‘assigned’ dealers and pick up the vehicle from whomever we want-

Agree with your post. The sad part is the first dealer likely sold the jeep you ordered to somebody else after they tacked on 5-10k of ADM. Like you said it all comes down to the individual dealer and since covid began Ford dealers generally have been exploiting supply chain/availablity issues to their short term advantage. I haven't bought a mopar product since 1998 so that's relatively unknown territory for me but your experience shows some of them are taking the same approach. I do have fleet accounts with both Ford and GM and where in the past that used to mean something, today you have very little leverage. Last year I bought the f150 and the Bronco sport at under invoice. The day after I ordered the Bronco 2 door at invoice the fleet rep, a fellow I've done business with for 30 years, called me and told me the dealer principle wanted 1800 over invoice to do the deal. I've ordered dozens of vehicles through him on a handshake and the customer service he provides has been second to none but he said this one was out of his hands. It was still about 5% under msrp but I was not happy and I shared with the fleet rep some unkind and perhaps hurtful words concerning my opinion of the dealership owner. I too am hopeful that ineos chooses their local dealers wisely because as we know that will make or break the customer experience and with the thin spread of Ineos dealer coverage each dealer takes on a greater importance. Thankfully I'm coming close to the end of my interactions with car dealers and I'm very hopeful that this one will go well. The good news is that the wait is almost over and we will find out very soon.