INEOS will NOT protect order holders in the US from dealer markups

[Sulley]

Hello all,

I have been very excited about the Grenadier, and had been planning on making a reservation to place an order. It was very disappointing to find out that INEOS will be using the same franchise dealer model in the US that many dinosaurs like Ford, GM and Jeep are using, rather than a consumer-direct model like Tesla. I verified this morning with an agent that, while you're placing a reservation with INEOS, you will in fact have to purchase the vehicle through a dealer, and that INEOS will not be doing anything contractually to prevent dealers from marking up your order. Attached the conversation below. It is very disappointing to see a brand new company using a hundred-year-old business model that has really injured consumers over the past few years. Older companies like Ford are stuck with it, but there is no reason a new company has to take such a terrible approach. I'm posting this here so that potential buyers can go into this fully understanding that they may wait a year or more for their vehicle only then to be hit with tens of thousands in surprise markups from the dealer - as has happened with Ford, Jeep, and GM to an obscene degree over the past few years. I had hoped the founders of INEOS would be thoughtful enough to do something innovative in their business model. A consumer-direct business model alone would have taken a huge chunk of market share away from Bronco and Jeep sales - customers are completely sick of the drama they've had to go through with those manufacturers. Seeing how awful the dealer model has treated people on the Ford side personally, going to have to walk away here.

 

[emax]

I'd try to find some fellows in misery and buy as a group at a fair dealer - at the recommended sales price.

 

[vjmvjm]

INEOS has no choice. US dealer franchise laws, state by state, are written to protect the financial interests of dealers. Period. If INEOS tries something else, they are subject to long and costly lawsuits. It is unrealistic to expect anything different for a new, small player in the US auto market.

 

[Sulley]

INEOS has no choice. US dealer franchise laws, state by state, are written to protect the financial interests of dealers. Period. If INEOS tries something else, they are subject to long and costly lawsuits. It is unrealistic to expect anything different for a new, small player in the US auto market.

Ford is moving toward new dealer contracts with their EV line to prevent markups and hidden fees. Tesla has avoided the franchise model altogether and gone consumer-direct, which has stabilized pricing across the US. There are ways to do it right. I'd have expected something along those lines from a brand new company looking to be innovative.

 

[Sulley]

Can you explain that for stupid German readers like me, please?

Cheers
AWo

In the US what this looks like for, say a Bronco, is that you place an order, are given the MSRP for the vehicle, wait two years, and then the dealer surprises you when you go to pick up your vehicle by telling you that it'll cost you another $20,000 or they'll sell it to someone else.

 

[Krabby]

Hi Sulley - welcome to the board. This topic has come up in a few different threads, but thank you for posting those screenshots. I'm not sure where you're located, but in New Jersey, it is illegal for car companies to sell direct to customers, and unfortunately, this is the case in a good number of states. The dealer lobbyist attack is awfully strong.

That said, we hope that Ineos can "influence" dealers to not charge markups, but it is out of their control. Many of us have talked about a group buy from an honest dealer and our willingness to travel to acquire an IG at list. I've had some bad experiences with local dealerships and their "market adjustment" BS and refuse to give them anything. I'd rather spend $5,000 to fly to Timbuktu to buy this truck for list, than give that $5,000 to the greedy dealer down the road.

Check this attachment out.

EDIT - Some states would allow direct sales under certain guidelines, but since IA wouldn't be able to do this everywhere, I'm guessing they decided to forgo direct sales all together.

 

[klarie]

@Krabby is it possible to do a "grey" (we call it grey if it means circumvent the standard channel) import to US means purchasing the vehicle -to US and get it registered?

 

[Sulley]

Hi Sulley - welcome to the board. This topic has come up in a few different threads, but thank you for posting those screenshots. I'm not sure where you're located, but in New Jersey, it is illegal for car companies to sell direct to customers, and unfortunately, this is the case in a good number of states. The dealer lobbyist attack is awfully strong.

That said, we hope that Ineos can "influence" dealers to not charge markups, but it is out of their control. Many of us have talked about a group buy from an honest dealer and our willingness to travel to acquire an IG at list. I've had some bad experiences with local dealerships and their "market adjustment" BS and refuse to give them anything. I'd rather spend $5,000 to fly to Timbuktu to buy this truck for list, than give that $5,000 to the greedy dealer down the road.

Tesla won that fight in both NJ and GA: https://www.pcmag.com/news/tesla-scores-direct-sales-wins-in-nj-georgia

However, you're correct in stating that it's not "easy". There is enough money in Sir Jim's pocket, however, to build this business the right way in the US, and that is not with a hundred year-old model that just hurts people. Even were he to go with the franchise model, as you've said there is contractual pressure that can be applied here to prevent markups. There are preferred dealership models that can be used to provide more allocation to honest dealers. There are a lot of things that can be done, however based at least on my conversation with the INEOS rep, it doesn't sound like there are any plans to implement anything. I was more discouraged by their expectation that they didn't expect much markup. Clearly they haven't been paying attention. I expect in a year's time, they'll be scrambling to figure out why all of their dealers are acting so greedy and trashing their brand.

If something changes, and INEOS execs address this publicly before the vehicles go into production, I'd love to order one. But I've grown weary of playing the sleaze-bag dealer game in the US, and it's just not worth it for a car.

 

[Krabby]

The NJ situation changed, allowing only Tesla (and limiting them to four stores), and then closing that option off for good.

And, if IA really doesn't think markups will happen, they're seriously mistaken!

 

[BD1]

According this Q&A with Jeff Clark, US leader, there will not be dealer markups:

Answering Your Questions

ineosgrenadier.com

 

[Krabby]

@Krabby is it possible to do a "grey" (we call it grey if it means circumvent the standard channel) import to US means purchasing the vehicle -to US and get it registered?

I think that would open a can of worms not worth dealing with. If it's like buying a grey market camera, it'd be a nightmare with everything - including warranty claims.

 

[Sulley]

According this Q&A with Jeff Clark, US leader, there will not be dealer markups:

Answering Your Questions

ineosgrenadier.com

I watched this section of the video, but he didn't really provide any details about whether this had teeth or not. It sounds quite conflicted with their customer service messaging. I would welcome more information on this if INEOS wants to provide it.

 

[BD1]

For anyone interested the question about dealer markup is at the 7min mark.

It seems very clear that the condition of the dealer taking the order is it at MSRP. It would not be the first time customer service reps are not fully informed. I am sure some dealers will try to play games. I bought a Bronco with a dealer who honored MSRP. For the most part, dealers honored the MRSP price of the broncos for original orders. For Broncos, where the big mark ups happened is when a customer cancelled the order and then the dealer could mark up the Bronco sitting on the lot. This will likely happen with the IG. And I am sure some dealers will play games if they can.

In another post from the US test drives, they are saying they are building a 'new' dealer network and not using BMW dealers, etc. If that is the case then maybe they will have more control.....as much as the US franchise laws allow.

If Jeff Clark is at my drive (he has been at some), I plan to ask him personally about this.

 

[DCPU]

I watched this section of the video, but he didn't really provide any details about whether this had teeth or not. It sounds quite conflicted with their customer service messaging.

So from your headline you've decided to go with an anonymous person from customer service over the top man in the US - Greg Clark?

 

[Sulley]

FWIW I emailed Greg Clark at INEOS about this, and was really impressed that he replied. In short, the condition of MSRP is in good faith. There is no guarantee the dealer will honor this. I asked what the recourse is (can dealers be punished, can customers move their order), and am waiting to hear back. I do appreciate him taking the time to reply, even if the answer isn’t what I’d hoped.

 

[DaveB]

Hello all,

I have been very excited about the Grenadier, and had been planning on making a reservation to place an order. It was very disappointing to find out that INEOS will be using the same franchise dealer model in the US that many dinosaurs like Ford, GM and Jeep are using, rather than a consumer-direct model like Tesla. I verified this morning with an agent that, while you're placing a reservation with INEOS, you will in fact have to purchase the vehicle through a dealer, and that INEOS will not be doing anything contractually to prevent dealers from marking up your order. Attached the conversation below. It is very disappointing to see a brand new company using a hundred-year-old business model that has really injured consumers over the past few years. Older companies like Ford are stuck with it, but there is no reason a new company has to take such a terrible approach. I'm posting this here so that potential buyers can go into this fully understanding that they may wait a year or more for their vehicle only then to be hit with tens of thousands in surprise markups from the dealer - as has happened with Ford, Jeep, and GM to an obscene degree over the past few years. I had hoped the founders of INEOS would be thoughtful enough to do something innovative in their business model. A consumer-direct business model alone would have taken a huge chunk of market share away from Bronco and Jeep sales - customers are completely sick of the drama they've had to go through with those manufacturers. Seeing how awful the dealer model has treated people on the Ford side personally, going to have to walk away here.

They want to sell direct but your laws won't allow them.
Plus as we discovered early on here some of the US customers want the dealer model.

 

[Sulley]

They want to sell direct but your laws won't allow them.
Plus as we discovered early on here some of the US customers want the dealer model

Some states don't, you're right. I do think many people - maybe a majority - would cross state lines to buy direct If given the option. But that’s kind of a moot issue now. They’re not going to adopt direct sales.

Buying a car in the US is the most uniquely awful sales experience you can have. I'd rather buy a house and move than buy a car here.

 

[CB]

I will not pay a dime above MSRP. Never have and never will. It isn't that special/unique!

 

[DCPU]

FWIW I emailed Greg Clark at INEOS about this, and was really impressed that he replied. In short, the condition of MSRP is in good faith. There is no guarantee the dealer will honor this. I asked what the recourse is (can dealers be punished, can customers move their order), and am waiting to hear back. I do appreciate him taking the time to reply, even if the answer isn’t what I’d hoped.

So that makes your headline even more wrong.

What guarantee would you like from a dealer?

What recourse would you like Ineos to have?

Under the existing law, if the dealer was behaving in a legal manner in marking up prices then it would seem you want Ineos to act in an unlawful manner and punish them?

Seems Ineos are more than aware of the topic, and have answered as diplomatically as they can, as to be more overt would perhaps be counter-productive and used against them in any future litigation.

I know feck all about US law, but do you have a way Ineos can give you what you want whilst navigating the law of vertical restraints, and their legality under federal and most state antitrust laws?

 

[Sulley]

So that makes your headline even more wrong.

What guarantee would you like from a dealer?

What recourse would you like Ineos to have?

Under the existing law, if the dealer was behaving in a legal manner in marking up prices then it would seem you want Ineos to act in an unlawful manner and punish them?

Seems Ineos are more than aware of the topic, and have answered as diplomatically as they can, as to be more overt would perhaps be counter-productive and used against them in any future litigation.

I know feck all about US law, but do you have a way Ineos can give you what you want whilst navigating the law of vertical restraints, and their legality under federal and most state antitrust laws?

I can give you an example from Ford, who has started cutting back allocations from dealers that are price gouging.
INEOS could also allow customers to move their orders, if a dealer attempts to mark up their purchase.
They could also have rules around customer-named orders and dealer-orders, and impose tighter control over named orders.
They could have a "preferred dealer" certification for dealers who commit to higher standards.

There's a lot they could do that would satisfy me. These are just a few examples. Throwing your hands up and saying, "we can't do anything" doesn't interest me. I'm interested to hear if and when they reply. I'm guessing they won't because they probably haven't developed policy about any of this yet. Until they do, I don't need another headache with dealers.

I'm not sure how I was wrong. The email said what the customer service rep said was technically right. Good faith is great wishful thinking. I am not convinced the executives at INEOS know just how disgustingly greedy and dishonest US dealers are.