Posted on 02/09/2022 8:13:36 PM PST by blam
Both Ford and GM are directing their dealers to stop charging so much for autos, according to a new report by the Wall Street Journal. Dealerships have been marking up vehicles over sticker price as a result of a drought of inventory, attributable to supply chain issues and the semiconductor shortage, combined with increased demand.
But Ford Chief Executive Jim Farley said this week that dealers who gouge prices will “face consequences” that may include losing supplies of future models. “We have very good knowledge of who they are,” he said on his company’s earnings call, talking about these dealerships.
Farley noted that around 10% of the roughly 3,000 dealerships in Ford’s U.S. network are charging above the sticker price, the report said. Ford will punish those who don’t stop with “punitive action”, the report said.
GM also called out “a small minority of bad actors” engaging in the practice, and said it could also withhold vehicle shipments as a result.
Most dealerships are franchise dealerships, the Journal notes, “which are independent businesses that purchase cars from the factory”. While they control the final transaction with the customer, the auto companies still control supply and can offer promotional programs.
The practice of overcharging has been rare in the past, and companies have said before that they disapprove of the tactic, claiming it reflects poorly on the brand.
But the practice has become routine over the past year thanks to supply chain lockups and shortages in computer chips.
A spokesman for the National Automobile Dealers Association commented: “This is simply a temporary symptom of supply and demand being entirely out of whack. Dealers and consumers have always been free to agree on the price of the vehicle.”
Jon Harding, a project manager for a utility company in Southern California, told the Journal that while shopping around he got more than 12 quotes that were above sticker price. He said the experience was harrowing and left him considering buying another Tesla, a purchase that comes directly from the company, and not through a dealer.
He concluded: “The dealer represents the manufacturer, it’s the person you deal with. Right now, they’re not representing the brands very well by trying to jack people around.”
Toyota dealers did this routinely when Toyota agreed to export quotas of new cars in the early ‘80s after pressure from Reagan.
We saw $20K mark ups on Escalades and Yukons, this past fall.
We also said....NO THANKS!!
Ford itself has long been overcharging for trucks.
My friend recently wanted to buy a new pick-up. He was told he had to pay $7,000 over sticker price and HAD to finance the purchase for at least 6 months (even though he was a cash buyer).
Such dealers should be disclosed publicly so consumers can boycott them.
Is it gouging if buyers are offering above-sticker prices?
Maybe they should get their act together and actual MAKE enough vehicles to meet demand.
Isn’t that their management’s fault for not ensuring adequate supply channels and sourcing materials and components overseas instead of working with local and regional companies to keep jobs in the US?
Instead they blame dealers who have no inventory so can’t make a decent living selling the piddly little inventory their brands are producing.
Ford itself has long been overcharging for trucks.
Ford website says vehicles should be sold at invoice.
Basic economics. If the dealers sell them at list, many buyers (or straw buyers) will turn around and obtain the markup by selling them to someone else.
Plenty of cars lacking chips.
Well that’s funny. And just where have they been the last 8 months as dealers have been absolutely hosing people? They are just now getting around to saying something?
Pfffft... this is just a flimsy CYA for when the formal inquiries start coming down the pike and they can point to this fig leaf of cover.
“Instead they blame dealers who have no inventory so can’t make a decent living selling the piddly little inventory their brands are producing.”
At Ford dealer last week. Busier selling cars than whin I bought mine in 2019.
Whatever happened to good ol’ economic competition and “supply and demand”?
I think this is a pretty clear anti-trust violation. It’s a form of price fixing.
One of my best buds who is a conservative and OWNS 2 used car dealerships said he left the company dealership because they sell overpriced cars which suck. At a used car dealership, he offers more options and brands for the buyers at lower prices.
What are the dealers supposed to do, hold a lottery to determine who gets to buy a car that is in short supply?
The free market determines car prices. Maybe Ford Chief Executive Jim Farley is a communist? It wouldn’t surprise me.
“Dimmitt Chevrolet in Clearwater, Florida is offering a 2021 Chevy Corvette C8 Stingray Convertible 1LT for $115,910, a markup of $35,000 over the MSRP ($80,910).
Miami Lakes AutoMall in Hialeah, Florida is offering a 2021 Chevy Corvette C8 Stingray Coupe 2LT for $125,896, a markup of $40,546 over MSRP ($85,350), while Jessup Auto Plaza in Cathedral City, California has a 2021 Chevy Corvette C8 Stingray Convertible 3LT on offer for $168,700, $75,000 over MSRP ($93,700).”
https://gmauthority.com/blog/2021/07/dealers-still-marking-up-the-corvette-c8/
Well, when you consider neither one of them are worth anywhere near the sticker price.
Ding, ding, ding.
We have a winner.
Anyone who has any understanding of supply and demand understand the term, “What the market will bear”
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