With production of new vehicles running slow due to parts shortages, particularly semiconductors, dealer lots have been light on popular models. Some dealers have taken advantage of this to hike up prices, angering some buyers while collecting a tidy profit from others.
When demand is high and supply is low, the free market takes over and prices often start to rise. However, there have been some ridiculous stories of $150,000 dealer markups on $150,000 vehicles. TheDetroitBureau.com spoke with several buyers who paid anything from just a couple thousand over sticker to more than $10,000.
Others shopped their way to the lowest dealer markup possible. However, the Quantrell Auto Group recently commission a study to find out just what people are willing to pay over the sticker price for a vehicle they really want.
They’re willing to pay an average of $19,000 over and above the manufacturer’s retail suggested price. The average price of a new vehicle last month was just over $48,000.
What you’ll pay depends …
Not only will some people dig deep to get that new Ford Bronco or Kia Telluride, but also the lack of vehicles on dealer lots changes the intentions of some. The survey showed that 35% bought a new vehicle despite having no plans to do when they began looking around.
The remaining 65% of the more than 3,300 respondents said they would be willing to spend 39% above MSRP — about $19,000. Mind you, that varies by state. Folks in Idaho must be sitting on piles of cash, as they said they’d pay as much as 71% over the sticker price to get their vehicle.
Conversely, those in North Dakota, South Dakota, Rhode Island and West Virginia are keeping that money close, saying they’d only pay an average of 11% over sticker price. Still others are even more strident in their feelings.
“My daddy used to say he wouldn’t pay 5 cents to see an ant swallow a bale of cotton,” Joe S. Rainey Jr. of Savannah, Georgia, told TheDetroitBureau.com, which is to say: they’ll get nothing — and like it.
Several automakers have attempted to blunt the actions of dealers slapping huge upcharges on vehicles. Ford CEO Jim Farley threatened to cut off supply to popular vehicles to dealers who gouge customers. General Motors, Hyundai and Kia also attempted to discourage the practice.
Big bucks now, but paying the price later
The old saying goes that “you need to make hay while the sun shines,” and many dealers would argue putting their thumb on the scale right now is the only time they get the chance to have the odds in their favor. Some claim the customer comes into a showroom with more information than ever, making it a fight to see how low the price of a new vehicle can be.
Despite this, getting big bucks now may have repercussions down the road, according to a separate study from Gfk Automotive.
Many buyers now vow never to return to their dealer, and a large number also say they’ll never again buy from a brand they feel took advantage of them.
As a result of these “concessions and disappointments,” there is a “trend toward near-hostility aimed at dealers, in particular,” the research firm said in an analysis of the study, and it is “gaining momentum at lightning speed.” The study also found “equally strong negative feelings toward car brands themselves.”
