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Tuesday, August 9th, 2022 8:50 am EDT
Buying cars in 2022 can be a huge headache. Not only are some cars hard to find at all with dealers selling out of popular models, but there’s also the issue of dealer markup. This is when a dealer sells a car for more than the MSRP, or Manufacturer’s Suggested Retail Price. This usually comes in the form of a “market adjustment,” which can be anywhere from a few thousand dollars to as much as doubling the price of the vehicle in some more extreme cases.
This has been a controversial practice for years, with some dealers claiming that it’s necessary to make up for losses on other sales (or, today, to make up for a lack of volume due to chip shortages), and customers feeling like they’re being taken advantage of (because they actually are being taken advantage of).
Another shady thing dealers are doing is selling mandatory “protection packages” for the car that provide little or no protection for the car’s accessories, seating, or glass. They’ll either refuse to sell the vehicle without the “protection” or they’ll tell you it’s “already installed,” which is a mean joke on people who don’t know much about cars.
When prices for new cars with markup and “protection packages” are too much, buyers can usually look to the used market for relief, but in 2022, even that’s impossible. Because new cars aren’t readily available to buy off the lot and drive away today, demand for used cars is way up, often driving the price of a used car above that of a new one of the same make and model.
So, how can buyers fight back against dealer markup?
There are a few different ways. Firstly, customers can do their research ahead of time and know the MSRP of the car they’re interested in. This way, they can be sure that they’re not being taken advantage of when it comes to pricing. Secondly, buyers can shop around at different dealerships to see if they can find a better deal. This is often difficult, as many dealerships are selling the same cars for the same high prices, but it’s worth checking out multiple options before settling on a purchase.
Finally, buyers can look into aftermarket options, such as buying a car directly from a manufacturer or through an online car buying service. These options may not be as convenient as going to a local dealership, but they often offer better prices and more selection.
But, dealers know that car buyers are going to turn to the internet for information, so they’ve figured out how to make that a difficult avenue. If you go to many dealer websites, they don’t disclose the markup, leaving that nasty surprise for when you arrive at the dealer with a pre-approval ready to buy. Or, the website simply says “call for price” instead of listing a price at all, leaving you with no information at all until you’re at the dealer.
How Some Customers Are Fighting Back
Now, there’s a new website that’s trying to help car buyers fight back against dealer markup. The site, simply called Markups.org, lets customers rat out dealers who jack prices far above MSRP.
The site’s About Us page claims it was formed to document markup data on a variety of goods sold by dealers and retailers. The project began as a set of Google Docs pages in mid-2021 to gather data on various Toyota 4Runner and new generation Tundra dealers who were marking up prices in order to take advantage of people who really wanted those vehicles. This evolved into manually gathering markup data on Ford Raptors, Ram TRX trucks, HD pickups, and so on.
Later, a large publication that specializes in Toyota vehicles published links to itss spreadsheets and papers, bringing a lot of interest and traffic. The new Markups.org website has integrated the Google Doc sheets and organized them in groups. They also claim to use web crawlers to gather/scrape numerous open public non-copyrighted user contribution lists to build and automatically add the markup data to their website.
The website has a really simple interface, but don’t let the simplicity fool you into thinking it doesn’t give powerful data for car buyers. To test it out, I decided to search for Chevy Bolt EUVs, a car I’d like to replace my Nissan LEAF with. So far, I’ve been frustrated in any attempt to even find one for sale, let alone get one at a reasonable price (even if I were to order one in).
Not only did it show me who the worst offenders were, charging thousands over MSRP, but it also showed me several dealers who aren’t marking up their Bolts at all. I noticed that several AutoNation dealers had very modest markups of only a few hundred bucks, which is a lot more palatable than a $5,000+ markup some other dealers are trying to get out of people.
I searched for another vehicle I’d really like to have, assuming I could find one at an affordable price, and it gave me a number of both bad and good results for that, too. Sadly, I’m probably not going to be able to afford a Jeep Wrangler 4xe anytime soon, but I’d at least know where to go to order one in and not get screwed over.
Why Not Just Buy A Tesla?
Something I keep seeing on social media when the topic of dealers and markups comes up is the idea that buyers should just consider a Tesla. While Tesla doesn’t engage in MSRP markups like “market adjustments” and “protection plans” the way dealers do, as the manufacturer selling directly to customers they can simply raise the manufacturer’s price (which isn’t a suggestion).
At current prices, I simply cannot afford a Tesla, and that’s true for many people in the market for a car. For a time, they offered a $35,000 Model 3, but that was a bare-bones vehicle and it’s no longer available, except perhaps as a used car, but they’re going for more than the new ones now. So, telling frustrated buyers just to buy a Tesla sounds a whole lot like Marie Antoinette’s “let them eat cake.”
So, tools like Markups.org are a valuable resource for the rest of us who can’t afford a Tesla, even if we wanted one.
Featured image: Harry Wormwood from the 1996 movie Matilda. (Fair Use, Commentary)
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