Ford and GM Threaten to Stop Selling to Dealers

[Ben]

Apparently Ford and GM are upset with dealers selling vehicles at well over MSRP and are threatening to hold back inventory to dealers.

I guess I'm of two minds on it. On the one hand, it's capitalism and getting what the market will bear, whether I like it or not. On the other hand (I don't know the legalities of it) the manufacturers appear to have some say regarding asking prices for their vehicles.

One of the interesting parts was manufacturers working to bypass dealers completely, like Tesla and others do. Apparently there are actually laws preventing them from doing so. Kind of strange those laws are still in effect given that Tesla et al are "big boys" now and doing direct sales. I would expect the manufacturer lawyers will be working to change those laws.


You may hit a paywall depending on your browser:

https://www.washingtonpost.com/business/2022/02/12/ford-gm-dealer-markups/

[MechAg94]

IMO, if you are just going to order a vehicle that takes weeks at arrive, what value is the dealer adding that justifies the mark up?

On the other hand, Ford and GM might just be upset that they are still selling wholesale to the dealers and don't get some of that mark up themselves. 

[Boomhauer]

Apparently Ford and GM are upset with dealers selling vehicles at well over MSRP and are threatening to hold back inventory to dealers.

I guess I'm of two minds on it. On the one hand, it's capitalism and getting what the market will bear, whether I like it or not. On the other hand (I don't know the legalities of it) the manufacturers appear to have some say regarding asking prices for their vehicles.

One of the interesting parts was manufacturers working to bypass dealers completely, like Tesla and others do. Apparently there are actually laws preventing them from doing so. Kind of strange those laws are still in effect given that Tesla et al are "big boys" now and doing direct sales. I would expect the manufacturer lawyers will be working to change those laws.


You may hit a paywall depending on your browser:

https://www.washingtonpost.com/business/2022/02/12/ford-gm-dealer-markups/

I hit the paywall but it does not surprise me.

Manufacturers have a lot of say in how a dealer operates, even down to how the dealership building looks. But the dealership has a major stake because they pay the manufacturer to be able to sell their stuff and territory rights. If the manufacturer tries to do an end run around the entity that paid them so much, invested in the building, service tools, tech training, and service commitments that’s going to be a major contractual issue.

Ford dealerships are trying to sell Broncos for $40-50k over MSRP by adding a “dealership service fee”. I imagine that is generating a lot of complaints to Ford and Ford’s position is probably that this is damaging to the brand name.

Our local dealer is falsely advertising Broncos as available inventory and then when you go to look at it they say order only. That behavior and dishonesty will ensure I never buy a vehicle from them.

[Pb]

High prices for products in short supply are typical for the free market, and reasonably so... but...

The shortage isn't going to last forever.  It may be smart not to get future potential customers mad at you by increasing prices a lot even though you can... because the situation is temporary.

Recall the hate cheaper than dirt always gets?

[K Frame]

Neighbor ran into that a few weeks ago with Honda and Toyota dealers, who wanted as much as $5,000 over MSRP.

He went down the street to the Subaru dealership. 6 to 8 weeks to get the car he wants and no markup.

[BobR]

Between 1 and 2 year old Super Duties selling for more than when new and the dealers marking up what is on the lot i was lucky to find a place in Iowa that would order mine for 2% under invoice. Dealers are loving it right now when people walk away from their Super Duty orders because they can mark up at least 5K-10K over MSRP and often do more. Quite a few people are trading in used Super Duty trucks for what they paid 1-3 years ago and with 40K or more on them. Crazy times.

Here is a fancy F250 gasser with a market adjustment, over 100K in total. Some serious dope smoking going on there.

https://www.kunesfordantioch.com/new-Antioch+-2022-Ford-F+250SD-Tuscany+FTX+Edition-1FT7W2BN5NEC48515

bob

[HankB]

. . . Ford dealerships are trying to sell Broncos for $40-50k over MSRP by adding a “dealership service fee”. 

Isn't that pretty close to doubling MSRP? I can sort of understand that for cars like the Ford GT, but for what is presumed to be a mainstream SUV?   

Reminds me when we had a gas crunch back in the '70s, and some dealers were adding ADP charges to the MSRP of econoboxes to the tune of a couple of hundred bucks. (ADP = Additional Dealer Profit.)

And some people paid $25k for the first PT Cruisers to appear in dealerships - about a $10k markup over MSRP. They were upset a year or three later when they went to sell it and the used car price was based on a three year old $15k new car, not a three year old $25k new car. 

There's a sucker born every minute.

[K Frame]

"And some people paid $25k for the first PT Cruisers to appear in dealerships - about a $10k markup over MSRP. They were upset a year or three later when they went to sell it and the used car price was based on a three year old $15k new car, not a three year old $25k new car.  "

Same when the Mazda Miata came out in 1989-1990. Competition was insane for them and dealers were getting thousands over MSRP.

[French G.]

Free market but also free for the manufacturers to protect their service mark. For example we are a decade past Obama buying gm and the still remember. If I were the target market I might be permanently soured by a dealer trying to rip me off.