2:34
- ABC News
- January 29, 2022
Buyers paying insane markups on new vehicles
Expect high prices for the foreseeable future.
2:34
Tyson Jominy, vice president of data and analytics at J.D. Power, said 87% of consumers are currently paying above MSRP, which is already at a record high. The average new vehicle price is now $45,283 versus $35,000 in December of 2019, according to J.D. Power. The global chip shortage and supply crunch have led to surging prices, Jominy said.
\"There are some crazy markups and the higher price point you go the crazier they are,\" he told ABC News. \"Automakers have never seen anything like this. But some of them are telling dealers to cool it with markups. It's not in their best interest long term.\"
He added, \"The higher markups are like a tax on rich people.\"
![\"PHOTO:](\"http://a.abcnews.com/images/Business/corvette-ht-ml-220128_1643384906086_hpEmbed_3x2_384.jpg\")
Cracking down
Ford and General Motors are actively trying to stop dealerships from heavily marking up the price of new vehicles.
Steve Carlisle, president of GM North America, addressed customer interest for the upcoming Corvette Z06, Chevrolet Silverado EV, GMC Hummer EV, GMC Sierra EV and Cadillac Lyriq in a letter sent to the automaker's dealer network on Jan. 18, writing in part:
\"Unfortunately, it has come to our attention that in connection with some of these announcements and launches, a small number of Dealers have engaged in practices that do not support a positive sales experience for our customers. This puts our collective interests at risk and generates negative press that reflect poorly on GM’s brands and your dealerships. Specifically, it has come to our attention that some dealerships have attempted to demand money above and beyond the reservation amounts set in GM’s program rules and/or have requested customers to pay sums far in excess of MSRP in order to purchase or lease a vehicle ... GM will be forced to take action if it learns of any unethical sales practices or brokering activities that undermine the integrity that customers expect from the Chevrolet, Buick, GMC, and Cadillac brands.\"
A GM spokesperson confirmed the letter to ABC News, adding, \"We want every customer to have a great experience. The majority of our dealers know this; however, we want everyone on the same page.\"
![\"PHOTO:](\"http://a.abcnews.com/images/Business/silverado-EV-ht-ml-220128_1643384906092_hpEmbed_3x2_384.jpg\")
In a tersely worded memo, Ford instructed dealers not to raise the price of its new F-150 Lightning electric truck nor demand that customers already on the reservation list make additional deposits or payments.
\"It has come to our attention that a limited number of dealerships are interacting with customers in a manner that is negatively impacting customer satisfaction and damaging to the Ford Motor Company brand and Dealer Body reputation,\" the memo stated.
A Ford spokesperson told ABC News in response to the memo: \"The all-new F-150 Lightning represents a leap ahead in innovation for Ford trucks and is critical to the Ford brand and our dealerships as we move into a segment we’ve never competed. We are competing with others who have a direct model and we need to be very mindful of how customers perceive Ford and our dealer network. How our dealers treat customers has major implications not only on an individual dealer but the reputation of Ford and our dealers as a whole. We want to show customers how our Ford dealer network provides a better experience than anyone out there.\"
Automakers displeased with excessive markups could penalize wayward dealers in the future with fewer allocations.
\"Markups can sour the relationship with the customer,\" Caldwell said.
Even the unloved compact car has seen its price skyrocket as consumers frantically snap up SUVs. Drivers who may have shunned sedans before are willing to buy any vehicle at this point, Jominy pointed out.
\"We're seeing very limited inventories and high prices in this market for the foreseeable future,\" he said.
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