General Motors and Ford Motor Co. have warned dealers to not charge excessive fees above sticker, but new data shows the trend is across the industry — in some cases topping GM and Ford brand prices.
In January, buyers paid above the manufacturer’s suggested retail price in 82.2% of new-vehicle purchases compared with 2.8% in January 2021, Edmunds.com, a car shopping analyst and data company, said in a report it released Tuesday.
You are watching: Most new car buyers are paying over sticker price
The high prices are due, in large part, to the industry’s unusually low new-car inventory amid a global shortage of semiconductor chips, which are used in many car parts. Adding to that is the high consumer demand for new vehicles especially as 3.9 million vehicles are due to come off lease this year.
More:Everything you need to know about the chip shortage that’s plaguing automakers
“The fact that an overwhelming majority of consumers are paying above sticker price would have been unthinkable even just a year ago,” said Jessica Caldwell, Edmunds’ executive director of insights. “This is, in part, driven by affluent consumers being willing to shell out more cash to get the vehicles that they want, but there’s also a vast population of individuals who are being forced to do so simply because they need transportation.”
[A digital subscription to the Free Press makes work like this possible. Sign up here.]
On average, a car buyer paid $728 above MSRP in January.
Last year at this time, a car buyer would have gotten a new car at an average discount of $2,152. In January 2020, the average transaction price was $2,648 below sticker.
Both Ford and GM have tried to mitigate the practice of tacking on excessive surcharges for popular and hard-to-get new vehicles.
Said Deep, a Ford spokesman, told the Free Press on Tuesday that the majority of Ford’s dealers are not charging above MSRP.
See more : Americans Spending Big Money for New Cars
“Ford dealers are independent franchises and ultimately set the final price with a customer,” Deep said. “Right now, in a supply constrained environment, dealers are more likely to price around MSRP, unlike in the past when inventory was more available.”
More:Ford F-150 Lightning dealer backs down from $10,000 markup
After Ford’s move, GM issued a letter on Jan. 18 to its dealer body. In it, GM President of North America Steve Carlisle warned dealers that GM has the right to withhold allocation of the future Corvette Z06 and the new EVs GM is bringing to market or take “other recourse” against dealers who are charging money above the reservation amounts in light of the current shortfall of new vehicles.
GM had no update Tuesday on its continued efforts to prevent some dealers from charging excessive markups for certain new vehicles, said GM spokesman Sabin Blake.
More:As GM drops Chevy Spark, here are the most affordable vehicles from Detroit 3
“All eyes have been on Ford and GM since they both publicly called for their dealers to stop charging over MSRP for vehicles,” Caldwell said. “Of all automakers, they might be in the most precarious position since they have very high-profile launches in the near future that appeal to a new type of customer.”
But looking at the data, Caldwell said, there are other automakers who might want to follow GM’s and Ford’s leads.
Stellantis declined to comment on its communications with dealers over pricing.
“While we stay close to our dealer network on consumer-facing issues, we keep these communications with our dealers confidential,” said Diane Morgan, Stellantis spokeswoman.
Here are the brands commanding the biggest markups over MSRP in January, according to Edmunds analysts, who took the difference in new vehicle average transaction prices and compared them with the average MSRP across automakers:
- Cadillac: average markup of $4,048.
- Land Rover: average markup of $2,565.
- Kia: average markup of $2,289.
- Porsche: average market up of $1,721.
- Acura: average markup of $1,701.
- Genesis: average markup of $1,603.
- Honda: average markup of $1,508.
- Hyundai: average markup of $1,498.
- Audi: average markup of $1,325.
While Dodge is further down the list, the markup over sticker is more than that of Mercedes-Benz, Edmunds shows. The average markup for a Dodge was $729 above sticker, topping a Mercedes-Benz markup of $719.
Of GM brands: Chevrolet’s average markup was $625 over sticker, GMC was $677 and Buick was $17.
See more : The most and least reliable car brands for 2024, according to Consumer Reports
Meanwhile, Ford’s average transaction price in January was $49,843, which is about $163 above average MSRP, Edmunds said. Lincoln’s average transaction price came in at $61,692, a $510 discount from the MSRP.
Here are the brands that brought the biggest discounts:
- Alfa Romeo: average discount of $3,421.
- Volvo: average discount of $869.
- Lincoln: average discount of $510.
- Ram: average discount of $465.
- BMW: average discount of $199.
- Mini: average discount of $151.
All automakers have experienced production disruptions since this time last year, with some forced to idle factories for months as they funneled what chip parts they could get to their high-profit and in-demand vehicles such as pickups and big SUVs.
While most auto experts expect to see the chip shortage ease in the latter half of the year, it will still take many months to refill the production pipeline and get new vehicles to dealerships to offer consumers some more selection and pricing leverage.
So Edmunds’ experts advise holding off on a new car purchase if possible, though they realize that might be unrealistic for some people given that prices likely will not come down for quite some time.
“Consumers might be waiting up to a year or longer if they want to hold off until the market resembles anything close to the pre-pandemic normal, but some buyers simply cannot wait,” said Ivan Drury, Edmunds’ senior manager of insights.
Drury said if a car buyer will need a new vehicle soon or has a vehicle coming off lease and its term can’t be extended, do extra research on prices and what’s available. He recommends the following:
- Be flexible and consider alternative vehicle types, brands and colors.
- Expand your search to a wider geographic area for more selection. But before you hop on a plane, make sure to lock down as much of the deal as possible.
- Reevaluate before jumping straight into another lease because lease incentives are becoming increasingly difficult to find, but finance deals are still available.
- Negotiate for add-ons such as warranties, service contracts, protection packages or dealer-installed accessories.
- Leverage the trade in value of your current vehicle.
- If you find a vehicle that meets all your needs, don’t wait to immediately reach out to a dealer.
More:Sticker shock is a real thing for car shoppers right now: Here’s why
More:Shopping for a new car? Prepare for little selection, no negotiation
Free Press staff writers Eric D. Lawrence and Phoebe Wall Howard contributed to this report.
Contact Jamie L. LaReau: 313-222-2149 or [email protected]. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.
Source: https://us.congthucvatly.com
Category: Car
