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Ford, GM Warn Dealers on Pricing


menasco

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I was pleased to read this today, ran across this at dealerships in Grapevine Texas and Fayetteville Arkansas when shopping, 10k over MSRP.

 

If a lumber yard did this during a hurricane they would be in trouble for price gouging.

 


Ford Motor Co. and General Motors Co. are clamping down on dealerships that are trying to charge more than the sticker price, a tactic that has proliferated amid the car Ford Chief Executive Jim Farley said Thursday that dealers who engage in this practice will face consequences, including losing supplies of future models. 


WSJ article

 

 

WSJ - Printing Ford, GM Warn Dealers on Pricing.pdf

Edited by menasco
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It would be nice if this ends up having some teeth but something tells me it's more of a public relations move.  My comment applies to all brands as from what I've seen some dealerships (regardless of brand/make) will price gouge when given the opportunity.  I've seen 10K, 20K, and higher mark ups for "market adjustment" on some hard to get vehicles at local dealerships.   A few had sold signs on them so as long as people will pay and real repercussions don't occur it will continue.  

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1 hour ago, bshort said:

Sounds like more bark than bite.  Ford vehicles are moving out the door and that the most important thing for Ford.  It's not as if the market adjustments are hurting sales.....

Right. It isn't like when the foreign oil companies hold back production that drives up prices. I don't feel sorry for dealerships. They make most of their money in service, anyway. Anyone paying over MSRP is crazy, IMO. 

Edited by Black Label
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1 hour ago, bshort said:

Sounds like more bark than bite.  Ford vehicles are moving out the door and that the most important thing for Ford.  It's not as if the market adjustments are hurting sales.....


They’d be moving the same number and making the same profit without the markups and their customers would be a lot happier.  The real problem is the special orders being marked up as a surprise.  That is pissing off customers who may never return to Ford.

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I can understand dealerships needing to make a profit.  All the empty lots.  Nothing to sell means no profits from sales.  All of that said though, I think it is generally wrong to charge more for products during hard times.  I know morality doesn't really enter into the business bottom line but it should.  It just looks bad to have an MSRP right on the window and charge thousands more.

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34 minutes ago, akirby said:

The real problem is the special orders being marked up as a surprise.  That is pissing off customers who may never return to Ford.

 

Yes sir akirby, this is the main issue, not necessarily dealer markups in general for new vehicle sales. Both Ford and GM are emphasizing retail sold orders, which are good for all involved but only if dealers don't surprise those customers with markups after orders have been placed. 

Edited by rperez817
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37 minutes ago, Superduty 2021 said:

that is exactly what happening Akirby peaple are moving to competition or will never return to those dealer asking more than MRRP


Not if they’re buying off the lot because all dealers are charging markups to some degree.  It’s not just Ford.

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47 minutes ago, Superduty 2021 said:

that is exactly what happening Akirby peaple are moving to competition or will never return to those dealer asking more than MRRP

 

Yes sir Superduty 2021, some of the quotes in the WSJ article menasco shared suggest that the behavior of some dealers (especially marking up retail sold order vehicle prices after the order is placed) is pushing some customers to car companies with a direct to consumer sales model. As Tesla, Rivian, Lucid and others with that sales model continue to grow exponentially, the situation with certain dealerships has the potential to give car dealerships in general a black eye in terms of reputation among consumers, making it even more difficult for incumbent automakers and their franchised dealers in the U.S. to compete in an automotive industry future defined by 100% electric vehicles.

 

Quote

Traditional car companies face growing competition in the electric-vehicle space from rivals—such as Tesla Inc., Rivian Automotive Inc. and Lucid Group Inc.—that sell directly to consumers and don’t have dealerships

 

Quote

[Car buyer Jon Harding] said he also owns a Tesla Model 3 and the frustration of haggling with a few dozen salespeople over several months left him thinking he should buy another Tesla, even though he was looking for a more affordable vehicle

 

Quote

“It’s a bad thing for the reputation of car dealers,” said Earl Stewart, a Toyota dealer in Florida. “People have long memories. I think this is going to hurt the auto-dealer brand"

 

Edited by rperez817
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Maybe Ford, GM and Toyota should just do what Tesla did and raise MSRP by $9k.  People get hung up on the semantics of paying MSRP vs invoice vs rebates vs ADMs as opposed to just looking at the actual price.

 

Some used to bitch about not paying MSRP but they’d be perfectly fine if you raised MSRP by $5K and added a $3k rebate at invoice.  They’d be paying more but think they’re getting a bargain.  Like grocery stores that can’t sell tuna for $1 but when they make it 3 for $5 it flies off the shelves.  It’s all perception.

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18 minutes ago, akirby said:

Maybe Ford, GM and Toyota should just do what Tesla did and raise MSRP by $9k.  People get hung up on the semantics of paying MSRP vs invoice vs rebates vs ADMs as opposed to just looking at the actual price.

 

Some used to bitch about not paying MSRP but they’d be perfectly fine if you raised MSRP by $5K and added a $3k rebate at invoice.  They’d be paying more but think they’re getting a bargain.  Like grocery stores that can’t sell tuna for $1 but when they make it 3 for $5 it flies off the shelves.  It’s all perception.

I had someone on a FB group tell me invoice price is fake. Not sure what he meant but guessing invoice isn't actually what a dealer pays for a vehicle is what he was getting at. I have bought my last 3 vehicles at "invoice", so I feel I got good deals. 

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39 minutes ago, akirby said:

Maybe Ford, GM and Toyota should just do what Tesla did and raise MSRP by $9k.

 

Ford, GM, and Toyota make upward pricing adjustments all the time, and have done so for decades. I think retail sold orders from those automakers have some kind of price protection policy though, in which orders confirmed prior to a price increase get the lower price, even though the vehicles may be delivered after the higher price is in effect. 

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21 minutes ago, rperez817 said:

 

Ford, GM, and Toyota make upward pricing adjustments all the time, and have done so for decades. I think retail sold orders from those automakers have some kind of price protection policy though, in which orders confirmed prior to a price increase get the lower price, even though the vehicles may be delivered after the higher price is in effect. 


Retail orders are price protected by Ford to the dealer but that doesn’t stop dealers from raising their price.

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First dealer I went to to order my 2022 SD, where my family had bought several vehicles previously, justified their 10k markup by saying that since there weren't as many vehicles to sale they still had to make the same money. Was a way to make themselves feel better about it I guess. Then he told me even on a special order it was 7k over MSRP. I laughed, told him he not only lost the profit off of and MSRP special order sale but also the profit off an '18 SD trade in and future service. Drove 30 miles the other direction and ordered my truck without any ADM. They were amused at the story.

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45 minutes ago, Black Label said:

I had someone on a FB group tell me invoice price is fake. Not sure what he meant but guessing invoice isn't actually what a dealer pays for a vehicle is what he was getting at. I have bought my last 3 vehicles at "invoice", so I feel I got good deals. 


What they mean is there is holdback which the dealer gets from Ford as well as other after sale incentives.  Holdback used to ne 3% but might be 2% now.  That’s not a lot of money - about $1000 on most vehicles and that has to cover sales commission and everything else on an invoice sale.

 

But the invoice is not “fake” - it’s real but it doesn’t represent the final dealer cost.

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13 minutes ago, akirby said:


Retail orders are price protected by Ford to the dealer but that doesn’t stop dealers from raising their price.

 

Thank you akirby, that's what I thought. It confirms what you mentioned earlier about the surprise that some customers have encountered with marked up vehicle pricing on retail sold orders after the order went through. That's bad behavior by dealers, not manufacturers.

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13 minutes ago, rperez817 said:

 

Yes sir Black Label, that is correct. Why Invoice Price Is Not the Dealer's True Cost (realcartips.com) 

Yes, I think I had read something about that in years' past. Since I can't, as far as I know, get info on what dealers actually pay, when I negotiate based on "invoice" that I can find, I still feel I have gotten a good deal. Maybe not. 

 

Incidentally, Frontier, who I fly for, announced it is buying Spirit. Since Spirit has a DFW pilot base, it looks like my move focus has shifted from Atlanta back down to Fort Worth. Very excited about that. I like Hooks Lincoln in FW. 

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16 minutes ago, akirby said:


What they mean is there is holdback which the dealer gets from Ford as well as other after sale incentives.  Holdback used to ne 3% but might be 2% now.  That’s not a lot of money - about $1000 on most vehicles and that has to cover sales commission and everything else on an invoice sale.

 

But the invoice is not “fake” - it’s real but it doesn’t represent the final dealer cost.

Lincoln dealers does not get holdback, correct?

Edited by Black Label
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13 minutes ago, Black Label said:

Incidentally, Frontier, who I fly for, announced it is buying Spirit. Since Spirit has a DFW pilot base, it looks like my move focus has shifted from Atlanta back down to Fort Worth. Very excited about that. I like Hooks Lincoln in FW. 

 

That's great to hear Black Label! I wish you a warm welcome back to the DFW Metroplex when the time comes, and hope your experience with Hooks Lincoln and other car dealerships here is a positive one. 

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