Dealer Markups Are Hurting Brand and Dealership Loyalty

[Yo_Mama_Been_Loggin]

Brand and dealership loyalty is continuing its steady decline, and it’s all because of high vehicle prices. Research done by Growth from Knowledge AutoMobility confirms this trend. It turns out asking people to pay above retail price for a Toyota RAV4 could hurt repeat customers. Who knew?

Automotive News reports that in May and June, 80 percent of car buyers paid at or above sticker for a new vehicle. 31 percent of those buyers said they would tell others not to go to the dealership they used. 27 percent of the buyers said they would not return to the dealership for service.

Julie Kenar, senior vice president at GfK AutoMobility, gave a bit of a warning to dealers who are charging customers well over MSRP. While it might be more than beneficial in the short term – it could damage their reputation and affect sales for the long term.

“I think what dealerships need to do is realize that they’re forgoing a long-term relationship with customers when they charge over the MSRP. Consumers can tell which dealers are in it for the long term versus the short term,” Kenar said. “I really think that it’s incumbent upon the dealers to take that long-term view as opposed to just taking their money and likely never seeing them again.”

https://www.msn.com/en-us/autos/news/dealer-markups-are-hurting-brand-and-dealership-loyalty/ar-AA10rGNm

[keithbvadu2]

1. Higher profits. Less inventory. Advertising cut way down.

Higher profits. Less inventory. Advertising cut way down.

The Sunday paper used to be loaded with car ads.

[JohnSJ]

2. The problem is consumers willing to pay 5, 10K or more above MSRP. If consumers refused to pay over

MSRP, what do you think dealers would do?

[leftieNanner]

3. Subarus are very popular cars where I live

When I was shopping for new wheels in 2014, I went to the dealer. Back THEN, they wanted $3,000 over MSRP. I told them they were arrogant and greedy and walked out.

Apparently people were willing to pay, but not me. And apropos to this article, I would never consider buying a car from them at all.

So I bought a used MBZ SUV that has been great. The customer service at the dealership is exceptional. That does create brand (and dealership) loyalty.

I think this is very shortsighted.

[Just A Box Of Rain]

6. We've been car shopping here in LA.

The only brand we've looked at that is not charging a "Market Adjustment" fee is Subaru.

For example, the Hondas we considered are $5-6K over and same with Kias (I believe it is $10K on the Telluride).

[MineralMan]

4. Putting short-term profits above developing relationships is the American way.

We don't do long-term thinking very well.

In July of 2021, I bought a new '21 Chevy Trax. We needed a small AWD SUV, and it was the cheapest one available. There were none available on any of the Chevy dealer's lots. After searching daily, I found one in transit, heading for a local Chevy dealer. They had listed it in their inventory as "in transit" and had it priced at MSRP. Already, new cars were getting scarce, and there was no sign that the 2022 models would come in on schedule.

So, I called that dealer and said I wanted that particular car. I said I'll pay the price you list on your website, but no more than that. They wanted a $500 payment to put a hold on the car, so I gave them my credit card information. Three days later, the car showed up and they called me. I said, "I'll be there tomorrow to give you a check. It's sold."

If you need something like a new car these days, you'll have to jump on it, even before it's on the lot. If it's a popular model, which the Chevy Trax most definitely was not, you should expect a hefty dealer mark-up. Normal car-buying rules just won't work right now. If you can, hang onto the one you have for a while longer. I couldn't do that, unfortunately, so I had Hobson's choice.

[LonePirate]

5. I bought a new car last month and paid MSRP for it. Same brand as my previous car.

Dealer markups are simply outrageous, especially if you are buying a truck. Some dealers are adding anywhere from $30K-$50K if not more on trucks that normally sell for $70K and up. It is absurd. The chip shortage and consumers flush with unspent cash from the pandemic have sent car demand and prices through the roof. Dealerships are taking advantage with these hefty markups that only reduced consumer demand or excess manufacturer supply will resolve.

[gibraltar72]

7. I predicted dealerships would change after pandemic.

I had no idea how much. Ford got sick of fielding complaints from customers that the cars they ordered had prices jacked up on delivery or were sold to others at a higher price. I noticed local Ford dealer had loaded up on luxury used cars, and even though Ford was producing cars, few sat on dealers lots ready to buy. Local dealer had really pushed ordering a car just to your liking. Ford made it public that dealers will have to have 75% of ordered cars assigned to someone as a sold unit. Thus dealers can't load up on cars and charge above sticker or throw on costly dealer packages. This percentage will go to 80% next year. Any dealer who has three orders that can't be linked to a customer will lose franchise. I would bet other manufacturers will follow suit. Some dealers had been making an extra 50 grand on Fords new lightning.

[Yo_Mama_Been_Loggin]

9. Saw that about the F-150 Lightning

It's not that affordable of a vehicle to begin with.

Impressive technology but out of reach for the average Joe.

[Phoenix61]

8. People are much more mobile than they used to be.

When you have a stationary client base repeat business is much more important than when your client base is constantly changing. It’s why service in places that serve mainly tourists is so hit or miss.

[Midnight Writer]

10. I've given up on my dealership for service and maintenance.

They charge way more than some local shops, and I am not confident that they are not doing a little bit of "upselling" by "finding" problems that don't need to be fixed.

I'm not a car savvy person, and trust is the number one factor when I need repairs. It's a shame the dealership doesn't value that relationship.

[mitch96]

11. The local dealer I bought my car from reneged on the "OTD" price. Kept on saying he

"misquoted" the registration and doc fees. Also tried to charge me a fee for my trade in..
I had no trade in.. I figure he burned me for an extra couple of hundred bucks.. I would have walked out but I had already sold my used car to Carvana and got a killer deal..
The only way I can respond to this bullshit is to
#1 never used that dealer again and
#2 never use him for service... Vote with your wallet.
I know some people who do a fly and drive to get a better deal.
Would you spend $100 for a flight and some drive time to save $500?
m