Dealer markups against the law

[RedStang1]

I find it interesting that many of the people who post on this forum accept as a "fact of life" that dealers ask more than MSRP for a desirable new car (such as the Shelby GT500) and have every right to do so in order to make a profit. This is not the case everywhere. In Ontario (where I live), new car dealers are not allowed, by law, to charge more than MSRP for a car - no matter how desirable or rare it is. On a popular, hard-to-get model, they are within their rights to hold out for MSRP but they cannot charge more. It's just first come, first served. In fact, these desirable cars will often sell for less than MSRP as different dealers start to compete with one another for the sale. For example, a year and a half ago when the '05 Mustangs first came out, there was only one Torch Red red leather fully loaded manual trans GT (which is exactly what I wanted) within 300 miles of where I live. It had just come in to a dealership in Toronto but was available to any Ontario Ford dealer (through internet dealer trade). I had several dealerships competing to sell me this car and was therefore able to get it for $3000 less than MSRP. I am 54 years old and I guess I've led a protected life but it wasn't until I started reading internet automotive forums a couple of years ago that I realized that people in other places actually paid many thousands of dollars more than MSRP for a car they really wanted. My car enthusiast friends and I have collectively purchased many "hot" new cars over the years but none of us have ever paid more than MSRP. Have you ever considered approaching your state or federal politicians to push for laws similar to what we have that would stop car dealerships from tacking these unreasonably high dealer markups onto desirable new models? After all, many things are possible when there is a collective will. By the way, the owners of most new car dealerships in Ontario still seem to do quite well from a profit viewpoint even without these exhorbitant markups.

 

[351CJ]

Unfortunately here in the US dealers can charge whatever they want.

Even worse is car dealers have a large amount of political power. There is about a 0.001% chance that the law would ever be changed. It is very diffcult for the manufacturers to get rid of bad dealers (take away their franchise).

A few years ago Ford started listing certified used cars on their website. The website directed you to a local dealer. But the dealers didn't like it, they thought it was a beginning step in getting rid of them. Some state court (I think TX) declared that it was illegal for Ford to list used cars on the Ford web site and other states threatened to do the same so Ford backed down and dropped the used car listings.

 

[The Fang]

Well as I see it The companies themselves should regulate what the dealers sell em at because thats what MSuggestedRP stands for. I'm not saying a small fee wouldn't be so bad but that is what gives some a bad name.

 

[351CJ]

Well as I see it The companies themselves should regulate what the dealers sell em at because thats what MSuggestedRP stands for. I'm not saying a small fee wouldn't be so bad but that is what gives some a bad name.

The auto companies cannot tell their dealers what to sell their vehicles for. They can suggest a price (MSRP) but it is illegal to make a dealer sell a vehicle for any specific price.

A-Z plan, where Ford specifies a price and the dealer gets a commission for the sale, is voluntary. That is any dealer can refuse to sell a vehicle under A-Z plan.

 

[markham51]

Charging more than MSRP is not a significant problem in the US as it relates to overall volume of vehicles. Only occasionally does this happen and only for short periods of time on specialty vehicles or new introductions. Restricting how much one can charge for a product in an industry that traditionally discounts the hell out of its products simply is just not a significant issue. Market forces will ultimately settle prices and is the cornerstone of our free market economy. Its not a perfect system, but it's the best that is out there...sometimes it works against you but we forget how often it works for us.... Dealers don't have the upper hand very often and I personally don't begrudge them the opportunity that comes up once in a "blue moon" to make a couple of extra bucks here and there. I am sure this may not be a popular opinion but if it is fair to sell a vehicle at a discount (99.9% of the time), why isn't it fair to sell at a premium (.1% of the time)?

 

[SVTdriver]

Charging more than MSRP is not a significant problem in the US as it relates to overall volume of vehicles. Only occasionally does this happen and only for short periods of time on specialty vehicles or new introductions. Restricting how much one can charge for a product in an industry that traditionally discounts the hell out of its products simply is just not a significant issue. Market forces will ultimately settle prices and is the cornerstone of our free market economy. Its not a perfect system, but it's the best that is out there...sometimes it works against you but we forget how often it works for us.... Dealers don't have the upper hand very often and I personally don't begrudge them the opportunity that comes up once in a "blue moon" to make a couple of extra bucks here and there. I am sure this may not be a popular opinion but if it is fair to sell a vehicle at a discount (99.9% of the time), why isn't it fair to sell at a premium (.1% of the time)?

Because in this country people feel they are entitled to it.

 

[DukeOfValencia]

Hey, get over it... this is America... does anyone really think we should start passing laws on what companies can charge for products? Hey, my grocery bill is too high... lets pass a law that limits what grocery stores can charge. Hey, my Armani suit is too expensive... lets pass a law that limits what they can charge for them...
Seriously folks, this is what makes this country so great (not perfect, but great none-the-less). If I invent a gizmo that cost me $1.00 to make, but could increase gas mileage by 200%, should there be a law that limits what I can charge for it? Supply and demand. If you don't want to pay over MSRP you have choices... wait until demand drops, or buy a V6, or even better, go buy a Chevy Aveo... you'll get a deal on that!

 

[steedastang06]

i got MSRP for my 06 GT through the Military Overseas New Car Sales program Not that that has any bearing on those who are A: ) Not in the military and B: ) Are not stationed overseas

 

[BLKGT03]

It really would not mater if it were against the law or not, all the dealer would have to do is sell the car to himself personaly then pay the tax and tag and turn back around and sell it as used and ask what ever they want for it. It would appear that with the shelby there would be allot of money to be made by doing just that.

 

[351CJ]

I am a free market person. Pricing should be determined by supply and demand. The only time price controls should be used are when gouging occurs in due to illegal acts such as conspiricy, price fixing, creation of artificial shortages, etc.

In the case of the GT-500, it is a luxury, not a necessity, so I guess the dealers can have at it and drain all the dollars they can out of the suckers who are willing to pay over MSRP.

Ford could stop all this nonsense by announcing they will build as many GT500s as there are customer orders. But while Ford publicly says the don't want price gouging, privately Ford is using these sorts of limited production vehicles to give dealers the opportunity to price gouge thereby gaining dealer loyalty.

 

[1994Vobra]

Ford could stop all this nonsense by announcing they will build as many GT500s as there are customer orders.

The funny thing is, Ford has announced this several times at several different press announcements and interviews... It has never been a secret that Ford would build to meet demand with the Shelby..

There will be shortages at first of course, but Ford has always said, "There will be a Shelby for everyone that wants one"

 

[Johnman]

I don't like that the first Shelby Mustangs will scarce and the prices bidded way up past the MSRP, but I believe in the free market capitalist system. Ford will make more as more people want them, and the price will come down. I don't want the Canada government-controlled MSRP plan that an earlier post talked about. That goes against basic economic freedom.

 

[StangCollecter]

this is an ugly part of car sales where dealers do not understand that they are hurting the company by only selling to those who will pay way over.

If, for example, the pontiac dealers sold all Soltices at sticker and sold all their alottment in the first few weeks, GM would have upped production. Instead, dealers have upped the price by 5-10,000 dollars. slowwing the sales and only selling what is being made.

I think Manufacturers should use this as an angle to file suites against dealers and stop doing it.

Ford builds the car and makes a few grand profit off it. The dealer is the ass bag you need to buy it from so he makes 10k profit? I don't think so.

I will never pay over sticker even if I ever become loaded enough not to care.

 

[SVTdriver]

this is an ugly part of car sales where dealers do not understand that they are hurting the company by only selling to those who will pay way over.

If, for example, the pontiac dealers sold all Soltices at sticker and sold all their alottment in the first few weeks, GM would have upped production. Instead, dealers have upped the price by 5-10,000 dollars. slowwing the sales and only selling what is being made.

I think Manufacturers should use this as an angle to file suites against dealers and stop doing it.

Ford builds the car and makes a few grand profit off it. The dealer is the ass bag you need to buy it from so he makes 10k profit? I don't think so.

I will never pay over sticker even if I ever become loaded enough not to care.

So you know for sure GM had the production capacity and parts to up production on the Solstice? I believe the Saturn Sky is the same basic chassis. Which would lead me to believe production was split between the 2. And there may not have been anymore room. As for Dealers being the people you have to buy it from. That's the way it always has been. But if you think you can change it. I'm there for you.

 

[StangCollecter]

So you know for sure GM had the production capacity and parts to up production on the Solstice? I believe the Saturn Sky is the same basic chassis. Which would lead me to believe production was split between the 2. And there may not have been anymore room. As for Dealers being the people you have to buy it from. That's the way it always has been. But if you think you can change it. I'm there for you.

I know how it works. They tell the suppliers to increase parts production, then they add shifts on the line (my father worked at a GM plant that was run at full capacity about 20% of the 27 years he was there). One reason they don't like to do this is they have to pay a premium for night shifts, a lot of big number cars are produced 24-7, or close to it, but not the smaller number vehicles. The big problem comes when they overestimate, and overproduce. Sure, there may not have been room to make 100k of them, but the info I got indicated most dealers would have sold out their allocation in the first week if they sold at sticker. They could have increased by 50% to 75% without a drastic change. Look at the 05 Mustang, production estimates were about 1/2 of what they actually made for 05.

Can I change it personally? No. Communicating with the right people is a complicated thing. One thing is you have to know them, then you need to be on their good side, then you have to say what they want to hear. This is one reason why Detroit is in such mess it is in today. They need a whole new breed of leaders and a regime change for things to turn around.

Capitalism is fine and all, but when it affects production numbers by them charging obscene amounts over the actual price (and worth), it is too far.

 

[SVTdriver]

I know how it works. They tell the suppliers to increase parts production, then they add shifts on the line (my father worked at a GM plant that was run at full capacity about 20% of the 27 years he was there). One reason they don't like to do this is they have to pay a premium for night shifts, a lot of big number cars are produced 24-7, or close to it, but not the smaller number vehicles. The big problem comes when they overestimate, and overproduce. Sure, there may not have been room to make 100k of them, but the info I got indicated most dealers would have sold out their allocation in the first week if they sold at sticker. They could have increased by 50% to 75% without a drastic change. Look at the 05 Mustang, production estimates were about 1/2 of what they actually made for 05.

Can I change it personally? No. Communicating with the right people is a complicated thing. One thing is you have to know them, then you need to be on their good side, then you have to say what they want to hear. This is one reason why Detroit is in such mess it is in today. They need a whole new breed of leaders and a regime change for things to turn around.

Capitalism is fine and all, but when it affects production numbers by them charging obscene amounts over the actual price (and worth), it is too far.

Not that I have any facts to base this on. But I wouldn't think they would up production by 50% to 75%. It all depends on how many are being built. Which I don't know production numbers. When Ford tried to up production of 05 mustangs. There was quite a shortage of parts.

Capitalism is not affecting production numbers. Worth is all based on what someone will pay for something. Not what it actually cost to build.

 

[03mustangcobra]

I'd be willing to bet that, if you are correct, virtually no Canadian dealers will get GT500's for sale in year 1. In the US we have the freedom of speach, freedom to bear arms and the freedom to charge what we want for a product. All this coupled with freedom from universal health care and lower tax brackets (still oppressive) makes all this possible!

 

[StangCollecter]

I'd be willing to bet that, if you are correct, virtually no Canadian dealers will get GT500's for sale in year 1. In the US we have the freedom of speach, freedom to bear arms and the freedom to charge what we want for a product. All this coupled with freedom from universal health care and lower tax brackets (still oppressive) makes all this possible!

lol, I am going to resist taking this into politics.

I think the abundance of dumbasses in the US makes it possible for dealers to charge whatever they want, because there are just enough dumbasses to pay whatever the price is. Does it make it right? No. Should it be illegal for dealers to overcharge? That's a tough call. If they had to split the additional profit with the car company I'd look at it differently. But I could NEVER see giving some salesman a small (or sometimes large) fortune just because he can sell me what I want.

If I was willing to pay extra, I would only do so if the people who built it were getting that as a bonus. The salesman didn't build it, and the schmuck probably does not know 1/2 as much as I do about the car I am looking at.

If you are a salesman and read this, sorry but I have had nothing but horrible experiences with dealers.....

 

[StangCollecter]

Not that I have any facts to base this on. But I wouldn't think they would up production by 50% to 75%. It all depends on how many are being built. Which I don't know production numbers. When Ford tried to up production of 05 mustangs. There was quite a shortage of parts.

Capitalism is not affecting production numbers. Worth is all based on what someone will pay for something. Not what it actually cost to build.

considering all the ones being built for 06 AND 07 are spoken for already including overcharging, they could have easily increased production by 50% meaning if they are making 10k they would make 15k..... not a tremendous difference...... HOWEVER if this line is that small and geared up to only make 10,000 at max capacity (24-7) then there would be no way to up production other than making an additional line. But I read from a Solstice forum they were up to 100 per day at times, if that was kept up for 250 days out of the year, that's 25,000.

 

[SVTdriver]

considering all the ones being built for 06 AND 07 are spoken for already including overcharging, they could have easily increased production by 50% meaning if they are making 10k they would make 15k..... not a tremendous difference...... HOWEVER if this line is that small and geared up to only make 10,000 at max capacity (24-7) then there would be no way to up production other than making an additional line. But I read from a Solstice forum they were up to 100 per day at times, if that was kept up for 250 days out of the year, that's 25,000.

Again though everything I had heard was the solstice is the nearly the same as the Sky which would be 50,000 assuming they are onthe same production line.