Car dealers are raising prices up to 82% above retail as Ford threatens to withhold new cars

Four-fifths of Americans who bought a car from a dealership last year paid more than the list price – a 276-fold increase in just two years.

A new study by automotive market research firm Edmunds showed that just 3% of cars purchased from US dealerships were selling above the manufacturers’ suggested retail price (MSRP) at the start of 2021.

The trend slowly increased in May before skyrocketing to 82% in January 2022, a 276-fold increase from 0.3% in 2020.

Ford saw an average markup of $163 to MSRP in 2021, though a Seattle woman told the Washington Post she was warned she would have to pay $12,000 more than the list price for one of the company’s hybrid vans, prompting her to forgo the purchase.

GM’s Chevrolet and GMC brands saw increases of $625 and $677, respectively.

GMC’s Cadillac prestige line saw an average of $4,048 last month. Kia, Hyundai’s popular bargain brand, saw an average markup of $2,289.

On average, the new markup on cars cost consumers an additional $728, with buyers reporting that electric and hybrid vehicles are priced at an additional $10,000 or more.

Only about 3% of cars sold at dealerships were marked up at the start of 2021. In January 2022, 82% of cars sold were marked up.

Ford saw an average $163 markup to MSRP in 2021, with some popular models, like the Maverick (above), bumped up to $12,000

Ford saw an average $163 markup to MSRP in 2021, with some popular models, like the Maverick (above), bumped up to $12,000

GM's Chevrolet and GMC brands saw increases of $625 and $677, respectively.  Its Cadillac lineup saw an average of $4,048 last month

GM’s Chevrolet and GMC brands saw increases of $625 and $677, respectively. Its Cadillac lineup saw an average of $4,048 last month

Ford said it would withhold deliveries of its most popular vehicles, including the new F-150 Lightning pickup and other electric vehicles, from dealerships that overcharge the cars.

Ford spokesman Said Deep told the Washington Post that the company is concerned about the impact of markups on its new electric and hybrid cars as it tries to compete with Tesla, which dominates the electric vehicle market. .

“The Lightning is a big deal for us,” Deep said. “It’s a leap forward in innovation for each of our trucks. He plays such a critical role for our brand and all of our dealers.

Ford CEO Jim Farley told investors at a conference in January that about 10% of the company’s nearly 3,000 dealerships in the United States have consistently priced vehicles above MSRP in 2021.

GM did not immediately respond to DailyMail.com’s request for comment.

Hyundai said it “constantly reminds its dealers of the need for full transparency” on pricing and “strongly reinforces[s]’ that advertised online prices for vehicles must match retail prices.

“We strongly discourage our dealers from charging prices above MSRP,” the company said in a statement.

Traditional automakers in the United States are bound by laws requiring them to sell vehicles through dealerships, with those intermediaries adding a markup to profit from the sale.

Newer companies, such as Tesla and Rivian, are selling directly to customers, reducing this markup. Traditional brands now want to follow suit, although they are aware that they risk losing the knowledge and skills of dealers who close sales for them.

Hyundai saw its popular budget brand Kia rise by an average of $2,289

Hyundai saw its popular budget brand Kia rise by an average of $2,289

Ford fears soaring margins will damage the company's reputation and the launch of its new range of electric cars to complement Tesla's models (pictured)

Ford fears soaring margins will damage the company’s reputation and the launch of its new range of electric cars to complement Tesla’s models (pictured)

Ford estimated that about 10% of the company's nearly 3,000 U.S. dealerships have consistently priced vehicles above MSRP in 2021.

Ford estimated that about 10% of the company’s nearly 3,000 U.S. dealerships have consistently priced vehicles above MSRP in 2021.

David Eagle, a Los Angeles-based auto broker who helps buyers negotiate the price of electric and hybrid vehicles, told the Post he’s struggled to find good prices for his clients over the past year.

He said the market suffered badly at the start of the pandemic in 2020, with dealers sitting on cars for months before people started buying cars again in 2021, with 15 million vehicles sold the year. last, a slight increase from the 14.6 million sold in 2020.

Eagle added that dealers were also raising prices to address supply shortages as microchip shortages hampered automakers.

Jeff Aiosa, owner of a Mercedes-Benz dealership in New London, Connecticut, told the Post that dealers really had no choice but to mark up cars due to declining sales.

“I think a lot of high-end luxury buyers understand that ‘Listen, your volumes are down and you’re still discounting,'” Aiosa said.

“If we now have to pay a little extra for something that we want and need right now, we understand that’s the environment we find ourselves in. And you have to stay in business, and we want that you were staying in business because we don’t want to come back and see the lights go out and not be able to service our car.