If we stop paying markups on non-limited production vehicles, we would return to MSRP or better. If multiple people want the same vehicle you factory order and wait your turn like in the good old days. You know, 12 months ago…
Sorry for the rant but I’ve been shopping around and seeing YouTube videos of people overpaying by so much for basic cars, it’s their money sure dealers are getting used to this and are less likely to go back to normal pricing.
These people who are paying way over MSRP are going to be F#@ked when they want to trade in those cars in 3 years. We all know they are not putting 20% down plus the dealer markup.
Markups exist for a third key reason you’ve left out: the law of supply and demand.
You realize that the S in MSRP stands for suggested, right? If inventory is extremely tight, and you’re running a dealership with the same overhead costs - why wouldn’t you be charging more than during ‘normal’ times? Even Tesla, with its direct model, does this with price hikes.
Consumers have decided that certain vehicles are worth more to them than the MSRP. It is what it is, hopefully we return to MSRP & Below toward the end of 2022.
If we stop giving discount on non-limited production vehicles, we would return to MSRP or higher. If multiple don’t people want a vehicle, you wait for factory orders and wait your turn like in the good old days. You know, 12 months ago…
Sorry for the rant but I’ve been looking around and seeing YouTube videos of people getting discounts for basic cars, it’s their money sure customers are getting used to this and are less likely to go back to MSRP pricing.
I am mostly joking, but the market giveth and the market taketh. But for the most part it is a wash IMO if you have a trade-in since those prices are inflated too. It just hurts if you are trying to lease.
It won’t be as bad as you think. Banks have lending guidelines and won’t loan out a certain amount over the vehicle’s MSRP or book value. Sometimes the approved amount is lower with sub-prime lending. So if a bank approves someone for 100% of the MSRP, the customer still have to put down the markup and taxes/fees.
I don’t think the majority of people who are paying the mark-ups are thrilled about it. They’re paying it because they need a vehicle or have their minds set on a particular vehicle. As we all know, cars are emotional purchases for many people so once people have researched and fixated on a particular car, it’s difficult to switch to something else and/or wait.
There are no cars on the lot and people have boat loads of money from all sorts of gov bailout/funding/handouts whatever you want to call it, as long as that money won’t dry up it’ll be a uphill battle.
Even dealers that are buying up used cars at inflated prices will get screwed if the prices ever go down. That’s the thing, do they know something we don’t? Why would they sink so much overpaying for trade-ins when the traditional model is for them to always undercut the market value. I guess time will tell.
I’ve purchased/leased many cars in my life and was always able to get below MSRP, I don’t plan to start overpaying now because some people can’t put dealers to task and avoid them for using markups. It’s robbery since dealers didn’t overpay for the vehicle.
Market economy, as long as there is no manipulation let the market be free and let people pay whatever they want. It meant discounts in the past and mark-ups today.
There are no banking guidelines on future trade in values of these cars though. As we are pretty much in agreement with, most cars are bought because we want it, not because we need it. And in a few years, we will want another car again, and probably be in for a rude awakening on how much underwater these cars are. Only way around this would be if you had a desirable trade that brought stupid money on trade. Which helps mitigate the over MSRP sales price of a new car.
Autotrader is a joke. “Great Price”, “Good Price”, WTF? How is it a great price when it’s listed for 5-10K over the window sticker on a 2-3 year old car? The guy above stated “the law of supply and demand is driving this”, damn straight it is. Face it, most people don’t need a new car, they want a new car.
Correct, we don’t know future trade in values but the majority of people are not going to be as upside down as you think between current trade in values and financing guidelines. The ones at risk are 84+ month loans on normal eco boxes. Anyone under 72 months should be able to keep up with depreciation in 3-4 years if they didn’t borrow more than 110% of MSRP.
I also think we will see this trend continue longer than most people expect. Dealers are fine with selling less cars for more money with a thinner staff. It really comes down to if the manufacturers wants to pump out volume or continue on the current trend of no/reduced incentives with a bump in prices.
Because all they are doing is comparing it to similar listing. If someone has a car listed at $15k over, then $5k over is a great price.
Just like we were getting great deals even in LH standards up until early last year, dealers and manufacturers are getting great deals now. It is probably cyclical but we don’t know where we are in the cycle. I do not think you can ask people to stop paying for mark ups and it goes away. Supply and demand economics are a lot more complicated than that.
Markups also exist because dealers know people are buying new cars and flipping them for a profit. There are bad actors on all sides of this issue so we should be honest with ourselves before we blame consumers who may simply need a car and have no choice, or dealers who are taking advantage of people.
