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Reports of $10k to $20K Dealer Markups Now Common Due To Vehicle Shortage - Your Options

Shopping for a new or used car? Be prepared to pay as much as $20,000 more than MSRP for a popular model. We break down the causes and make some suggestions for shoppers dismayed at dealer markups.


Car dealers across America are adding market adjustments to the MSRP and Delivery Fee prices of new cars to the tune of $20,000. That means that some RAV4 crossovers now cost over $60K. Some Kia SUVs approach $75K after huge markups. Trucks and sports cars are not immune as our examples below will illustrate.

Related Story: EVs In Demand: RAV4 Prime and Mustang Mach-E Dealer Markups See Rebound

Dealer markup image by Noe ArribasWhat Is MSRP
MSRP stands for “Manufacturer’s Suggested Retail Price.” Emphasis on the “Suggested.” There is no set price for any automobile in nearly every case in the US. The dealer can charge what they want, and more often than not in the past, they charge consumers less than the suggested price, not more. For the coming year or possibly more that may not be the case. Expect dealers to charge more than suggested.

Dealer markup image by Noe ArribasWhat Is a Delivery or Destination Fee
Many folks forget that buying a car “At MSRP” usually costs you more than the sticker price. A delivery fee, also called a destination fee by some brands and dealers, is an added fee that pads the profits of the people you buy your car from. They are now universal. Delivery and Destination fees are simply a way for the company you buy a car from to have you pay more for what they provide.

Delivery fees are not set in stone, not mandated by law, and dealers do not have to charge the same fee in every dealer location in the US. For example, Mazda charges a $945 delivery fee in some states, and $990 in another. (Mazda is known for having some of the lowest delivery fees overall.) Also, manufacturers charge different delivery fees for different vehicles in many cases. Tesla charges customers who pick up their new cars at the factory that builds them a delivery fee. Are you getting the picture? There is no rhyme or reason to delivery fees. A Ford Mustang Mach-E made in Mexico has a delivery fee if you buy it in Texas, and a Subaru Forester made in Japan has a similar delivery fee if you buy it in the same Texas town. Yet, one came from halfway around the planet and one a short ride away.

Subaru dealer markup image by Noe ArribasWhy Are Car Dealers Adding Market Adjustments Now
Dealers have used “Market Adjustments,” as the markups over MSRP are called, for as long as cars have been around. A few years ago, when cars were abundant and buyers had been buying fewer than the normal amount, we spotted a Subaru STI sports sedan with a markup of $10K at the dealer who services our Forester. That compact Subaru cost $75K. The reason the dealer could add that requested markup was it was a special edition and they only made a few of them.

Today’s more common markups are different. A global disruption with many factors has taken place. Manufacturing of all types is impacted, not just cars. Many parts are in short supply. Microprocessor chips are the most commonly discussed parts hard to find, and increasingly expensive. However, tires and other more “old-tech” parts are also now suffering shortages. In the case of electrified vehicles, the batteries they use are not in a temporary short supply situation, automakers have never had enough. Despite any governmental effort to control prices, short supply and high demand results in consumers paying more.

Dealer markup image by Noe ArribasWhy Can Car Dealers Get Away With Markups
In nearly every case, the place you buy your car is not owned by the carmaker, but rather, a separate completely independent company. Those separate companies are among the most politically powerful business types in the nation. They help elect politicians, they sponsor your kids’ hockey, baseball, and soccer teams, and the workers they employ are very active in the community. Every one of them is a charitable leader in the community in which they reside. Car dealers employ two million Americans according to Statista. All of them are expensive to the dealers who employ them. Government-mandated health insurance, unemployment insurance, workman’s compensation insurance, family leave, sick leave, paid holidays, overtime, and a long list of payroll taxes at the federal, state, and local level, are all included in the price you pay for the car you buy. As are the property taxes the dealership pays on the land it occupies. Have any of those costs gone down lately? To the contrary, they are rapidly increasing.

What About Tesla
When Tesla began, the company promised a fresh approach to car sales. The idea was that Tesla would cut out the middle man and sell direct. Dealers fought back, and they had good reason. It is not unethical to protect a business you worked hard to create. Tesla lost in a few states, and its sales model was not adopted universally. However, in other states, like Massachusetts, Tesla was allowed to do exactly what it wanted. Tesla dealerships in Mass. enjoy every business opportunity that other brands in the state do, but they are owned and operated directly by Tesla. We compared the ratings that consumers give those two full-service Tesla dealers to the ratings shoppers gave to other legacy brands in the same area. Tesla had the lowest ratings. Surprise!

Bigger Picture - Why Are Dealers Marking Up Cars Over MSRP
Car dealers are scrambling for inventory. They cannot get the volume of the cars they want right now, so supply to shoppers is also constricted. Overall, dealers are selling fewer cars, yet their landed costs are mostly the same. Should they roll over and go out of business, or try to recoup their lost revenue by charging more for each sale to keep the business afloat? There is no free money “Car Dealer Bailout Bill” like there was for airlines.

During times of plenty, it is routine for auto dealers to discount vehicles. Truck buyers, in particular, have come to expect $5K to $10K off the MSRP of a new truck. Was it unfair when the dealers discounted below MSRP? If not, why is it then unfair for a dealer to mark up a vehicle?

Dealer Markups - Pay It Or Wait
There are two opposing arguments for and against buying a car now at a premium. First, anyone rushing out to buy a new car today is crazy. Wait, fix your existing car, or if you must buy, purchase an unpopular model, color, or trim to keep your cost down. This will pass and car prices will return to “normal.”

Here is the counterargument. Why buy when the market is at its peak? Because the peak may become the new norm. Also, with global commodities suddenly in short supply as the economy booms back from the closures of the past year, inflation is a real likelihood. Wages are usually the last part of the economy to catch up to inflation, so your earned dollar value is shrinking as goods and services are increasing in price. Wait a year if you like, but if the automakers simply raise MSRP prices, you may be buying your next car at an inflated price with a dollar that has less value.

This topic is an emotional one. We invite you to comment, vent, educate, correct, boo, or applaud in the space provided below the story. Your opinion is valued, and we’d love to hear your thoughts on this topic.

Image Notes: Torque News would like to thank Sarah Jane for her top-of-page image and acknowledge the help of Noe Arribas for his help with researching this topic and his many photos.

John Goreham is a long-time New England Motor Press Association member and recovering engineer. John's interest in EVs goes back to 1990 when he designed the thermal control system for an EV battery as part of an academic team. After earning his mechanical engineering degree, John completed a marketing program at Northeastern University and worked with automotive component manufacturers, in the semiconductor industry, and in biotech. In addition to Torque News, John's work has appeared in print in dozens of American newspapers and he provides reviews to many vehicle shopping sites. You can follow John on TikTok @ToknCars, on Twitter, and view his credentials at Linkedin


AJ (not verified)    September 9, 2021 - 12:32AM

In reply to by Jay (not verified)

I totally agree with this and my husband and I ran into a similar issue—the website didn’t mention it and the salesperson didn’t mention it until AFTER our test drive. Lol. Their markup fee was $5,000. We quickly translated that to how many hours we’d have to work to line someone else’s pockets and walked away from the deal. My husband and I are the worst type of customers in today’s car shopping environment because we recognize a new car (to replace one that is 24 years old) is a “nice to have” but not something we absolutely need.

Jagonga (not verified)    November 9, 2021 - 3:27PM

In reply to by jim (not verified)

We get it Jim, you work for a car dealer. This practice is despicable though and the only people who would disagree are people profiting from it. Advertise a certain price. Have the people come in. Have them look at the car and like it. Then they sit down to do the deal and *that's* when you tell them "oh right, we forgot to mention the extra $7500. Hey! Read the fine print! We can do whatever we want until it's signed!"

You may think that's ok. Other Ayn Rand worshippers may *pretend* they think it's ok (if it happened to them they'd be livid). It's not ok.

Shaun (not verified)    June 14, 2021 - 9:51AM

We test drove an Escalade, and in our area, there was a $25k mark up right from the start.
It wasn't on their website nor was it on their window sticker.
But their 'numbers sheet' listed it, which almost negated our trade in.
Without a trade in, this $92k model was $128k after mark up and all taxes, fees, etc.

We walked out. Mostly because we didn't like the Escalade enough to entertain this idea, but we also weren't willing to pay such a mark up.
I've done some research and I am seeing there are some shortages. (makes me glad I bought my car when I did). A few thousand for a car my wife truly wants may be acceptable. $25k on top for any car (to me) is unreasonable and my wife would never allow it.

Dave (not verified)    June 23, 2021 - 10:44AM

Actual inflation is strictly a monetary phenomenon, not a scarcity (supply) vs demand thing. Yes prices will increase with reduced supply vs demand but THAT is not inflation but simple supply / demand pricing. The federal reserve has been pushing on a string trying to generate Their ubiquitous inflation target of 2% for a long time .. it is sooo convenient that unprecedented lockdowns and loss of jobs on the massive fear mongering of imminent death from a virus has actually caused this supply issue ... restricting supply to push prices up is a whole different animal and is artificial on its face .. that is the real question and I have difficulty believing it is anything but that ..

Rocky (not verified)    July 3, 2021 - 1:04AM

I have been selling cars for almost 40 years. I am sure prices will back down sooner than later as long as consumers reject these practices . At the end of the day market dictates the selling price for any product.
Buy the models that have discount and avoid the one with mark up.

Ethan Joseph Welch (not verified)    December 11, 2021 - 9:08PM

In reply to by Rocky (not verified)

I love how all these angry peoples first thought is to bash the salesperson or the small dealer owner. Do you people understand how the economy works? I have less so you need to pay more. Just basics laws of capitalism guys and you go straight for morality unreal children

Karl (not verified)    July 7, 2021 - 7:10AM

Just looked at a Kia Telluride yesterday. MSRP + dealer fees the car listed at $46,080. Then I see the additional "Market Adjustment" fee of $10,000 tacked on on an added sticker placed to make it look like it was part of the manufacturer's invoice.

I looked around at other models on the lot, and found all had the "Market Adjustment" sticker, but the percentage of markup varied wildly, and it looked like it was based on how many of a particular model was available. Most were 4 to 10% of MSRP, but the Telluride was a stunning 22.7% over.

I understand due to the chip shortage, shipping problems caused by the Covid virus is preventing Dealer's from getting the stock they need, but... It is illegal to purchase generators, bottled water, etc., and set up outside of a disaster zone to sell marked up products at an arbitrage, and this practice should be also.

I also understand the "want vs. need" argument, but in my case, I need a vehicle, as my vehicle was just totaled by my insurance company after a deer strike. (Big damned deer).

I told the dealer I would write a check for the full MSRP amount right then, but I was not giving them a dime towards your price gouging, and will go buy a cheap used car and wait for the market to stabilize . This is a dealership family that owns 9 of 10 dealerships on our local strip, from which I have purchased 4 new cars over the last 15 years.

They told me, "Thanks for coming by."

Please people, don't allow this predatory BS.

John (not verified)    July 14, 2021 - 11:31PM

In reply to by Karl (not verified)

Coincidentally, we just looked at a Kia Telluride today as well. Same story. We researched pricing online and went into the dealership thinking we were equipped. When the salesman started talking about prices in the $60K+ range I knew the bait and switch was on. The prices he shared were nowhere near the sticker prices that were advertised online or on the actual vehicle. He spouted on about how the Telluride is the highest rated SUV in it's class with the highest resale value and that even used models still sell at today's MSRP. All that told me was that they are overpriced in the first place. He said that the "markup" is between $7500-$12000 depending on the trim level. I told him in a very nice way that Covid has been around for 18+ months now and the Telluride is just entering it's third year so how much of this stunning resale value is due to the real intrinsic value of the Telluride vs. Covid? We politely shook hands and thanked him for his time and walked out and decided we didn't need the car that bad. Good luck out there!

Ethan Joseph Welch (not verified)    December 11, 2021 - 9:01PM

In reply to by John (not verified)

Why buy a vehicle to sell it the next year? Are you trying to make a profit? Almost like cheating the system? But dealers are the criminals right? Yall crack me up absolute jokes

pd- (not verified)    February 8, 2022 - 5:33PM

In reply to by John (not verified)

I was just told this same story about the Telluride, but here's the kicker - I'm not buying a Telluride. I was looking to buy an EV6, and this dealer was justifying the $5k mark-up on the success of the Telluride. I called multiple dealerships after that one, and they all want $5k-$7k over sticker because "it's new". I told them all thanks but no thanks. I can't believe people are paying these prices for a Kia.

Ryan Johnson (not verified)    August 24, 2021 - 3:33PM

In reply to by Karl (not verified)

I'm in the same situation and walked away from a bait and switch and reported them to the FTC. Can't believe how shady these dealers are now. They were bad enough before, but this is ridiculous. Dealers are advertising one price on their website and 3rd party sites like Autotrader and when you come into the dealer they have a "market adjustment" sticker on it that marks it up from MSRP and what they have it advertised at. This is an illegal practice called bait & switch. If you or anyone else finds these scenarios, report them to the FTC and they will be fined. Hopefully if they get enough fines, they will stop this nonsense.

Karl (not verified)    July 17, 2021 - 8:38PM

Note: I had a used vehicle they wanted a Ram 1500. They gave me 6K more than than they offered in Nov/Dec 2019/2020 on a 2018 Ram 1500. I bought a new Ram at MSRP, they put the 1250 FCA incentive on top of MSRP for price. But, the amount on the used Ram offset the MSRP by the equivalent of good incentives. The old Ram was paid off. I ended up paying 36.6 for a 59K truck. My goal in 2019 for an 18 was 35K. So, I got a next gen with more stuff BECAUSE I had the used valuable truck. So deals can be had IF the cards fall right.

Michael G Seal (not verified)    July 21, 2021 - 5:12PM

The key is to start looking for a vehicle when you don’t have to buy one immediately, because you can take your time and wait for the perfect vehicle . You will need to have your funds available , because when you find that perfect vehicle for a good price, you will need to act quickly, otherwise someone else will jump in front of you and buy your perfect vehicle. I think you get the best deals with private parties, but you have to be a cash buyer, in order to get the best deal. If a used car been on a dealership lot for over 2 months, you might get a good deal, because the dealer just wants to get rid of the vehicle ASAP.

Shannon Breland (not verified)    July 24, 2021 - 3:08PM

Wow! This is so frustrating. I'm in a 1998 Mazda and it's been in the shop 10 times in the last 2 months, 6 of those times I had to have it towed. Just 2 days ago I had to get new spark plugs and the guy said I had a tear in my manifold and it would set me back $500. So I've started looking for a cheap used car cause I don't want to put more money into this one and then I read this article. My goodness what's a girl to do? I'm scared to buy a car now.

FToyota (not verified)    August 14, 2021 - 3:10PM

All the NY-NJ Toyota dealers are charging $5000 on the Rav4 (as I heard on their other models too, but I was looking for this one so I can say this for sure).
What one said, this is to 'cover their loss'... Another one didn't even try to come up with a BS like this, she just said it's because of the high demand. What, other brand's dealerships don't struggle? I was at Mazda, cars are sold on their MSRP.
But anyway, this is greed, I get it, move on.
I called a dealer in MA, to ask what's the out of door price of the vehicle. Well, beside the MSRP, there is tax, documentation fee, but no surcharge. Let's do it then, I thought.
And here is where it gets dirty: They cannot sell cars only to MA and CT, not to NY!
as much as the person could say (was permitted to) is this is a rule is coming from Toyota.
Syndicate a bit?
I wonder if an attorney could make a case of it?
For me, it sounds illegal, refusing a buyer based on their residence. If this would be with race or religion, the news will be all over it, how about this?
It's clearly made up, with no valid reason (besides money) behind it, but is it legal?

I will sell yo… (not verified)    August 16, 2021 - 6:13PM


I won't buy it! (not verified)    August 18, 2021 - 6:56PM

In reply to by I will sell yo… (not verified)

What you're saying (or yelling) is ridiculous, the same way you don't have to lower prices if you don't want to sell the car, we (customers) don't have to buy it if you try to rip us off.

Stephen Knudsen (not verified)    September 27, 2021 - 10:55AM

In reply to by I will sell yo… (not verified)

Bet your the owner of a Dealership and feel guilty about gouging consumers to line your personal pockets and could care less about your employees. Seems to me you could still sell at invoice and make your 5 to 10% profit margin. What costs have gone up for you as a dealer again? When I asked if I could order a new car at invoice, the manager blew me off and said it wouldn't be ready for at least a year. Didn't give any other reason why we couldn't just order one except that I wouldn't like how long it took. He didn't ask me what my current situation was and if I really needed a new car right now or at a later date. Dealerships are taking advantage of the supply chain issues and trying to pad their pockets. If it's really that bad for you Dealership, just go into bankruptcy and get out of the business. We have laws on the books to keep our rich people in this country rich even if the economy goes bad.

Guajiro (not verified)    October 1, 2021 - 7:58PM

In reply to by I will sell yo… (not verified)

Apart of your irrespective yelling (caps on), do you meant you sold cars at a loss? Dealers ALWAYS sale cars for profit less or more, price gouging is just greed. For my side I’m not in a hurry and can wait but some people are needing a new car for whatever reason.

dsmither (not verified)    October 13, 2021 - 4:21PM

In reply to by I will sell yo… (not verified)

lmfao! consumers are hurt. they like to put the blame on dealers and call them sleazy but its really the consumers fault. people are knowingly paying over sticker, why would they stop for you? welcome to 2021. There is a serious shortage of vehicles and dealers are not desperate to sell you a car at all. Whoever said they are reporting to the FTC is a moron because its happening nationwide. We are in a pandemic guys, why would you buy a covid car anyway? production and supplies are already screwed up. just wait a couple a years when everything bounces back. At the end of the day, if you buying a car is a want and not a need why are you complaining. BTW cars arent the only thing inflated have you seen the housing market? you cant even buy a ps5 or xbox at its retail price.

jagonga (not verified)    November 9, 2021 - 3:30PM

In reply to by I will sell yo… (not verified)

No dealership ever loses a penny. If you were selling under invoice, it sure as heck wasn't to "make someone happy", just like the current gouging sure as heck isn't just about "making up for lost business".

Every dealership owner I've ever known is a multi-millionaire, so spare us the BS. But good you made it abundantly clear how customer hostile you vampires *actually* are.

dsmither (not verified)    November 23, 2021 - 2:51PM

In reply to by jagonga (not verified)

jagonga - Selling a car at invoice makes a dealer no money. They literally just breakeven and get a unit count. just because the owner is a wise business man and a multi mullionaire does not mean his employees are as well. you just need to understand that right now we are in sellers market, not a buyers. dealers no not owe you anything. just about any and everything is marked up ( grocerys/gas/ housing market/ appliances) right now but when it comes cars consumer want to strike dealers down smh!

CK (not verified)    August 19, 2021 - 9:45AM

We looked into a RAV 4 Prime yesterday in Colorado Springs. The dealer here has a $15,000 market adjustment over MSRP. This wipes out any savings from Federal and state tax adjustments on EVs. This dealer owns 2 locations here, others in CO and at least one in Albuquerque. They are selling every car they have delivered. There is a $5,000 markup on Hybrid RAV4. They take $1,000 deposits on upcoming deliveries and that customer has first right of refusal on that specific car. They had no RAV 4 s of any model to test drive. I can’t understand why people are willing to pay this price. A Prime is now over $50,000 for the base model. We will wait and may even travel to another state to purchase. This “adjustment” doesn’t create a feeling of loyalty to this dealership. But hey, they were crazy busy yesterday and somehow people have the money to pay a $15,000 mark up.

icharis (not verified)    August 19, 2021 - 8:53PM

if the price is too high just don’t buy it…. the market goes up and down supply and demand…. hunt and look around there are deals still to be had if you look. The internet is your friend and you can buy a car from anywhere in the us and just get it shipped to your house way cheaper than any BS. 5k over msrp hike. There is no point in bitching saying robbery etc though