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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


Andy Parrot (not verified)    November 12, 2021 - 1:36AM

Well, according to California Vehicle Code Section 11713.1 (e), selling a vehicle at a HIGER price than it is advertised is PLAIN ILLEGAL. But hey, does that stop local dealers from doing exactly that? LOL You know the answer. Real example: vehicle advertised for $16,500 on the website and window stickers with a "Dealer Discount" ends up having a $2000 "Dealer Markup" and costing $22,000 when you press them for total out the door cash price. Why do we even need laws? Just tell 'em - it's plain anarchy.

Twin (not verified)    November 21, 2021 - 8:44AM

We are the market! When the cars start to sit on the lots the prices will come down. Build your car online that they have on the lot, and see the real MSRP. The Ford dealers around me are selling F-150 XL, RWD, ad V6 engine for the price of the V8, 4X4 LARIAT.

You can pay the prices if you like, but I hope your salary is seeing the same increase.

Les (not verified)    November 26, 2021 - 4:52PM

Which one of you complainers is willing to sell your house at the price you paid and ignore the inflated prices of today?

Neftali (not verified)    December 4, 2021 - 1:58AM

I’ve been trying to buy the Shelby GT500 for a few months now here on Maui went to Jim falk dealership they said it’ll be here in January but the MSRP it’s 89,917.00 the salesman said that they will add 30,000 dollars on top of that , I really got bummed out though about it and not going for it , that’s crazy I’m not gonna hand out 30 grand

Paul Clark (not verified)    December 4, 2021 - 4:38AM

What is wrong with your story is the difference between a house and a car is the house appreciates and a car almost never does. Once the bottom falls out of this market those that paid a premium assuming they didn't put 30k down on a car will be stuck upside down with thousands in debt.

Also the manufacturer has already put a MSRP on the vehicle. The dealer is paying the same invoice price for the vehicle. The manufacturers aren't charging them more but yet they are charging the consumer more.

It's typical dealer highway robbery. Some dealers are not raising price. My opinion is seek those out and let the others fall on their face.

Michael Downey (not verified)    December 17, 2021 - 10:42AM

I, for one, have grown weary of news about sanctioned American GREED. "Market adjustment" is just another "ISM" used in a market that is becoming more and more the playground of the 1%. I'd be curious to see figures on how much of the "market adjustment" ever shows up in the pockets of the sales reps or the line workers at the assembly plants. I'd bet an "attitude adjustment" that most (if not all) is going back into the fleece lined pockets of the corporate high-and-mighties. Our tax laws provide them shelters and loopholes that enable near complete secrecy and evasion of tax liability. So, you justify these exhorbitant "adjustments" anyway you like ... and feel free to pay it. I won't.
Hey, how about a "market adjustment" for my mobility van? No, I didn't think so.

Art LaMere (not verified)    January 6, 2022 - 11:34AM

Wow!! Thousands of other Businesses that are much bigger than our local Dealership's across the United States are in the same position as the local Dealer and employee as many if not more! People remember! When this down time is over and inventories become plentiful you will see more of our local Dealers that wanted to price gouge during tough times sales numbers will dramatically fall. We all remember the 70s when certain service station across the US decided to take advantage of the So called gas shortage and gouged themselves right out of business when it was over!! I happened to own a large Service station at the time and no way could bring myself to do that! I totally understand having to pay over sticker on certain vehicles, I don't Understand 10;15; 20;000;00 and then tell customers you also must finance with us. It is going to really hurt some of these local Dealerships when this so called chip shortage is over! There are many more ethical ways for the Companies to survive these times! People today have also figured out that after they have their trade appraised at the local Dealer and it is Thousands behind market value they now just go online to Carvana and put simple information about their vehicle in and receive thousands more than our local Dealer appraised it for!!! Just my opinion and I just really believe that these Dealers that have to or are trying to survive by stealing from the consumer are in for much tougher times when this all ends! Shortages happen in all Businesses and the reputable honest and service oriented survive!!

Mr & Mrs Patri… (not verified)    February 10, 2022 - 9:46PM

2/10/2022 Was in the market for a Nissan Pathfinder until I just found out about the mark up over MSRP cost. My local dealers went up $3000 to $5000. Lucky my cars are still in good condition. I refuse to pay the extra just to make the dealers rich. They never seem to care in the past about the cost of a vehicle . Im 75 years old on a pension so I need to budget my spendings .Sorry for those you have to purchase a car now and their getting screwed in plain english.

Francis Mainiero (not verified)    February 19, 2022 - 10:40AM

No one is talking about the back end of the deal for the consumer when the market readjusts most loans may be under water the dealership model is dead I’m buying Tesla I refuse to support price gouging on both ends of a deal

Jim wickersham (not verified)    February 25, 2022 - 9:29PM

I think Wickersham is full of it All-he is doing is putting more money in his pocket And complaining about it So this means that all the assembly lines are shutdown Funny I haven’t heard of a major automobile layoff All these companies are still making vehicles But where are they going ?You should back up with facts before you write It’s all about enough is not enough Wake up people Don’t Buy A new car

Justin (not verified)    February 27, 2022 - 11:06PM

Going through this myself now. Reading others comments have been reassuring I’m not alone in my disgust, albeit a few sales people who decided to chime in. I’ve been looking for a gr86 for about a month and markups ranging from $2000 upwards of $15000. Most fall within $5k-9k range. Im holding strong in my refusal to pay markups. This car is a want and not a need, and although I can afford the markup, I honestly just don’t want to tip the dealer a few grand for selling me a car.

dave (not verified)    February 28, 2022 - 2:48PM

This is the biggest BS article totally written by a dealership. Automakers should prohibit these POS car dealerships from doing this. Can gas companies gouge their customers, no! Automakers shouldn't be allowed to either.

Tony Wynn (not verified)    March 2, 2022 - 1:35PM

This seems like another case of taking advantage of the consumer. There is no justification for adding 10k to 20k to a price of a vehicle the Dealership are not willing to discount.

Carrie (not verified)    May 15, 2022 - 1:12AM

I went to a Cadillac dealership in Florida to inquire about pre-ordering the new EV Lyriq. MSRP is around $60k. They want an additional $30k, a 50% markup over MSRP! No thank you.

Jay (not verified)    September 4, 2022 - 3:29AM

Would a knowledgeable person please provide a true answer to my question.
If I go to a Toyota Dealership and place an order for a new vehicle,would that order have a 'market adjustment' for profit added to the total cost. Or would the total cost be free of the dealer's greediness.
Thank you.