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The internet is packed with infuriating images and stories about dealers who are marking up popular models with huge market price adjustments. These added dealer markups, or ADMs, seem so real. Yet, when we polled owners of many popular crossovers and SUVs they tell a different story. Most who recently bought a new vehicle say they paid MSRP or less. However, one state constantly seemed to buck the trend.
Which State Is It, I’m Dying To Know!
The state that we had consistent feedback from owners and shoppers where dealer markups seemed to be the highest is California. We created a spotlight story highlighting that California is the state in which the additional dealer markups seemed to sting the most. This was particularly true for electrified vehicles. We even explain why this is true. Hint: It's all about EV incentives.
What Models Did We Include In Our Polls About MSRP Pricing?
We included the most popular SUVs and crossovers in America in our polls. We asked owners to tell us what they paid for their new vehicle over the past 18 months. Many of the models we investigated, like the Toyota RAV4 Prime and Ford Mustang Mach-E, have only been on the market for that long. Here is a link to each spotlight story for each of the models we investigated.
Nearly All Shoppers Polled Paid MSRP or Less For Toyota Highlander
Poll: Most Toyota RAV4 Hybrid Buyers Paid MSRP Or Less
Poll Results: Most Toyota RAV4 Prime Buyers Paid About MSRP For Their Vehicle
Poll: Nearly All Ford Mustang Mach-E Owners Paid MSRP or Less
Poll: Most Mazda CX-5 Buyers Report Paying Less Than MSRP
The discrepancy between why dealer markups seem so prevalent, but owners reporting that they paid MSRP or less is possible to explain. Some dealers simply do charge huge markups. They have limited inventory, and may even charge a markup on orders by customers. So, let’s call these real. And let’s also recognize that they are likely to be angrily highlighted in memes and posts on social media that are then shared and liked quite a bit.
Next, dealers may be marking up a single individual model that they have on the lot. The reason for this might be to keep it in stock for a while so it can be used for test drives or static demonstrations. Or simply to give the appearance of inventory to a passing shopper.
A dealer may also simply want to markup a very popular model that is very special. That isn’t new. We’ve seen and reported on five-figure markups on vehicles as mundane as Subarus prior to the whole market crisis. Special sports cars have had huge additional dealer markups forever.
Wait! Tesla Tesla Tesla!
Yup, we know Tesla pretends to be different. Tesla’s least expensive Model Y jumped in price by about 50% over the past twelve months. If it makes you feel better to pay full TSRP (Tesla suggested retail price,) plus destination fees, plus an order fee every time you shop, Tesla is a great place to do so. You better hurry. Tesla raised its prices eight times in the past year by our count.
Related Story: Shocker - Tesla's Dealerships Do Not Earn Higher Review Scores Than Traditional Brands’
Tell us in the comments below if you think dealer markups are real, imagined, or if they are real, but not the norm. Tell us what model you bought and if you paid more or less than MSRP for it and in which state.
Toyota RAV4 Hybrid poll screenshot courtesy of Facebook. Top of page Toyota RAV4 Hybrid image courtesy of Kate Silbaugh.
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 news outlets and he provides reviews to many vehicle shopping sites. You can follow John on TikTok @ToknCars, on Twitter, and view his credentials at Linkedin
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Comments
My partner just last night
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My partner just last night tried to purchase a Kia Sorrento PHEV from a dealership in Victorville, California. The car was in transit and would be there in about a month. He was quoted a non-negotiable price that was $12,000 over MSRP! (He declined). This is bad for Kia, the dealership and the consumer. On the flip side, I ordered and received a Ford Maverick Hybrid very recently and paid exactly MSRP for what is arguably the most popular vehicle of the year. The dealership is in Palm Springs, CA.
You want to see some dealer
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You want to see some dealer price gouging, check out what Hyundai dealerships are doing with the Ioniq 5.
People like admitting they
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People like admitting they paid over MSRP like they like admitting they lost in Vegas.
Most say they break even or won a little but we know most people lose and that’s how Casinos stays in business.
I'm in California and have
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I'm in California and have seen all kinds of excuses for additional dealer mark ups. The purchase process is a mixture of frustration and cynicism followed with a big chunk of 'not optional' options. In the past, this would have caused huge problems for dealerships and car manufacturers. Today, it's the norm and not a very attractive business model.
I bought a car last month. It was an arduous task where, so often, I'd walk away wondering if I was a respected customer or just some simple sheep waiting for a fleecing. I'm exhausted from finding a car at retail. RETAIL! You know, with profits for all built right in?