Car buyers fight back with dealer markup trackers

Buying cars in 2022 can be a huge headache. Not only are some cars hard to find as dealers have sold out of popular models, but there’s also the issue of dealer markup. This is when a dealer sells a car for more than the manufacturer’s MSRP or suggested retail price. This usually takes the form of “market matching” which can range from a few thousand dollars to doubling the price of the vehicle in some more extreme cases.

This has been a controversial practice for years, with some traders claiming it is necessary to make up for losses on other sales (or to make up for a lack of volume today due to chip shortages) and customers feeling like they are being exploited (because they are actually being exploited).

Another dodgy thing dealers do is sell mandatory car “protection packs” that offer little or no protection for the car’s accessories, seats or glass. They will either refuse to sell the vehicle without the “protection” or they will tell you it is “already installed”, which is a mean joke for people who don’t know much about cars.

When new car prices are too high with markups and “protection packages,” buyers can usually look to the used market for relief, but in 2022 even that is impossible. Because new cars are not readily available today to buy and drive away immediately, the demand for used cars has skyrocketed, often driving the price of a used car higher than a new car of the same make and model.

So how can buyers defend themselves against dealer premiums?

There are a few different options. First, customers can do their research in advance and know the MSRP of the car they are interested in. That way, they can rest assured that they won’t be taken advantage of in pricing. Second, buyers can shop around at different retailers to see if they can find a better deal. This is often difficult with many dealerships selling the same cars at the same high prices, but it’s worth checking several options before deciding to make a purchase.

Finally, buyers can check out aftermarket options, e.g. B. buying a car directly from a manufacturer or through an online car buying service. These options may not be as convenient as visiting a local retailer, but they often offer better prices and more variety.

But dealerships know that car buyers will turn to the internet for information, so they’ve figured out how to make this a difficult path. When you go to many retailer websites, they don’t reveal the surcharge, leaving that nasty surprise when you arrive at the retailer with a pre-authorization ready to buy. Or the website just says “Price on request” instead of giving a price at all, leaving you with no information at all until you get to the retailer.

How some customers fight back

Now there’s a new website trying to help car buyers fight off dealer markups. On the site, simply called Markups.org, customers can sniff out retailers who charge well above MSRP.

The site’s “About Us” page claims that it was founded to document markup data on a variety of goods sold by distributors and retailers. The project began in mid-2021 as a series of Google Docs pages to collect data on various new generation Toyota 4Runner and Tundra dealerships, which were raising prices to take advantage of people who really wanted these vehicles. This evolved into manually collecting markup data on Ford Raptors, Ram TRX trucks, HD pickups, and so on.

Later, a major publication specializing in Toyota vehicles posted links to their spreadsheets and papers, which drew a lot of interest and traffic. The new Markups.org website has integrated the Google Doc Sheets and organized them into groups. They also claim to use web crawlers to collect/crawl numerous open, public, non-copyright user posts listings in order to create the markup data and automatically add it to their site.

The site has a really simple interface, but don’t let the simplicity fool you into not providing any meaningful data for car buyers. To try it out, I decided to look for Chevy Bolt EUVs, a car I’m planning to replace my Nissan LEAF with. So far I’ve been frustrated with every attempt to find one for sale let alone get one for a reasonable price (even if I did order one).

Not only did it show me who the worst offenders were, charging thousands over MSRP, but it also showed me several retailers who don’t price their bolts at all. I’ve noticed that several AutoNation dealers have had very modest markups of just a few hundred dollars, which is far more palatable than a $5,000+ markup that some other dealers are trying to squeeze out of people.

I was looking for another vehicle that I would really like, provided I could find one at an affordable price, and it gave me a number of both bad and good results for that too. Unfortunately, I probably won’t be able to afford a Jeep Wrangler 4xe anytime soon, but I would at least know where I could go to order one and not be screwed.

Why not just buy a Tesla?

What I keep seeing on social media when the topic of dealers and markups comes up is the idea that buyers should just consider a Tesla. While Tesla doesn’t participate in MSRP mark-ups like “market adjustments” and “protection plans” like dealers do, as a manufacturer selling direct to customers they can simply increase the manufacturer price (which isn’t a suggestion).

At current prices, I just can’t afford a Tesla, and that’s true for a lot of people in the car market. For a while they offered a Model 3 for $35,000, but that was a meager vehicle and it’s no longer available except maybe as a used car, but they want more than the new ones now. So telling frustrated buyers to just buy a Tesla sounds a lot like Marie Antoinette’s “let them eat cake.”

So tools like Markups.org are a valuable resource for the rest of us who can’t afford a Tesla even if we wanted one.

Featured image: Harry Wormwood from the 1996 film Matilda. (Fair Use, comment)

 

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