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Dealer markups drove me to buy a Tesla
- Thread starter zarrack007
- Start date
I also got some info from a friend of mine who placed an order in the ID4. Apparently the price is not locked on the order date and can go up on delivery date. So Tesla is also way ahead on that front.
Great thread - got my M3SR+ in Aug 21 and wife liked EV's but it sat too low. We looked at the Mach E & ID4, dealers wouldn't even let us test drive. We rented a Mach E via Turo, liked it enough and dealer wanted $5k over MSRP. Ended up ordering a MYLR because of pricing transparency.
Side note - Hyundai has a buyer assurance program where you can lock in pricing, not all Hyundai dealers participate but here in Dallas, TX I have 1 dealer (Freeman Hyundai) who sells at MSRP + $900 tint/protection fee (which is better than $2k-$7k markups).
Side note - Hyundai has a buyer assurance program where you can lock in pricing, not all Hyundai dealers participate but here in Dallas, TX I have 1 dealer (Freeman Hyundai) who sells at MSRP + $900 tint/protection fee (which is better than $2k-$7k markups).
My wife told me that she would like to consider replacing our 2019 Subaru ascent with a hybrid of some sort given the horrible gas mileage. I told her that I go out and look at cars but the truth of the matter is that it will be very difficult to actually find a hybrid of any type let alone something we would actually like.
Eventually I ended up at a Lexus dealer and went for a test drive in a rather nice Lexus hybrid. When I got back the sales guy told me that his sales manager wanted to have a talk with me. I assumed that what was going on was that the man wanted to do some sort of tag team where they play games with me as far as discussing price or whatever. I also assumed that they weren’t gonna have anything in inventory and I would have to leave a deposit and then wait for something to come in.
The sales manager proceeds to tell me that they are getting $7500 for each hybrid vehicle they sell over MSRP. So I look at them and I do my very best project manager imitation:
“So, what I heard you say was that you want me to buy a Volvo. (Long pause while he looks like someone smacked him.) After all, Volvo is still getting $7500 back as a tax credit from the federal government for their 40 mile plug-in hybrids, and then there’s a $7500 that you wanted rip me off with. Overall that’s a $15,000 opportunity cost and I get a very nice much larger vehicle that still gets fairly decent gas mileage. Of course, there is the last part of the whole thing in that Volvo is not trying to rip me off by charging me more than MSRP.”
Eventually I ended up at a Lexus dealer and went for a test drive in a rather nice Lexus hybrid. When I got back the sales guy told me that his sales manager wanted to have a talk with me. I assumed that what was going on was that the man wanted to do some sort of tag team where they play games with me as far as discussing price or whatever. I also assumed that they weren’t gonna have anything in inventory and I would have to leave a deposit and then wait for something to come in.
The sales manager proceeds to tell me that they are getting $7500 for each hybrid vehicle they sell over MSRP. So I look at them and I do my very best project manager imitation:
“So, what I heard you say was that you want me to buy a Volvo. (Long pause while he looks like someone smacked him.) After all, Volvo is still getting $7500 back as a tax credit from the federal government for their 40 mile plug-in hybrids, and then there’s a $7500 that you wanted rip me off with. Overall that’s a $15,000 opportunity cost and I get a very nice much larger vehicle that still gets fairly decent gas mileage. Of course, there is the last part of the whole thing in that Volvo is not trying to rip me off by charging me more than MSRP.”
ucmndd
Well-Known Member
Tesla: Raises prices 33% in a year and blatantly prioritizes more profitable deliveries by moving people who buy snake oil FSD and ridiculously overpriced wheels to the front of the line. TMC collectively shrugs.
Other dealers: Raise prices above MSRP due to unprecedented demand and historically low inventory. TMC clutches pearls and collectively loses its mind over unspeakably predatory and unscrupulous dealers responding to the market.
Yup, checks out.
Other dealers: Raise prices above MSRP due to unprecedented demand and historically low inventory. TMC clutches pearls and collectively loses its mind over unspeakably predatory and unscrupulous dealers responding to the market.
Yup, checks out.
stopcrazypp
Well-Known Member
Except that's not a correct characterization. People are locking in at lower prices at order time and just waiting a bit longer to get their cars at MSRP. That the prices get higher later, doesn't affect them (in fact makes them feel better about ordering at the time they did, at a price they are ok with). With the dealer process, even when you do a "reservation", they raise your price by the time you take delivery. With Tesla you also avoid the unpleasant negotiation experience.
ucmndd
Well-Known Member
If you custom order a car from a dealer and agree on price ahead of time and have a contract that says so, then I agree they should honor that contract and it’s shady/sheisty not to.
But that particular case is only a small fraction of the moaning in this thread. Plenty of others are walking in off the street and seem to be SHOCKED that a dealer would dare ask them to pay over MSRP for a car on the lot.
Like the guy right above me who seems to think he really told that Lexus dealer what’s up by walking out the door and going to buy a Volvo.
Lexus sold that car to the next guy, for what they were asking, 4 hours later. Lexus doesn’t care that Volvo apparently doesn’t have the demand “problem” that they do. Dealers have all the cards right now. Seems like people aren’t used to that.
Tesla is playing the same exact game, making hay while they can.
stopcrazypp
Well-Known Member
That's the whole issue, good luck finding a dealer willing to sign paperwork like that on a hot product. Plenty of stories where they pretend to do that, but the paperwork ends up not legally binding and they screw you later.
Those accounts are just talking about in general. Manufacturer price increases (and decontenting) includes parts/labor increases and inflation, while dealership "market adjustments" typically are purely going to more profit, which is why people hate them. Plenty of people hate the idea of negotiating for a car and the dealership playing games, which is fundamentally different from paying a set price, where even if the manufacturer increases prices, that is all transparent to the buyer (and applies to all buyers ordering at the given moment). If you are ok or even happy with the traditional negotiation process obviously you will not be able to understand the perspectives of those that hate it.But that particular case is only a small fraction of the moaning in this thread. Plenty of others are walking in off the street and seem to be SHOCKED that a dealer would dare ask them to pay over MSRP for a car on the lot.
Like the guy right above me who seems to think he really told that Lexus dealer what’s up by walking out the door and going to buy a Volvo.
Dealers have all the cards right now. Seems like people aren’t used to that.
Tesla is playing the same exact game, making hay while they can.
The concept of charging over MSRP, which many franchises have a greed to sell cars for with the manufacturers, it’s really just a scalping kind of game.
Effectively, they know they can rip people off by charging a much higher price and they’re willing to do it.
The case in point was the Lexus dealer (rockville Maryland):
They’re only charging $7500 above MSRP for any hybrid vehicle, while their normal vehicles they’re not doing that with.
So yeah, I think an average person would be pretty pissed off. They’re not doing it to make more money in general because they don’t have a lot of inventory coming in and they need to make up the difference in losses. They’re doing it because they can get more money out of people who are desperate to get a vehicle. I understand that it’s a luxury vehicle, per se, but it’s still fundamentally wrong.
The real question is whether people upon seeing this do what I didn’t and leave, or decide to support them and pay more for the vehicle.
Effectively, they know they can rip people off by charging a much higher price and they’re willing to do it.
The case in point was the Lexus dealer (rockville Maryland):
They’re only charging $7500 above MSRP for any hybrid vehicle, while their normal vehicles they’re not doing that with.
So yeah, I think an average person would be pretty pissed off. They’re not doing it to make more money in general because they don’t have a lot of inventory coming in and they need to make up the difference in losses. They’re doing it because they can get more money out of people who are desperate to get a vehicle. I understand that it’s a luxury vehicle, per se, but it’s still fundamentally wrong.
The real question is whether people upon seeing this do what I didn’t and leave, or decide to support them and pay more for the vehicle.
Buying a car over MSRP may be OK if you keep the car 20 years,
many say it but very few do. When you are in the car game, you
can buy cars for 30% below MSRP. In two years with 15k miles it
is hard to break even. If you pay 20% above MSRP its just pure loss.
When the Honda Accord first came out, they were selling for 10k over MSRP,
A year later it was 10k under MSRP. Of course we are not in normal times.
Happy hour calls, never mind.
many say it but very few do. When you are in the car game, you
can buy cars for 30% below MSRP. In two years with 15k miles it
is hard to break even. If you pay 20% above MSRP its just pure loss.
When the Honda Accord first came out, they were selling for 10k over MSRP,
A year later it was 10k under MSRP. Of course we are not in normal times.
Happy hour calls, never mind.
thank you. this one-sided blindness is beyond ridiculous. if Tesla would build up the SC experience with all these extra profits... ok... i would feel better. but that's clearly not the case with lines getting longer and longer and repairs being pushed out due to staffing. at least a traditional "stealership" will get you in the next day and the repair won't take weeks and you can't speak to a person and oh...uber credits only...
OK, So who's being one-sided blindness here. Because I've had all those things happen at regular dealerships! You don't get in the next day, they'll schedule you out weeks to get a repair done, and they won't even give you uber credits. just a sorry you're on your own for transportation.
rhumbliner
Member
I think you meant to say that with fewer units sold dealerships need to generate more income per unit in order to make the same overall profit. Which, of course, begs the question of why dealerships are entitled to the same amount of (obscene) profits.
I admit I’m torn. I hate dealerships because they are (intentionally) slowing the movement to EV’s with their markups, but on the other hand I believe they are hastening their own demise which can‘t come soon enough.
RayK
Active Member
I don't believe you can equate markups with a desire to slow EV adoption. It just a basic case of supply vs. demand (i.e., Econ 101). They will still continue to apply markups on whatever they sell, ICE or EV, just because they can. In fact I'd say that with more people getting on the EV bandwagon, they will start reducing their markups on ICE vehicles (except those that are extremely popular, like pickups) and increase their prices on EV and PHEV simply because demand for those will rise.
The customers do have control, when voting with their $. What we are willing to pay, Who we buy from and who we do not, all make difference in what companies consider acceptable behavior. Behaviors can be changed, but getting people to do something other than what is strictly in their best interest is like herding cats.
RayK
Active Member
Yes we do. I think that's why Tesla has done so well with market penetration, despite their occasional price increases. When everybody pays the same price (at the same moment) it suggests a level playing field. Let's see if the Big 3 and foreign automakers can force their products to be sold at a standard price, like MSRP. I'd say not, as long as they adhere to the status quo with their independent dealership model. That lobby has great power and I don't see it changing that soon.
I have three cats and at times I can herd them. Mind you, it's probably their decision to go where I want them to but it gives me a sense of control.
rhumbliner
Member
I don’t believe Econ 101 applies here. The dealerships know that by marking up the cost of an EV they’ll steer customers to their ICE’s — which bring in larger profits from ongoing maintenance. With EV’s in short supply a potential customer can’t just drive down the street and shop for another, like they can with an overpriced ICE. It’s true dealerships will always take advantage of short supplies by jacking up prices but in this case the purchase price doesn’t tell the whole story. Dealers want to “recoup” lost maintenance profits by charging for it up front.
I paid 36,990 for my SR+ just a little over a year ago and now it is 46,990, exactly $10k more. All the car companies are making their money, it's just that Elon Musk has figured out a way to keep the extra for himself instead of letting a dealer take it. If I didn't like my car so much I'd think about selling it for a profit.
My dealer experience has been mixed. One time we went to the dealer with all the numbers that we could find online such as invoice, discounts to the dealer, whatever other info we could get. At the time it was still freely available but now you have to pay for that. But when we sat down and the sales guy saw we had it all we struck an easy deal of invoice less incentives plus a reasonable dealer markup for their efforts. The next time, after that car was stolen and then returned, we found a nice low miles used Odyssey at a Honda dealer and the sales people tried to pull every trick in the book. We just kept saying no, and then pulled out an online deal for that same car that was 2k less than what they were trying to get. The sales guy figured we hadn't checked because we didn't mention it. That was the end of negotiations, we got the car and told the finance guy where to go when he started trying to pull the finance tricks.
Trying to buy online was a very frustrating experience with the other makes because all the online listings said to call the dealer, and of course that just leads to them wanting you to come in so we can "make the best deal". Yea, right. Why have we put up with this for so long?
My dealer experience has been mixed. One time we went to the dealer with all the numbers that we could find online such as invoice, discounts to the dealer, whatever other info we could get. At the time it was still freely available but now you have to pay for that. But when we sat down and the sales guy saw we had it all we struck an easy deal of invoice less incentives plus a reasonable dealer markup for their efforts. The next time, after that car was stolen and then returned, we found a nice low miles used Odyssey at a Honda dealer and the sales people tried to pull every trick in the book. We just kept saying no, and then pulled out an online deal for that same car that was 2k less than what they were trying to get. The sales guy figured we hadn't checked because we didn't mention it. That was the end of negotiations, we got the car and told the finance guy where to go when he started trying to pull the finance tricks.
Trying to buy online was a very frustrating experience with the other makes because all the online listings said to call the dealer, and of course that just leads to them wanting you to come in so we can "make the best deal". Yea, right. Why have we put up with this for so long?
CapeOne
Active Member
The reality is that Tesla has been marking up prices too but they do it by raising the sticker prices, and since Tesla owns its dealerships the net result is basically the same. It's just not as apparent, obvious or transparent to buyers unless they've been following Tesla prices over the past year or so.
The same sort of thing was true when prices were going the other way i.e., before shortages, supply chain issues, etc. Tesla would lower the sticker prices instead of offering rebates. There were also other discounts or incentives that would come and go.
The same sort of thing was true when prices were going the other way i.e., before shortages, supply chain issues, etc. Tesla would lower the sticker prices instead of offering rebates. There were also other discounts or incentives that would come and go.
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