Dealer markups drove me to buy a Tesla

[Darmie]

Not only is there this huge markup when you go to the dealership to make a purchase, but it's also included when you make an on line purchase.
Can you imagine the excitement of ordering on line. You wait for what feels like eternity. Head to the dealership to drive your vehicle home, but you're hit with a $50,000.00 dealer markup. Yep. It's happening.

GMC Hummer EV Edition 1 Buyer Hit With Markup Upon Delivery

The dealer wanted over $160,000 for the vehicle.

gmauthority.com

 

[RayK]

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.

I don't believe that "the net result is basically the same". What Tesla does by adjusting their prices, up or down, is that it is fair to all buyers at that moment in time. People are paying the same, ignoring different tax rates and licensing fees, for the same product across the country. You don't have a multitude of independent dealers applying random markups to see how much they can extract from their "customers". Not to mention the wheel-and-dealing that can occur when said customers negotiate the price. Some people enjoy the back-and-forth; I don't. Markups will continue to be applied as long as the buying public does not vote with their feet and go somewhere else when a dealer tries adding a couple of thousand dollars to the MSRP.

Not sure how old you are but there was a car company that did try a one-price, no-dickering policy back around 1990: Saturn, a GM division. It went out of business around 2010.

ref: Saturn Corporation - Wikipedia

 

[texas_star_TM3]

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.

thank you. the Model Y AWD went from ~$50k to $62k+

 

[804son]

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.

However there are some differences as well:
1) When Tesla raises a price it is transparent and affects all potential customers the same.
2) Some dealerships are charging an additional markup and some are not.
3) The dealership model is get away with anything that is legal (ethical or not). At least most that I have dealt with and hide as much as possible from the potential customer.
4) Tesla does not have a Finance office that again attempts to extract more money from their customers, for what most would call unneeded services.

 

[Willy’sEV]

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?

You bring up a good point, the cost of your SR+ has increased $10K in a little over a year. At least here we have the bottomed line price, at the dealer it is a moving target. But when the sun sets, given an unpleasant experience at the dealer, it is the same deal….The dealer marks it up when you arrive at the showroom and Tesla marks it up on an ongoing basis but very stealthy.

 

[Zacster]

I wouldn't call what Tesla does stealthy. They put it right on their website. There is no pressure, no wheeling and dealing. If I wanted to buy the same M3 today that I bought last year it is 10k more and I know that before I click buy. If I say that isn't worth it, nobody is going to hold me hostage trying to sell me a car, any car, before I walk out.

When I bought mine the listed price was 37,990 but by the time my car came the price had gone down to 36,990. They gave me the lower price. Do you think a dealer would give you the incentive that the manufacturer gave them in the interim? That's a laugh. And if the MSRP was raised you can bet the dealer would try to weasel the raise out of you even though you signed a contract. If Tesla had raised the price your order would still be at the price at time of deposit.

I'm not saying Tesla is the most honest company around but at least the don't try to weasel money out of you. Except maybe that FSD feature... 12k for something coming "real soon now".

 

[CapeOne]

I don't believe that "the net result is basically the same". What Tesla does by adjusting their prices, up or down, is that it is fair to all buyers at that moment in time. People are paying the same, ignoring different tax rates and licensing fees, for the same product across the country. You don't have a multitude of independent dealers applying random markups to see how much they can extract from their "customers". Not to mention the wheel-and-dealing that can occur when said customers negotiate the price. Some people enjoy the back-and-forth; I don't. Markups will continue to be applied as long as the buying public does not vote with their feet and go somewhere else when a dealer tries adding a couple of thousand dollars to the MSRP.

With prices on some Tesla going up (or down) thousands of dollars in short periods, "paying the same at the same time" doesn't necessarily mean much especially if you happen to the one who bought a car only to see the price drop thousands of dollars within a few days or weeks OR are buying a car that has seen its price increase thousands of dollars from just a few days or weeks ago. At least with most rebates/incentives, you know when current prices may expire but Tesla typically adjusts prices without warning.

Besides, not everyone has necessarily paid the same at the same time for the same car with Tesla. For example, a few years ago, Tesla had an sale incentive that allowed a customer with a car on order to get at a higher priced inventory car if they took delivery before a certain date. Using current prices as an example, if someone had a new Model 3 in midnight silver with 18” Aero wheels ($48,190 retail) on order and an existing inventory Model 3 in black with 19” Sport wheels ($51,190) was available, the customer could get the inventory car for $3,000 less ($48,190 instead of $51,190) than someone who had ordered the $51,190 car or bought it off the lot.

Given that price changes, incentive changes, etc. can happen over short periods of time, "everyone paying the same" (even if it were always true) is way overrated in my opinion.

 

[CapeOne]

However there are some differences as well:
1) When Tesla raises a price it is transparent and affects all potential customers the same.
2) Some dealerships are charging an additional markup and some are not.
3) The dealership model is get away with anything that is legal (ethical or not). At least most that I have dealt with and hide as much as possible from the potential customer.
4) Tesla does not have a Finance office that again attempts to extract more money from their customers, for what most would call unneeded services.

1) When buying a car from a non-Tesla dealer, you know what you;'re paying (MSRP, over MSRP, under MSRP) before committing to a purchase. It's pretty transparent. If you're paying over sticker you know it but with Tesla, you don't necessarily know if the retail price is the same as it was last week or thousands higher. As I posted above, "everyone pays the same" is way overrated in my opinion.
2) Yes, and Tesla stores/dealers historically could have different prices depending on what kind of inventories they had.
3) Tesla is also about getting away with anything legal including price adjustments. last minute incentives, advertising cars at certain prices on the website even after production of the car at that price had ended, removing publicized option to sell lease car to third party dealers, etc.
4) No one is forced to buy.

 

[palt]

I’d argue though that with a classical dealership you never know what you’re paying until you’re in the little back office and signing papers. Everything you negotiated until that point is moot because now suddenly fees and insurances are getting slapped onto the bill (you can try to say no as much as possible, but something always sneaks it’s way onto the bill).

Not saying the Tesla model is perfect, but it’s at least upfront. Yes, price can increase for new orders but as long as I don’t make changes my price is set.

 

[Zacster]

1) When buying a car from a non-Tesla dealer, you know what you;'re paying (MSRP, over MSRP, under MSRP) before committing to a purchase. It's pretty transparent. If you're paying over sticker you know it but with Tesla, you don't necessarily know if the retail price is the same as it was last week or thousands higher. As I posted above, "everyone pays the same" is way overrated in my opinion.
2) Yes, and Tesla stores/dealers historically could have different prices depending on what kind of inventories they had.
3) Tesla is also about getting away with anything legal including price adjustments. last minute incentives, advertising cars at certain prices on the website even after production of the car at that price had ended, removing publicized option to sell lease car to third party dealers, etc.
4) No one is forced to buy.

1. Really? Have you ever bought a car from a dealer? You never know what they are going to try to charge you until they sit you down at the desk and start throwing numbers around. Ever try trading a car in at the same time? They'll play with those numbers too.
2. If you buy new on the website everybody is buying at the same price.
3. My experience was that they gave me the price adjustment downward, but you locked in the price upwards. But this applies only after you click buy. Up until then yes, they can change price. But you will see what the price is on the website at that moment. Does it matter if they raised the price overnight? That is their prerogative but at least they are honest about it and not "discussing it with their sales manager", IOW having a laugh in the back room about how they'll add the fees on the back end.
4. Yes, no one is ever forced to buy.

 

[CapeOne]

I’d argue though that with a classical dealership you never know what you’re paying until you’re in the little back office and signing papers. Everything you negotiated until that point is moot because now suddenly fees and insurances are getting slapped onto the bill (you can try to say no as much as possible, but something always sneaks it’s way onto the bill).

Not saying the Tesla model is perfect, but it’s at least upfront. Yes, price can increase for new orders but as long as I don’t make changes my price is set.

I don;t find what you describe nearly as true as it may have been decades ago, and feel it has become more of an exaggerated stereotype than reality these days. I'm not here to suggest one business model is better than the other, just that I don't find them much different. No one is forced to pay for extra insurance or whatever and people are free to get financing in advance and not have to do it through the dealership if they really don't want to.

I also don't find the no haggle, everyone pays the same idea much of a benefit since prices can potentially change quickly. Does it really matter if I and everyone else paid the same today if a week ago, the price was thousands less? Besides, you can walk into any dealership and pay whatever the sale price is at the time. It's usually the buyer that starts the negotiating process.

Buying a car today can be about as easy or complicated as someone chooses to make it.

 

[CapeOne]

1. Really? Have you ever bought a car from a dealer? You never know what they are going to try to charge you until they sit you down at the desk and start throwing numbers around. Ever try trading a car in at the same time? They'll play with those numbers too.
2. If you buy new on the website everybody is buying at the same price.
3. My experience was that they gave me the price adjustment downward, but you locked in the price upwards. But this applies only after you click buy. Up until then yes, they can change price. But you will see what the price is on the website at that moment. Does it matter if they raised the price overnight? That is their prerogative but at least they are honest about it and not "discussing it with their sales manager", IOW having a laugh in the back room about how they'll add the fees on the back end.
4. Yes, no one is ever forced to buy.

1) I have purchased several cars from dealers over time and knowing the price can be as easy (looking at the MSRP) or complex (haggling for every nickel) as someone chooses. The MSRP markup on new cars is much less than it used to be. Decades ago, the biggest savings on average would come from the dealer discount but today it's more from the manufacturer rebates/incentives which are known upfront.
2) Not necessarily. In just my one example above (reply #67), two people could've ordered cars on the website and ended up getting the same car for different prices. Besides, how beneficial is everyone "buying at same price” if just days ago, the price may have been thousands less as has happened plenty of times with Tesla. I think the "everyone pays the same" idea is way overrated.
3) Tesla is also about doing everything they legally can.
4) Yes.

 

[palt]

I have purchased and leased cars through the last decade as recently as two years ago (and attempted this year again) and while I try to understand what I’m paying for I’m not haggling for the very last dime.
It also depends on the region, but I absolutely disguise dealing with sales folks, pulling information out of their noses, the “I have to talk to my sales manager” play and then doing it all over with the last financing guy in the shady office.
Definitely not a low pressure environment and such a phenomenal waste of time.

Not saying Tesla is the solution, but at least I click a button, know that we’re all on a level playing field when placing the order and saves me countless messages back and forth with sales folks to close the deal.

 

[Z_Lynx]

Not sure how old you are but there was a car company that did try a one-price, no-dickering policy back around 1990: Saturn, a GM division. It went out of business around 2010.

I’d argue though that with a classical dealership you never know what you’re paying until you’re in the little back office and signing papers.

After the pain of buying two Hondas (one, a base model where they "lost the check" and we had to cut a second check; and the other where they left us with our crying newborn for an hour after being paid in full, we jumped at the chance to buy a Saturn. It was a very good car, reliable for years - but failed an inspection for a couple things that were hard to remedy so was scrapped. That Tesla avoided all the dealer pain was a huge plus.

 

[804son]

I think Tesla's Demand/Sales speak for themselves. There are many reasons why their demand is skyrocketing. The buying experience is definitely one of them. Consumers speak with their wallets and it shows.

 

[T4M3]

I think Tesla's Demand/Sales speak for themselves. There are many reasons why their demand is skyrocketing. The buying experience is definitely one of them. Consumers speak with their wallets and it shows.

100% agreed. Ordering online and also the delivery experience was very smooth with my Model 3 order.

I don't like haggling over the price at dealerships and then the extra push on their side to sell extended warranties and all other stuff.

In the future, if my budget allows it and I think the price is right, I will again order a Tesla.

 

[Willy’sEV]

This time I went with the Tesla, although at lease end may be a question mark or a cliff waiting for me.

Prior to Tesla, and forgetting about Saturn, we all went into the dealer and played the negotiating game. Yes, the salesman had to go speak to the manager, and you went back and forth until a deal was reached, and yes they try to throw in the extended warranty and spoiler and other nonsense at delivery time. You meet with the finance manager (also known in the industry as the “Bump Man”.

My point is we were used to this treatment, not saying we liked it but we definitely knew that we were going to play games when we went to buy a car. We had it in our minds that we were not going to pay MSRP, and we never did, until the current landscape.

So along comes Elon Musk and Tesla and tells you that there is no negotiation on price, we all pay the same price on a particular date, no haggling. There was some attempts before this (like Saturn) but Musk/Tesla burned it into our brains and it became the new normal. So we accept this. But why should we accept this? Because Musk/Tesla said so? Musk is a marketing genius.

So for the record, I hate going into the dealership and playing the games, however, I call it part of life. It was also ingrained in us that we would be haggling with the sales people at dealerships.

I am not going to defend car dealership sales practices, some are really really shady, others no so. Perhaps this is the new normal and we either accept it or not, we sure do have options now.

I am also a watch enthusiast. To make a long story short, it is very difficult to get a new Rolex watch from an authorize dealer now due to supply and demand. The grey market is profiting big time became prices are 2 and 3 times MSRP. I for one will never pay over list for a watch, but many many people do, it is their coin and they can decide for themselves. Same with cars, some will pay over MSRP some will not.

 

[KenC]

1. Really? Have you ever bought a car from a dealer? You never know what they are going to try to charge you until they sit you down at the desk and start throwing numbers around. Ever try trading a car in at the same time? They'll play with those numbers too.
2. If you buy new on the website everybody is buying at the same price.
3. My experience was that they gave me the price adjustment downward, but you locked in the price upwards. But this applies only after you click buy. Up until then yes, they can change price. But you will see what the price is on the website at that moment. Does it matter if they raised the price overnight? That is their prerogative but at least they are honest about it and not "discussing it with their sales manager", IOW having a laugh in the back room about how they'll add the fees on the back end.
4. Yes, no one is ever forced to buy.

I once traded in a BMW when buying a new one. I know they gave me a great price on the new one, but low-balled me on the trade-in. So, the day it came to close, instead of giving them my trade-in, I gave them the cash! Yep, they weren't happy about that. Then I sold my BMW, privately, for $2k more than what they offered me in trade.

 

[CapeOne]

Not saying Tesla is the solution, but at least I click a button, know that we’re all on a level playing field when placing the order and saves me countless messages back and forth with sales folks to close the deal.

But that's the buyer's choice. It doesn't/hasn't had to work that way. No one is forced to negotiate or go back and forth on price. They can choose to if they wish (although not necessarily with Tesla) but don't have to. Approximately 97% of new cars in the U.S. are sold this way, as are most higher priced items like motorcycles, boats, RVs, real estate, etc.

Neither way is perfect but I just don't see how the Tesla pricing model is a benefit here when you can buy any car without haggling.

 

[stopcrazypp]

But that's the buyer's choice. It doesn't/hasn't had to work that way. No one is forced to negotiate or go back and forth on price. They can choose to if they wish (although not necessarily with Tesla) but don't have to. Approximately 97% of new cars in the U.S. are sold this way, as are most higher priced items like motorcycles, boats, RVs, real estate, etc.

Neither way is perfect but I just don't see how the Tesla pricing model is a benefit here when you can buy any car without haggling.

Actually I would argue people are forced. The car franchise system is mandated by law in many states (especially for manufacturers which already have existing franchises). You simply do not have a choice of buying a car at MSRP directly from the manufacturer in many cases (this is putting aside MSRP hides invoice price and kickbacks dealers may get, something in a direct sales approach may instead be transparently passed to the consumer).

There are also other pressure tactics dealers can apply, which includes blocking your car in (others have said they used to even lock the office door).