Dealerships are getting out of control and there seems to be no end to the many new vehicles that are in demand or lacking. Consumers are paying the price – literally.
This is a story we’ve heard countless times recently, unfortunately. Demand for new cars is at an all-time high, and supply is low due to chip shortages, the Ukraine conflict and rising gas prices.
Related: Ford dealers add 50% markup to F-150 Lightning despite CEO’s condemnation
The reason for the price increase is not only global events, brands are constantly releasing products that are highly desirable. One of the best examples of this is Ford’s new Bronco, which has been expected for so long that when it finally arrives, everyone claims to have their hands full.
Some of the biggest culprits are electric vehicles such as the Ford F-150 Lightning. The all-electric truck is the first for the brand and has already sold its annual allotted product. Even before the next batch reaches the dealership, markups are already crossing the 200% mark, with some examples of the $ 40,000 truck being advertised for around $ 150,000.
Read more: Chevy dealer asks for a huge $ 100,000 markup on 2023 Corvette Z06
What is the solution? Is it possible to completely cut off dealerships for selling vehicles directly to customers? Should manufacturers abandon the proposed retail price (MSRP) for dealerships in favor of a set price? An American automaker is already making a big impact: Tesla.
“The U.S. automotive industry has been selling cars in the same way for over 100 years, and there are many laws governing how this is done.”
These are the words of Tesla CEO Elon Musk, a brand that has cut dealership middleman to sell directly to customers. Instead of having a traditional network of dealers who are able to profit from selling branded vehicles, Tesla’s sales strategy focuses on “stores” where potential buyers can go to get information about the vehicles, without the pressure of buying. If a customer decides to buy a car, they can do it completely online.
More: Greedy Toyota dealer orders $ 10,000 markup on MSRP for 2023 GR Corolla
The process eliminates difficult sales strategies by dealerships and also eliminates the possibility of additional markup to make more profit on high demand vehicles. The process obviously works, as each Tesla model is in extremely high demand, and there has been no problem with price increases.
Should other brands follow in Tesla’s footsteps and keep a set price for the car instead of the manufacturer’s suggested retail price? Or is the dealership an essential part of the car buying experience and a benefit to the local economy?