With the semiconductor shortage throwing a wrench into supply chains, manufacturers are dealing with uneven inventories nearly across the model range. We saw this problem arise in 2020 due to the global pandemic, then worsen in 2021. For 2022, the struggle remains, and consumers are bearing the brunt of it.
When vehicles are available, some have their prices marked up. Indeed, dealer markups are becoming common and are a stark contrast to the deep discounting pushed by the automakers themselves on some models. No longer can consumers expect to save much off the sticker price. Instead, prices are holding firm and, in some cases, thousands of dollars in dealer markup follows.
How to Avoid Dealer Markup
There are essentially three ways to avoid paying too much for a new vehicle. We will examine them as well as look for options to avoid overpaying.
1. Negotiate with Knowledge
While dealer markups seem widespread, not every car dealership is so engaged. The reason? Some dealers have pledged not to increase prices on sought-after models such as the Chevrolet Corvette and Ford F-150 Lightning and are holding to their promise. Others, however, are not as committed and will add on with impunity across the board.
The Internet is your friend and will help you find vehicles near and far. The best plan is to find your vehicle of choice, contact the dealer, and negotiate before setting foot inside the showroom. This means having complete knowledge of the pricing at hand, including manufacturer discounts as well as special deductions that may apply to you. These savings include recent college graduates, first responders discounts, and military and veteran savings. Ask to have all applicable discounts included; these may offset whatever markups are in place and then some.
You can also appeal to a salesperson’s nature and simply ask for the price you want.
2. Be Mindful of Other Add-Ons
The most obvious change in the sticker price is the dealer markup. This amount appears as an addendum to the Monroney with the extra cost listed. It does not get any more obvious than that.
Sometimes, in addition to the secondary sticker, other add-ons are listed. These include so-called protection packages that add underbody coating or special paint protection. The charges typically add hundreds of dollars to the vehicle cost. Unfortunately, they are hard to avoid once included. That said, you can ask for the cost to be dropped or, in place of other dealer markups, simply accept them and move forward.
3. Wait it Out
Do you absolutely need a new vehicle right now? For some consumers, the answer is an unequivocal yes as either their lease has expired, or their current ride no longer meets their needs. For these individuals, shopping for a different vehicle is essential.
For everyone else, holding onto their current ride for another year or so may be the best course of action. Here, you will want to make repairs and handle maintenance issues to keep your vehicle running. At the same time, keep an eye on the market for possible relief of the chip shortage crisis. It will come to an end and when it does, inventories will start to build. You may find that ordering a new vehicle will make the transition easier once you are ready to enter the market.
All in all, dealer markups seem like a scourge in an already difficult consumer buying process. And in many ways, they are. That said, dealers are not controlled by manufacturers and may set their prices as they wish. Even so, savvy consumers know to shop around as the best prices may be at a dealership that is not within their service area.
See Also — A Dealer Wants Your Car: Should You Sell?