Buying a car? Be wary of your dealerships
Image Source: goforfinance
Written By: Abdullah Al-Ejel
If you’re thinking about buying a car soon, wait and do some extensive research. The chip shortage and high demand during continuous supply chain issues are contributing to higher prices, but another issue is making cars even more expensive: markups.
According to CNBC, car manufacturers like Jeep, Porsche, and Ford are selling certain models at least 20% above MSRP (Most Suggested Retail Price). For example, the Jeep Wrangler has an average markup percentage over MSRP at 24.4%. This costs any future Wrangler customers at least another $8000. Most manufacturers are guilty of these markups in the name of inflation and supply not meeting high demand. While supply definitely took a hit and companies may need to offset losses, this could mostly be price gouging. There are no federal laws defining a minimum percentage for price gouging, but the US PIRG states that “While laws vary by state, increases over 20% may be considered price gouging”. Seeing these companies go over a 20% price increase looks like price gouging to me.
To try and avoid higher markups, expand the number of dealerships you’re looking at. It may not be easy, but it’s worth it in the end saving yourself some money. A very helpful resource emerged this year, aimed at helping prospective car owners avoid certain dealerships. Markups.org began in 2022 after its co-founder, Trey Soucie, fell victim to an auto dealership’s price gouging attempts. The website gathers data from crowdsourcing, where anyone can report on their local dealerships marking up prices. The website has grown so much that consumers from Canada are also sharing their experiences. This is a great resource if you want to avoid nearby dealerships, or hopefully find a new one to report.
Always keep watch of predatory practices. Don’t feel obligated to sign papers quickly, make sure prices line up like they’re advertised, and keep the discussion & bargaining on the vehicle you want.