Two major U.S. automakers are calling out car dealers for allegedly jacking up prices beyond sticker value and ripping off customers.
Ford and General Motors warned dealers to stop exploiting supply chain shortages by setting prices above the manufacturers’ suggested retail prices, or MSRP.
“We have very good knowledge of who they are,” Ford CEO Jim Farley said while unveiling the company’s latest quarterly results.
Ford estimates that around 10% of dealers are overcharging.
General Motors also has put dealers on notice, saying it is aware of “a small minority of bad actors” raising car prices “far in excess” of sticker value, according to the Detroit Free Press.
Both Ford and GM have threatened to withhold deliveries of new models from dealers if things do not change.
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A recent Edmunds auto market research report showed that more than 80% of car sales in January were above MSRP, with the average transaction price climbing $728 above the suggested retail price, while some paid as much as $10,000.
Barclays analyst Brian Johnson estimated the value of the markups at $3.6 billion, according to Fox Business.
“This is in part driven by affluent consumers being willing to shell out more cash to get the vehicles that they want, but there’s also a vast population of individuals who are being forced to do so simply because they need transportation and have no other choice, Edmunds Executive Director of Insights Jessica Caldwell said.
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Edmunds’s research experts are suggesting that consumers hold off on new car purchases if possible and note that it could be “a year or longer if they want to hold off until the market resembles anything close to the pre-pandemic normal.”
