(NEW YORK) — Looking to buy a new Kia Telluride sport utility vehicle? Expect to pay $48,509 — more than $3,700 above the manufacturer’s suggested retail price.
Luxury SUVs like the Range Rover ($117,890) and Cadillac Escalade ESV ($102,584) are selling for $3,000 to $6,000 over MSRP, according to Edmunds, which compiled a list of the top 10 vehicles with the largest market adjustments in the fourth quarter of 2021.
Markups on sports cars are even more dramatic: dealers are asking (and getting) 5% over MSRP for the Corvette Stingray ($86,511) and 8% for Ford Mustang Shelby GT500 ($91,611).
“People are accepting these prices without complaining … they’re going with it and making the plunge,” Jessica Caldwell, Edmunds’ executive director of insights, told ABC News. “Dealer markups are happening all over the board. Manufacturers don’t really have control over it.”
The automotive industry has not been immune from the price hikes impacting nearly every industry. Desperate consumers are starting to surrender to the new reality: discounts, incentives and negotiating are so 2019.
In December, consumers paid on average $709 more than the suggested transaction price, Caldwell said, noting that the upward march in prices really took hold in August.
“We have not seen this happen before on an aggregate level,” she said.
And markups are impacting nearly 90% of car buyers, according to one estimate, forcing some automakers to threaten a dealer crackdown.
‘Out of control’ luxury markups
It’s the Mercedes-Benz G-Class, the boxy, ultra-luxe ute driven by celebs and socialites, that may be the most extreme example of dealership markups. The base G-Class costs $174,650 though new owners are shelling out an additional $30,405 on average — if they’re lucky to get one at all. Caldwell said she knows of one woman who recently paid $50,000 above MSRP for a G-Class. Some Mercedes dealerships are even asking $337,000 for a 2021 AMG G 63 G-Class — more than $150,000 above the MSRP, according to Caldwell.
“This woman thought she got a good deal,” said Caldwell. “Consumers feel pressure to buy right away because inventory is so low.”
Some owners of the ultra-luxe G-Class have paid $150K above the six-figure sticker price.
And it’s not just the G-Class getting the markup treatment. The Mercedes GLS SUV and GLC Coupe SUV are also seeing massive price hikes. A Mercedes-Benz spokeswoman declined to comment when reached by ABC News.
Marc Van Hengst, a brand ambassador at the Jack Daniels Porsche dealership in Upper Saddle River, New Jersey, called the car market “out of control” and said he disapproves of the outrageous prices dealers are charging.
“I don’t like to do markups. It’s bad for business and will scare people away,” he told ABC News.
Van Hengst said he sees prospective customers coming into his dealership and pleading with management for a 2022 911 GT3 — the hottest Porsche on the market now among enthusiasts. The 502-horsepower GT3 sprints from 0-60 mph in 3.2 seconds and comes with a starting price tag of $161,100. A quick search on Cars.com pulls up listings for $307,740 — $339,000 — even $349,900.
“You get a lot of performance [in the GT3] which a lot of people will not use at all … but people want the performance,” Van Hengst said. “The internet makes it seem like it’s the most desirable Porsche of all.”
Tyson Jominy, vice president of data and analytics at J.D. Power, said 87% of consumers are currently paying above MSRP, which is already at a record high. The average new vehicle price is now $45,283 versus $35,000 in December of 2019, according to J.D. Power. The global chip shortage and supply crunch have led to surging prices, Jominy said.
“There are some crazy markups and the higher price point you go the crazier they are,” he told ABC News. “Automakers have never seen anything like this. But some of them are telling dealers to cool it with markups. It’s not in their best interest long term.”
He added, “The higher markups are like a tax on rich people.”
Cracking down
Ford and General Motors are actively trying to stop dealerships from heavily marking up the price of new vehicles.
Steve Carlisle, president of GM North America, addressed customer interest for the upcoming Corvette Z06, Chevrolet Silverado EV, GMC Hummer EV, GMC Sierra EV and Cadillac Lyriq in a letter sent to the automaker’s dealer network on Jan. 18, writing in part:
“Unfortunately, it has come to our attention that in connection with some of these announcements and launches, a small number of Dealers have engaged in practices that do not support a positive sales experience for our customers. This puts our collective interests at risk and generates negative press that reflect poorly on GM’s brands and your dealerships. Specifically, it has come to our attention that some dealerships have attempted to demand money above and beyond the reservation amounts set in GM’s program rules and/or have requested customers to pay sums far in excess of MSRP in order to purchase or lease a vehicle … GM will be forced to take action if it learns of any unethical sales practices or brokering activities that undermine the integrity that customers expect from the Chevrolet, Buick, GMC, and Cadillac brands.”
A GM spokesperson confirmed the letter to ABC News, adding, “We want every customer to have a great experience. The majority of our dealers know this; however, we want everyone on the same page.”
In a tersely worded memo, Ford instructed dealers not to raise the price of its new F-150 Lightning electric truck nor demand that customers already on the reservation list make additional deposits or payments.
“It has come to our attention that a limited number of dealerships are interacting with customers in a manner that is negatively impacting customer satisfaction and damaging to the Ford Motor Company brand and Dealer Body reputation,” the memo stated.
A Ford spokesperson told ABC News in response to the memo: “The all-new F-150 Lightning represents a leap ahead in innovation for Ford trucks and is critical to the Ford brand and our dealerships as we move into a segment we’ve never competed. We are competing with others who have a direct model and we need to be very mindful of how customers perceive Ford and our dealer network. How our dealers treat customers has major implications not only on an individual dealer but the reputation of Ford and our dealers as a whole. We want to show customers how our Ford dealer network provides a better experience than anyone out there.”
Automakers displeased with excessive markups could penalize wayward dealers in the future with fewer allocations.
“Markups can sour the relationship with the customer,” Caldwell said.
Even the unloved compact car has seen its price skyrocket as consumers frantically snap up SUVs. Drivers who may have shunned sedans before are willing to buy any vehicle at this point, Jominy pointed out.
“We’re seeing very limited inventories and high prices in this market for the foreseeable future,” he said.
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