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Study Suggests Ford Dealers Should Refrain From Charging Over MSRP

With new vehicle inventory levels remaining at or near record lows as a result of various supply chain constraints, Ford dealers – along with the sellers of most every automotive brand on earth – have been attaching markups to the price of many of those vehicles for some time now. In certain cases, these markups can be rather large, and in general, have drawn the ire of customers and The Blue Oval itself. Thus, it’s not terribly surprising to learn that a new study recently conducted by Growth from Knowledge found that Ford dealers and others should avoid charging over MSRP, as such practices can have serious longterm impacts on customer affinity and loyalty.

The study found that a whopping 80 percent of new vehicle buyers in May and June of 2022 paid at or above MSRP to purchase that vehicle, a staggering number indeed. Among those shoppers, a total of 34 percent admitted to paying fees they had never heard of before, 31 percent purchased a model that wasn’t their first choice, 30 percent compromised on the features they wanted, and 30 percent bought their vehicle from a dealer that wasn’t their first choice.

However, 31 percent of the shoppers surveyed who paid over MSRP said that they would tell others not to go to the dealership they used, compared to 14 percent who paid sticker price. Similarly, 27 percent who paid a markup of some sort said they would never buy a vehicle of the same brand again, compared to 10 percent of those who paid MSRP.

“The extreme effects of supply chain breakdowns and inflation may seem like a perfect storm – one that demands unprecedented pricing practices,” said Julie Kenar, SVP at GfK AutoMobility. “But manufacturers and dealers need to think beyond today’s troubles to protect their brands for the long term. While paying above MSRP may not seem terribly different than simply paying the list price, our research shows that the negative feelings generated are much stronger – and more threatening to future business.”

While Ford dealers have traditionally ranked at or near the top of various brand loyalty studies, it’s clear that these types of practices represent a major threat in the long term. Ford CEO Jim Farley recently expressed his desire to move toward a fixed price model as the company prepares to undergo a major reorganization that will split it into two distinct entities – Ford Model e for EVs and Ford Blue for ICE vehicles – but dealers have pushed back against that notion, and may retain their ability to set their own prices, regardless, as they prepare to switch over to this new business model next year.

We’ll have more insights like this to share soon, so be sure and subscribe to Ford Authority for 24/7 Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comments

  1. Placido

    And there are goofballs paying the 10-20k markups on Maverick’s.

    Reply
  2. David Dickinson

    Dealers Suggest Ford Creates Inventory (that isn’t recalled in 60 days)

    Reply
  3. Steve Ketterer

    If the consumer refuses to pay the extra money, gouging is no longer an effective strategy.

    Reply
  4. Alan

    If a dealer charges over sticker price, I expect my trade-in reflect same increase! Play any game but it’s the outlay difference with trade that is most important!! I definitely will inform friends, neighbors & etc thru internet or word of my mouth of my dealer experience… good or bad. Always did & will. Dealer’s & manufacturers profits depend on satisfied repeat sales!

    Reply
  5. NCEcoBoost

    I’d never pay MSRP, with the ridiculous prices that Ford is charging. $33K+ for a Bronco Sport Big Bend? You must be kidding me. Good thing FordPass has a $2K off offer, but still, it’s too much. WAY too much. I’d buy a Nissan Versa for MSRP and suffer for a while.

    Reply
  6. Thomas Willhite

    I actually found a Maverick Lariat in stock this week…nicely equipped with hybrid …..29k sticker, dealer has 47k on it…got em “down” to 44k all in…walked away….friggin ridiculous !

    Reply
  7. Mike Towpath Traveler

    The days of large dealerships with empty lots will be eventually coming to an end. Ownership will not see the sense in paying property tax on ground with no product sitting atop it to sell, especially in the US Northeast, with it’s high property tax rates.

    And when these dealerships start to fall, we can all point back to the incredible greed these dealerships displayed in selling the Bronco and Maverick in those arbitrary, excessive dealer markups.

    Reply
    1. Dee Hart

      I drove through a local Ford dealership (in Canada) and found a 2021 Bronco badlands (soft top) with a price tag of 66,000 dollars (cdn) yesterday. I was seriously looking at a new Explorer ST but quickly changed my mind and bought a new 2022 Acadia Denali AWD V6

      Reply
  8. GaryB

    cant wait for the stealership model to end. Dealerships should just be pick up points for getting new vehicles (at MSRP), parts, and certified service.

    Reply
    1. Bayman71

      Yes, Ford should let us buy direct from them and we pick them up at a delivery stable. Only person working there would give us our keys and paper work and we just drive off the lot. Good by dealer theft.

      Reply
  9. Kzoo86

    I think a trillion multi-billion lawsuit, against Manufacturers and dealers, would end this price gouging. I’ll fix what I have until this BS is over. I can fix a lot for $15k.

    Reply
  10. Judy

    I want to buy a Ford lariat it’s the perfect truck for a senior. I will not pay their greedy prices. Bring back production to the states.

    Reply
  11. imanjunk

    Those dealerships charging more than MSRP deserve to go out of business. But Ford is no better raising its truck 7k magically just when the 7500 tax rebate is about to pass though it may not qualify anyway considering where for is sourcing their batteries! The other brand has planned better for this day. Yes that other brand.

    Reply
    1. Dee Hart

      Ford is sourcing their batteries from CATL, A Chinese company… (of course)

      Reply
  12. Andrew Helsinger

    My niece wanted the full sized Bronco, but the dealer wanted 10K over. She ended up buying the Benz.

    Reply
  13. John geel

    New roof on the
    Bronco,all white what is the word?

    Reply
  14. John geel

    What is with the white roof on the bronco what can you tell about it?

    Reply
  15. mike s

    The dealership blames the manufacturer, Ford discourages markups by the dealership. It’s all a bunch of BS and everyone , dealership and manufacturer love how this scenario has turned out. Ford takes your deposit, tells you when (eventually), you will get your vehicle, and then the dealership marks it up. Who is the only one involved in this transaction that suffers? YOU, the customer. Anyone that puts in an order for any Ford vehicle is a fool. Yes, paying over MSRP by thousands happens. I’m jealous that I can’t afford to do it, but doing it certainly causes additional pain for the average buyer. One more vehicle that won’t be available, so wait time is now longer. I hope Ford suffers big time for their practices. Don’t give anymore business to this company.

    Reply
  16. Charles

    Study also suggests the Motor Companies should have good margins on new vehicles and not continue to cut our margins and not lower the invoice price dealers pay!

    Reply
  17. OWEN

    In nearly every case, the place you buy your car is not owned by the manufacturer. Rather a separate & completely independent company. MSRP stands for “Manufacturer’s Suggested Retail Price.” Emphasis on the “Suggested.” In nearly every case there is no set price for any automobile. The dealer can charge what they want. The independent dealer owns the vehicle.
    Dealers have used “Market Adjustments” over MSRP for as long as cars have been around. Normally limited to scarce production models or specific upfits. More often than not, when times were more normal, and supply was plentiful folks were often charged less than the suggested price (nobody ever complained about that). For the coming year or possibly more that may not be the case…

    Today’s more common markups are due directly to scarcity of inventory and related supply issues.

    A global supply disruption with many factors has taken place. Manufacturing & transportation of all types of goods have been impacted. Many parts are in short supply. Microprocessor chips are the most commonly discussed parts hard to find, and increasingly expensive. However, tires and other more “old-tech” parts are also suffering shortages. Car dealers are scrambling for inventory. They cannot get the volume of cars they want or need, so supply to shoppers is also constricted.

    Short supply and high demand result in higher prices.

    Overall, dealers are selling fewer cars, yet their costs remain the same (if not higher). Government-mandated health insurance, unemployment insurance, workman’s compensation insurance, family leave, sick leave, paid holidays, overtime, and a long list of payroll taxes at the federal, state, and local level, are just some of the expenses. As are the property taxes etc the dealership pays on the land it occupies. These costs and others all remain the same if not increasing.

    Until inventory can catch up with demand a dealership must recoup the lost revenue by charging more for certain vehicles based on the current market forces to keep their business afloat.

    Reply
  18. Bayman71

    What is the legal definition of price gouging?
    When retailers take advantage of these spikes in demand (often coupled with supply bottlenecks) by charging exorbitant prices for necessities, it’s referred to as “price gouging.”

    Reply
  19. Dave Phillips

    I checked out New Inventory at the local Ford dealer web site & found a new 2022 basic Bronco 2 door. When I asked for the price, was told “not available”. Instead, I was directed to a used 2021 Badlands for $67K. Bad, bad PR.

    Reply
  20. D Grim

    Ford should refrain from charging over MSRP to dealers for lease returns that are 3 years old! Let’s talk about that first.

    Reply

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