GM Warns Dealers About the Problem With Outrageous Markups on Vehicles
These days, prices for vehicles have increased due to the computer chip shortage and other factors from the pandemic. Dealerships have found a way to profit from it and began selling cars and trucks at even higher prices. However, General Motors is one automaker that’s fighting back. What are they doing to ensure a positive sales experience for their customers?
Why do some dealerships have huge markups?
Vehicle inventories have decreased substantially with the pandemic’s chip shortage. With high demand from consumers and low stock of vehicles, prices started rising, and dealerships found a way to take advantage of it for the new and used car market.
While any business would do what they could to profit from a sale, car dealerships feel the hit from the pandemic and are looking for ways to pay their staff. Unfortunately, it looks like they’re taking the MSRP and hiking it up by thousands of dollars. With high markups from dealerships, brands like GM are fighting back.
What has GM done to alleviate some of the dealership markup problems?
GM began selling the Hummer through online reservations, allowing consumers to skip the the dealerships. That angered GM dealers because they were left out of the opportunity for huge markups on the brand’s most popular rollouts.
GM has some vehicle launches coming up that will be important for the brand. The Cadillac Lyriq, Silverado EV, and the Corvette are scheduled to be released soon, and the company wants them to succeed. So, the brand is doing what it can to limit the price hikes.
Reportedly, GM’s North American President, Steve Carlisle, sent a letter to all dealerships selling its brand. He reminds them that their priority is to sell vehicles and some dealers have proven not to support a positive experience, which goes against its sales and service agreement.
Motor1 reports that the letter went on to say that the brand dealers are to “… effectively, ethically, and lawfully sell, promote, lease, and use of Products [sic] by consumers.”
GM ended its letter with a warning that if any unscrupulous practices were to be brought to the attention of its brand, action would be taken. That would include redirecting that particular dealer’s vehicle allocation and other recourses that aren’t stated.
Is it strictly a GM issue?
It appears that GM is not the only brand trying to take action against these exorbitant markups. Ford has also stepped in to reprimand some of its dealers. While not all of them are practicing unethical principles, a handful is spoiling it for the rest of them.
For those not following the agreements with Ford, the brand plans to do as GM and make changes in the vehicle allocation for that dealer. These unethical practices were recently seen with the Ford F-150 Lightning, according to CarBuzz.
Ford threatened to send that dealer’s entire allocation of the upcoming EV to competitors and not to the dealerships performing unscrupulous actions with the F-150 product. For private buyers planning to resell the truck once they get it in their hands, the brand gave a stipulation that they can’t resell it for at least one year.
While the after-effects of the pandemic are still causing issues in the automotive market, high markups are likely to remain. However, with the threats from the automotive brands, like GM and Ford, prices may not be quite as high as they have been. Only time will tell, though.