If you’ve done any car shopping over the past 24 months or so, you know about the low inventory situation. Not only is it challenging to find a suitable model, but prices are also the worst they’ve ever been. Thanks to a shortage of semiconductor chips, new cars aren’t being manufactured quickly enough, or at all. The result is that specific dealers are using low inventory as an excuse to put markups on new vehicles. Some automakers, like Subaru, aren’t happy with dealer low inventory markups on popular models like the Subaru Outback Wilderness.
Subaru isn’t happy with dealer markups
According to Jalopnik, a Subaru dealer in Orange County has 57 Subaru Outbacks in their inventory. Of them, 12 are Outback Wilderness trims, a highly sought-after model. Every Wilderness model in the dealer’s inventory is marked up to $45,673. That’s nearly $10,000 more than the standard MSRP of the SUV. They’re using lack of inventory as an excuse for their “low inventory markups.”
Unfortunately, this isn’t an isolated incident. Dealers everywhere, from every brand, are marking up their new car inventory. Why? Because they can. If dealers get their hands on a model or trim level that people want, they know there’s nowhere else they can get one. If customers want a Subaru Outback Wilderness badly enough, they’ll pay whatever price dealers ask. However, the manufacturer is not happy about it, and Subaru of America’s CEO sent out a letter to dealers addressing the problem.
What did Subaru say about the dealer low inventory markups?
Jalopnik managed to receive the letter from Subaru’s CEO through a tip in response to a customer complaint. In the complaint, the customer voices their concerns about Subaru Forester markups. This particular customer is loyal to the Subaru brand and noted that this would’ve been their third new Forester. However, the current price markups are putting the beloved model out of reach for them. The customer even gave a fitting name to the markups, calling it a “Low Inventory Surcharge.”
Fortunately, this was the straw that broke the camel’s back. On February 23, Subaru of America CEO Thomas J. Doll sent out a letter to all dealers. In it, he expressed his disappointment in a stern yet loving manner; although the CEO doesn’t make an obvious threat or potential punishment to dealers doing this, he clearly wants it to stop. One specific excerpt from the letter explains his dismay perfectly.
“We strongly discourage our retailers from engaging in this practice because of the negative impact this can have on the customer experience and our brand loyalty. In addition, such a practice does not fit with the brand philosophy of our Love Promise…that promise to provide our customers with the best purchase and ownership experience in the industry.”
It seems like Subaru of America’s CEO gets it
In the short term, from a dealer’s point of view, marking up vehicles, especially rare ones, seems like a great idea. Customers who want the car will pay whatever is asked, so why not? However, as Doll said in his letter to dealers, it’s more about giving customers a great experience. Dealers value customer and brand loyalty more than anything. Loads of sales are made to returningThat’smers, not to mention those who have their vehicle serviced by the dealer. That’s how these locations make most of their money.
Dealers are chasing those customers away by offering popular vehicles like the Subaru Outback Wildeit’ss with a massive markup. Who knows how long the chip shortage will last? If it’s a few more years, you can bet those customers will find another place to buy a car. Whether it’s a different brand or another Subaru dealership, the dealer with markups loses across the board. That’s why it’s a great thing that Subaru shames dealers for low inventory markups.