ADM - Additional Dealer Markup

[ADDZ71]

I know everyone wants to buy a car at MSRP but understand what MSRP means. It is the Manufacturer Suggested Retail Price. Note the word Suggested. I know people can get bent out of shape of dealers charging more than MSRP in any form but these are for profit businesses and in the past many Manufacturers have forced cars on the dealer that were slow moving or resulted in very little margin. Consider these dealers today who have invested heavily in their dealership on land, buildings, training and other community support (think Little League). Those same dealers built their business models on a certain number of cars being sold per month. Well guess what, now they are faced with 30% fewer cars to sell but likely still have the same overhead. Just like everyone else it pains me to pay a higher price vehicle and I will do everything I can to achieve a lower price (X-Plan, order and wait etc.) but these are people that have a for profit business. Do not get upset that ADM has become a phenomena. Get mad for bait and switch tactics and sales people who don't know their product.

I hope my suggestion is received well.

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[Scooby24]

It's not likely to be well received by many because with respect to these vehicles, the dealership model is what supports ADM and dealership are not adding a perceived value. The ADM isn't going to Ford, it's going to a dealership that many have little to no relationship with. There was no interaction, very little communication and they can't provide meaningful updates that we cannot see ourselves.

If they aren't providing value, we don't want to pay them a markup.

 

[AKgrampy]

I know everyone wants to buy a car at MSRP but understand what MSRP means. It is the Manufacturer Suggested Retail Price. Note the word Suggested. I know people can get bent out of shape of dealers charging more than MSRP in any form but these are for profit businesses and in the past many Manufacturers have forced cars on the dealer that were slow moving or resulted in very little margin. Consider these dealers today who have invested heavily in their dealership on land, buildings, training and other community support (think Little League). Those same dealers built their business models on a certain number of cars being sold per month. Well guess what, now they are faced with 30% fewer cars to sell but likely still have the same overhead. Just like everyone else it pains me to pay a higher price vehicle and I will do everything I can to achieve a lower price (X-Plan, order and wait etc.) but these are people that have a for profit business. Do not get upset that ADM has become a phenomena. Get mad for bait and switch tactics and sales people who don't know their product.

I hope my suggestion is received well.

I do not like it either ; however, I understand it and we all are part of the problem. Basically the law of supply and demand. Machs are in demand and there is a lack of supply. Look at current housing market - prices have jumped drastically. I know if I was selling my house I would take the money! Same with used cars - their value jumped drastically overnight! I have a feeling there will be a lot of buyers remorse in a year or two when things go back to normal and used car values drop. I am lucky that there is no ADM on my Mach but if there would have been I most likely would have just waited another year or two.

 

[JohnnyMachE]

People hate higher prices period. If you pay more than sticker on anything you'll usually feel shafted and if you get a sale price you'll usually feel pretty good.

I don't think anyone is going to understand the "plight" of the dealer when they have there own problems to worry about. Everyone knows that ADM just combines the vendor and scalper role into one. Imagine how much people would complain if Walmart started selling PS5s for $800 instead of $500 MSRP.

ADM exists and sucks, that's it. People are frustrated and venting.

 

[RickMachE]

I know everyone wants to buy a car at MSRP but understand what MSRP means. It is the Manufacturer Suggested Retail Price. Note the word Suggested. I know people can get bent out of shape of dealers charging more than MSRP in any form but these are for profit businesses and in the past many Manufacturers have forced cars on the dealer that were slow moving or resulted in very little margin. Consider these dealers today who have invested heavily in their dealership on land, buildings, training and other community support (think Little League). Those same dealers built their business models on a certain number of cars being sold per month. Well guess what, now they are faced with 30% fewer cars to sell but likely still have the same overhead. Just like everyone else it pains me to pay a higher price vehicle and I will do everything I can to achieve a lower price (X-Plan, order and wait etc.) but these are people that have a for profit business. Do not get upset that ADM has become a phenomena. Get mad for bait and switch tactics and sales people who don't know their product.

I hope my suggestion is received well.

Well received? No.

Accurate information above? Not according to the National Automobile Dealers Association. Dealership Profits Breaking Records During Car Shortage

What source do you have that dealerships are making less profit today? Please cite a valid source. Or is it your opinion?

And 1/2 the respondents to this thread took it as fact already. Gotta love the internets. There is no plight. Dealerships are thriving. Making piles of money. Big freaking piles.

11/12/21 - KBB - Dealership Profits Breaking Records During Car Shortage

https://www.kbb.com/car-news/dealership-profits-breaking-records-during-car-shortage/

From the article:

America’s car dealers have spent most of 2021 struggling to find enough cars to sell. But they’re not hurting. They’re shattering profitability records.

According to a report from the National Automobile Dealers Association (NADA), net profit before tax at the average new car dealership through the first nine months of 2021 was up an astonishing 128.2% over the same period in 2020. Net profit includes both operating profit and the incentives some automakers pay to dealers who exceed sales targets.

Dealerships selling domestic cars saw their pre-tax net profit rise 112.6%, NADA says. Those selling imported cars saw an even greater increase, 140.6%.

 

[Motomax]

People hate higher prices period. If you pay more than sticker on anything you'll usually feel shafted and if you get a sale price you'll usually feel pretty good.

This reminds me of when JCP almost went bankrupt because they got rid of the “sales” illusion and just listed the low price lol.
I bought a motorcycle several years ago that was selling only At sticker or more. I told the sales guy idc how much the discount is but I’m not paying MSRP. I think they took like $100 off ?.

 

[FLmac]

I know everyone wants to buy a car at MSRP but understand what MSRP means. It is the Manufacturer Suggested Retail Price. Note the word Suggested. I know people can get bent out of shape of dealers charging more than MSRP in any form but these are for profit businesses and in the past many Manufacturers have forced cars on the dealer that were slow moving or resulted in very little margin. Consider these dealers today who have invested heavily in their dealership on land, buildings, training and other community support (think Little League). Those same dealers built their business models on a certain number of cars being sold per month. Well guess what, now they are faced with 30% fewer cars to sell but likely still have the same overhead. Just like everyone else it pains me to pay a higher price vehicle and I will do everything I can to achieve a lower price (X-Plan, order and wait etc.) but these are people that have a for profit business. Do not get upset that ADM has become a phenomena. Get mad for bait and switch tactics and sales people who don't know their product.

I hope my suggestion is received well.

I am probably in the minority around here, but don’t have a problem with ADM. There’s plenty of people who want to complain about the dealership model, how dealers are screwing people over ADM and how Tesla is better because their system is different. I’m sure those same people were more than happy to pay way under MSRP a few years ago when supply was high and demand was low. I paid a small ADM when I bought a cancelled order last week. The dealership was great, willing to negotiate and didn’t throw any surprises at the end. As long as dealers aren’t forcing customers who ordered to pay ADM or doing shady stuff to get them to cancel so they can mark it up, I don’t have a problem with the basics of supply and demand.

Plus anyone who is selling their previous car for more than it should be worth is basically doing the same thing. There’s plenty of people who bought a MME while waiting for their order and then will sell it/trade it when their order comes in. I’m guessing they aren’t going to take a major loss or give up the tax credit.

 

[Bigfeets]

When I ordered my MME, I was assured that "my dealer" (caused to choose an unknown by Ford's ordering system) would "honor" the MSRP at the time of my order and not add additional dealer markup. I'll be pretty steamed if they fail me on these two points just because Ford is slower and slower at producing the product I ordered. I think I'm with CEO Farley on this. We'll see what happens next summer when/if I get my ordered MME.
As noted elsewhere, I have examined my options due to MME delays. I've elected to "bite the bitter pill of ADM" to get a BEV that I like sooner rather than later, and it is NOT an MME because I couldn't locate an MME that suited me within my search range.
Thus, I've joined the folks who accept that the "microchip" shortage has NOT gone away, and sellers have an advantage in this "high demand-low supply" situation. Per Carmax, my 17-year-old car is valued at about twice its pre-pandemic value, so that's my only advantage, e.g. my ADM counter. Seize the day. or is it seizure.

 

[phil]

My biggest problem with the whole ADM thing is the redundancy. I mean, it's a dealer markup, ok? Of course it's additional. Have you ever heard of a subtractional dealer markup? C'mon, man!

Thank you for letting me finally get that off my chest. I feel much better now,

 

[mccdeuce]

invested heavily in their dealership on land, buildings, training

this is the issue. The ADMs are paying for an antiquated business model. There Are stories after story about how the dealers know little to nothing about the car, how to operate it, how to maintain it.

The problem as I see it is franchise laws designed to protect the dealers, when it seems all they do is hurt the consumer.

I ordered my MME online. Configured as I wanted it. Forced to select a dealer at that point With no ability to change. The dealer has added a front license plate bracket to the order (I legally do not need it, and do not want it) I have been trying to contact them for a few weeks now, no response. not Even a “sorry it stays”. I have even emailed the GM - no response. So now I have to take my time and go down to “My Dealer”. Dealers are not respectful of their clients. So why are people upset with ADM - because the dealers are not adding value to the car. They generally hurt more than they help.
I actually started a business plan to try and work with Ford. Be an EV only dealer. But the existing laws to protect the old dealer models from big corporate are getting in the way.

 

[Mach1E]

I know everyone wants to buy a car at MSRP but understand what MSRP means. It is the Manufacturer Suggested Retail Price. Note the word Suggested. I know people can get bent out of shape of dealers charging more than MSRP in any form but these are for profit businesses and in the past many Manufacturers have forced cars on the dealer that were slow moving or resulted in very little margin. Consider these dealers today who have invested heavily in their dealership on land, buildings, training and other community support (think Little League). Those same dealers built their business models on a certain number of cars being sold per month. Well guess what, now they are faced with 30% fewer cars to sell but likely still have the same overhead. Just like everyone else it pains me to pay a higher price vehicle and I will do everything I can to achieve a lower price (X-Plan, order and wait etc.) but these are people that have a for profit business. Do not get upset that ADM has become a phenomena. Get mad for bait and switch tactics and sales people who don't know their product.

I hope my suggestion is received well.

It won’t be received well for a few reasons:

1. no one likes dealerships and thus don’t care if they make a profit

2. The dealer model has created an “us vs them” mentality

3. people aren’t logical with this stuff, getting a “deal” is more psychological and emotional than math based.


People hate the idea of ADM. Doesn’t matter that we had 7.5% inflation in the last 12 months (highest in almost 40 years).

Doesn’t matter that everyone’s trade ins are worth significantly more.

Doesn’t matter that we still can borrow/finance at rates significantly below inflation.

People just don’t like the idea of an ADM.

Reality? Even paying a 2-5k ADM right now, they’re actually getting a better “deal” than those who paid MSRP a year ago.

 

[Cm12]

In addition to the valid points above, many car dealerships and salesman are downright unethical. They lie, cheat, and steal because they know it’s not worth the lawsuit for the other party. Or they have tricked an unwitting buyer into something that they didn’t realize. Granted, it’s the buyer’s responsibility to know what they’re buying, but many dealerships incentivize that type of behavior. Certainly not all, but enough to make it a major issue that we’ve all dealt with at one time or another. If someone makes extra money off me, I don’t want it to be them.

 

[Socalsp3]

Yeah the only good salesperson less likely to scam you are the internet sales people possibly. Expect to be paying commission when you deal with anyone else. They do not any value at all. Most people know more about the car they're buying than the salesperson. Hopefully they will go away when manufacturers will realize this and sell direct.

 

[FLmac]

In addition to the valid points above, many car dealerships and salesman are downright unethical. They lie, cheat, and steal because they know it’s not worth the lawsuit for the other party. Or they have tricked an unwitting buyer into something that they didn’t realize. Granted, it’s the buyer’s responsibility to know what they’re buying, but many dealerships incentivize that type of behavior. Certainly not all, but enough to make it a major issue that we’ve all dealt with at one time or another. If someone makes extra money off me, I don’t want it to be them.

Or there are unethical people in all professions and car salespeople/dealers have not always been great in the past, but it’s mostly different now. If you’ve ever tipped an employee at a restaurant, used a realtor to buy or sell a house, catered a party, hired a financial adviser, taken out a loan, bought furniture, jewelry, cell phone, higher priced clothing/shoes, etc. you’ve paid someone who has made money based off what you bought. I’m sure there are no unethical people in your profession either since you seem to think those people only get sales jobs. Most car salespeople make a basic “flat“ (flat standard commission) on most sales. Not everyone who makes money off you are lying, cheating and stealing to do it, but if that’s how you feel you should really consider never doing any of the above activities I mentioned.

 

[Cm12]

Or there are unethical people in all professions and car salespeople/dealers have not always been great in the past, but it’s mostly different now. If you’ve ever tipped an employee at a restaurant, used a realtor to buy or sell a house, catered a party, hired a financial adviser, taken out a loan, bought furniture, jewelry, cell phone, higher priced clothing/shoes, etc. you’ve paid someone who has made money based off what you bought. I’m sure there are no unethical people in your profession either since you seem to think those people only get sales jobs. Most car salespeople make a basic “flat“ (flat standard commission) on most sales. Not everyone who makes money off you are lying, cheating and stealing to do it, but if that’s how you feel you should really consider never doing any of the above activities I mentioned.

I didn’t say I had a problem with people making money off me, I said I had a problem with salesmen and dealerships making extra money off me. Holding back points on financing and ADM are things that I am definitely not going to deal with. People should be paid for their work, but car salesmen and dealerships have a long history of unethical behavior - there’s a difference between lying to a customer and fairly negotiating a better profit. The latter is fine, the former is not.

The other problem with the comparisons you listed is that the vast majority of people in the US NEED a car and will buy several over their lifetimes. You don’t NEED high-end fashion, jewelry, and fancy furniture. If someone gets hosed on their $5,000 purse, I have zero sympathy. When a car dealer screws a single parent on their $5,000 car by lying about the actual APR so they can hold back points and get a bigger commission, that doesn’t sit right with me. If you work in car sales, you know it’s a cutthroat business, even amongst the salespeople. There are minimal consequences for bad behavior, if any. If your financial advisor, realtor, etc., acts unethically, there are potentially serious consequences as they have professional licenses with a code of ethics. So no, I don’t want car dealerships and salesmen making any extra money off me. I’ll take my business elsewhere or simply not purchase a particular vehicle at all.

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