Ford, GM Make Stronger Push to Stop Flipping, Price Gouging of Popular Models

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ridgebackpilot

ridgebackpilot

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I agree with you on this. Another reason to consider is, volume, no more trade volume for a dealer. To stay in business and keep the lights on they have to charge more for less volume.
And why should customers pay for that?!

This strikes me as further evidence that the dealership model is a dinosaur and soon headed for extinction! Tesla, Carvana, Vroom and others have shown us conclusively that dealers are not an essential element of the buying process for either new or used cars...
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ridgebackpilot

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Now for some comic relief, and a couple of interesting comments about Ford's long-term plans to address the ADM problem with EVs through their "Model E" Program:




And lest you think ADM is only a problem with Fords, check this out!

 
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"Semantics"?! Tell that to the thousands of Ford customers who have walked away from deals because they don't want to pay ADM. For many people, ADM represents a real barrier to buying a car they want.

I assume you don't have a business degree, so you don't understand the concept or rules of business ethics. But many of us do.

Business ethics isn't just a discretionary, "feel good" thing. It's a way of defining and expressing the values of a company. And that often translates into real revenue and market advantages.

After all, who wouldn't want to buy from a company with superior business ethics? A company that respects and treats their customers better than others?

Is all of that just "semantics"? No, it's about values and ethics, which today are very real, tangible concepts in business. And something any successful business had better consider carefully.

Trying to defend ADM by arguing it's just the law of supply and demand is a common fallacy. But that just doesn't fly for businesses that have values and ethics. They know this isn't a semantic argument, but one that has a very real impact on their customers and the future of their businesses.
Actually what’s funny is that I do have a business degree.

But again, you aren’t arguing business concepts. You’re arguing philosophy, which I’m happy to argue as well.

You keep suggesting that raising prices in one circumstance is morally wrong (unethical), yet completely ignore all the other examples of price increases that you seem completely fine with. It’s illogical in my opinion.

I could list many other ways that your “ethical” local Ford dealer is doing things from a price standpoint that are arguably WORSE than ADMs.

I’m betting their service department charges around $175/hr for labor when a local mechanic would charge $75/hr for the same job. Is that unethical?

Or their finance department will charge 4% interest when a local credit union will charge 2% Is that unethical?

Their used car department will charge thousands more for a used car than a private party seller. Unethical?

You are accepting markups on certain things (the above) as totally fine, but having a higher than MSRP asking price is some moral dilemma?

I just don’t agree.
 

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I agree with you on this. Another reason to consider is, volume, no more trade volume for a dealer. To stay in business and keep the lights on they have to charge more for less volume.
Well, actually yes and no.

Dealers, despite low inventory, are making record profits year over year.

Significantly record profits.

I don’t feel bad for the dealers one bit.

They definitely don’t HAVE to raise prices to “keep the lights on,” they just “can.”

Not sure what industry everyone here is in, but if they’re having an awesome banner year, I don’t think it’s unethical to do so.

Should realtors cut their fees since so many houses are selling so fast?

Should Best Buy have put their computers on sale when they all sold out in the last couple years? (They didn’t put them on sale, they raised the prices)

I just don’t see how car sales are or should be any different.
 

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And why should customers pay for that?!

This strikes me as further evidence that the dealership model is a dinosaur and soon headed for extinction! Tesla, Carvana, Vroom and others have shown us conclusively that dealers are not an essential element of the buying process for either new or used cars...
Well customers don’t “have” to pay for it.

That’s actually the BEAUTY of the dealership model. They compete with each other. So you don’t HAVE to pay an ADM if you find a dealership like your local one that will give you a better price.

Unlike the Tesla model where everyone HAS to pay the $9000 price increase on the Model Y.
 


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And why should customers pay for that?!

This strikes me as further evidence that the dealership model is a dinosaur and soon headed for extinction! Tesla, Carvana, Vroom and others have shown us conclusively that dealers are not an essential element of the buying process for either new or used cars...

Every business has to make money to stay in business. So is every customer has right to do business with the business they like, you can simply choose to use dealer you like.

Business model changes after so many yrs/decades, may be Tesla model will flourish if most people like that model, only time will tell.
 

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Dealers are not the only ones marking up pricing and flipping - I see Carvana has a 22 GB Premium AWD-X listed. It is identical to mine except for the interior is black. Asking price is $ 65K ($ 75K with taxes, licensing and delivery). It only has 95 miles on it. At least at the dealership, you qualify for the tax credit.

But as other posters have mentioned - that is Free Market Dynamics at work.
 

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Interesting Car & Driver article on automakers pushing back against dealers charging ADM and customers flipping new EVs.

The article suggests ADM is applied only by a minority of dealerships, which isn't true here in northern California. Here, the vast majority of dealers mark up the MME and other in-demand new cars on their lots, sometimes by tens of thousands of dollars.
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ADM is not the problem. It is people willing to pay it that hurts. Don't pay $10K over MSRP for a car people... :oops:
 

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ADM is not the problem. It is people willing to pay it that hurts. Don't pay $10K over MSRP for a car people... :oops:
Ding ding ding!

If the cars didn’t sell at those prices, “asking price” wouldn’t matter.
 

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I enjoyed reading different perspectives....I kept flipping back and forth. Some real great points. As for me, psychologically, hearing ADM puts me off. I've come to realization that getting MSRP is the new norm. So if I was to consider let's say a MME vs model y, I would take into consideration the price difference between model y MSRP and MME with ADM and of course waiting time to get the car before making the decision. I went with MME because I was getting 7500 credit and xplan pricing (no ADM!) even though model y would have been delivered in half the time when I was shopping for cars with the price being very similar to MME.
 

Mach1E

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I enjoyed reading different perspectives....I kept flipping back and forth. Some real great points. As for me, psychologically, hearing ADM puts me off. I've come to realization that getting MSRP is the new norm. So if I was to consider let's say a MME vs model y, I would take into consideration the price difference between model y MSRP and MME with ADM and of course waiting time to get the car before making the decision. I went with MME because I was getting 7500 credit and xplan pricing (no ADM!) even though model y would have been delivered in half the time when I was shopping for cars with the price being very similar to MME.
And that is exactly why people don’t like ADM. It’s definitely a psychological thing.

With buying a car, EVERYONE wants to “feel” like they got a good deal. It’s psychological. And “over MSRP” doesn’t feel good.

People would rather the manufacturer raise MSRP than dealer raise the price.

That’s why no one notices when there was a $3000 rebate last month and it’s $2000 this month.

But everyone will notice a $1000 ADM sticker.

Reality? Both equal a $1000 price increase. One just doesn’t feel like a deal.

This is why manufacturers have used rebates for decades. It allows them to change prices quickly as needed.

But rebates don’t work when demand and inflation raise too quickly and actually exceed MSRP.
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