Higher used Mach-E prices are the "New Normal"

[DennisD]

My post was about the impacts of a government mandated price from an economics perspective. I did not provide an opinion regarding whether or not it is a good business decision to add ADM.

When dealers add ADM, they are changing the market price of an item. It does not matter whether or not Ford changes the MSRP or a dealer uses ADM, the selling price in the market has been increased.

You have full proof that when dealers increase the price of a car by adding ADM it decreases demand. Many posting here have said they will not buy a car that is priced higher than MSRP. So for the dealers who have added ADM, the demand for their cars has decreased because some people refuse to go to that dealer. Right? If the dealer removes ADM, their will sell their cars faster because more people are willing to pay MSRP than to pay MSRP+ADM. Right?

So because some dealers are adding ADM, there are cars available for people to buy - as long as they are willing to pay more, of course. But at least the car with ADM is available to buy. The car would not be available if the dealer removed the ADM. And if government forced them to do it, it would decrease the number of cars available, increasing the shortage problem.

Again, I am not making a subjective point about whether or not ADM is a good business practice. I am making a factual point that if we ask the government to put price controls on the dealers, it will make the shortage problem worse. That is a fact and not opinion.

Your "logic" would apply if there were no supply line issues that we currently have.

For example: Let us say pre-pandemic that I sold t-shirts. I sold them for let's say, $10 a piece.

Now, because of my low price I sold out of them quickly and needed to restock. I look at "the books along with the competitors" and I find that I should be able to sell them for $20 per shirt. I now sell them for $20 per shirt and I am still selling out of them.

I raise them again to $40 per shirt. Sales dropped off and I find myself not needing to restock as often and now I am wondering if I overpriced them.

Demand went up, my price went up multiple times and sales decreased in this model over time.

I now list my shirts for $30 and they are selling quite well. I am able to get the shirts needed and the consumers are willing to pay for the shirts now priced at $30. If some entity i.e. the Govt. came and "priced fixed", this would throw an in-balance to the supply-demand chain.

Once again, this model is pre-pandemic with no supply chain issues. When I adjust the price, the amount of shirts made (by the manufacturer) either goes up or down. In other words, if I priced the shirts at $100 per shirt, only the Kardashian's would be wearing them.

Now on to the topic at hand that you have yet to answer other than with a "straw man" argument.

Some dealerships are selling cars (both ordered and on the lot) for MSRP.

Some dealerships are selling cars for 10K over MSRP.

Both are selling as fast (or faster) than they (Ford) can make them.

Unlike the "shirt" example, Ford can't make them any faster no matter the price. In other words, price has no bearing in this world we live in. A few Dealerships are seeing this to take advantage of the situation at hand. All I am suggesting is that the Dealerships charge a reasonable rate (MSRP) and everyone will be happy and be making money.

I, along with many on this forum are only wanting Dealerships to be reasonable with the prices they are charging and not gouging the consumer when there are supply issues. If there were no supply issues, I could really care less how much they charged. With no supply issues, the supply and demand theory would "kick in" and take care of itself and those dealerships that charged a higher rate would be like me with extra T-shirts at $40 per shirt.

So in conclusion, you are worried that there will be fewer cars (which won't happen) and I am more concerned of Dealerships taking advantage of the consumers.

Just one more question, would you defend a Dealership that sees out of state plates with a car pulling in and it is a Saturday afternoon and decides to charge the consumer (that is clearly distressed with no other shops open) 5 k to fix a flat tire?

Using your logic, if they didn't charge 5k there would be a shortage of tires. ?

Riddle me that my friend................

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[mkhuffman]

Your "logic" would apply if there were no supply line issues that we currently have.

For example: Let us say pre-pandemic that I sold t-shirts. I sold them for let's say, $10 a piece.

Now, because of my low price I sold out of them quickly and needed to restock. I look at "the books along with the competitors" and I find that I should be able to sell them for $20 per shirt. I now sell them for $20 per shirt and I am still selling out of them.

I raise them again to $40 per shirt. Sales dropped off and I find myself not needing to restock as often and now I am wondering if I overpriced them.

Demand went up, my price went up multiple times and sales decreased in this model over time.

I now list my shirts for $30 and they are selling quite well. I am able to get the shirts needed and the consumers are willing to pay for the shirts now priced at $30. If some entity i.e. the Govt. came and "priced fixed", this would throw an in-balance to the supply-demand chain.

Once again, this model is pre-pandemic with no supply chain issues. When I adjust the price, the amount of shirts made (by the manufacturer) either goes up or down. In other words, if I priced the shirts at $100 per shirt, only the Kardashian's would be wearing them.

Now on to the topic at hand that you have yet to answer other than with a "straw man" argument.

Some dealerships are selling cars (both ordered and on the lot) for MSRP.

Some dealerships are selling cars for 10K over MSRP.

Both are selling as fast (or faster) than they (Ford) can make them.

Unlike the "shirt" example, Ford can't make them any faster no matter the price. In other words, price has no bearing in this world we live in. A few Dealerships are seeing this to take advantage of the situation at hand. All I am suggesting is that the Dealerships charge a reasonable rate (MSRP) and everyone will be happy and be making money.

I, along with many on this forum are only wanting Dealerships to be reasonable with the prices they are charging and not gouging the consumer when there are supply issues. If there were no supply issues, I could really care less how much they charged. With no supply issues, the supply and demand theory would "kick in" and take care of itself and those dealerships that charged a higher rate would be like me with extra T-shirts at $40 per shirt.

So in conclusion, you are worried that there will be fewer cars (which won't happen) and I am more concerned of Dealerships taking advantage of the consumers.

Just one more question, would you defend a Dealership that sees out of state plates with a car pulling in and it is a Saturday afternoon and decides to charge the consumer (that is clearly distressed with no other shops open) 5 k to fix a flat tire?

Using your logic, if they didn't charge 5k there would be a shortage of tires. ?

Riddle me that my friend................

Dennis, in your shirt example you proved my point. And then you say "but this is different". No, a law is a law. It applies to cars, airplanes, water bottles and shirts. Just like gravity applies to all those.

We have 100% proof that the law is in effect when dealers add ADM and fewer people want to buy the car. Can you make the point that the same number of people want to by a car with a $10k ADM as want to buy a car at MSRP?

No, actually you didn't make that point. Instead you said it isn't fair. Basically you don't like the fact that dealers are trying to find the actual market price for a car instead of just selling it for MSRP. That is a subjective argument, and in your opinion you think they should be stopped from doing it, but it is not factual. I can express my opinion about that behavior, but I am going to stick to the facts.

Artificially reducing the market price for a product will cause shortages especially when supply is restricted, like it is with MMEs. It is a fact. I used a basic economic law to explain why, which isn't a "straw man" argument, it is a scientific fact. That is why they call it a law. You used made up examples to prove my point and then say it doesn't apply to cars.

This seems to be going around in circles. I provide scientific fact, you provide subjective opinion. We can debate opinion if you want, but at least acknowledge the fact that artificially reducing the market price of any product will result in less of that product being available to purchase. If we cannot agree on that scientific fact, we probably will get nowhere with the subjective opinion debate.

 

[DennisD]

Dennis, in your shirt example you proved my point. And then you say "but this is different". No, a law is a law. It applies to cars, airplanes, water bottles and shirts. Just like gravity applies to all those.

We have 100% proof that the law is in effect when dealers add ADM and fewer people want to buy the car. Can you make the point that the same number of people want to by a car with a $10k ADM as want to buy a car at MSRP?

No, actually you didn't make that point. Instead you said it isn't fair. Basically you don't like the fact that dealers are trying to find the actual market price for a car instead of just selling it for MSRP. That is a subjective argument, and in your opinion you think they should be stopped from doing it, but it is not factual. I can express my opinion about that behavior, but I am going to stick to the facts.

Artificially reducing the market price for a product will cause shortages especially when supply is restricted, like it is with MMEs. It is a fact. I used a basic economic law to explain why, which isn't a "straw man" argument, it is a scientific fact. That is why they call it a law. You used made up examples to prove my point and then say it doesn't apply to cars.

This seems to be going around in circles. I provide scientific fact, you provide subjective opinion. We can debate opinion if you want, but at least acknowledge the fact that artificially reducing the market price of any product will result in less of that product being available to purchase. If we cannot agree on that scientific fact, we probably will get nowhere with the subjective opinion debate.

Today, I was informed that Ford is raising their prices on the MME's along with a host of other products that they are making. I am perfectly fine with that. The market will dictate this (like the law that you are describing).

The Dealerships (if you will) are acting like the "scalpers" at a concert event. The band that plays don't like scalping of tickets. Because scalping takes place, there really isn't a shortage but rather a price manipulation that takes place. I don't know why this concept seems so hard for you to understand? The shortage doesn't occur because of price manipulation. There were a set amount at the start of the event no matter the cost just like there are a set amount of cars now being manufactured.

I totally get the supply and demand law. Low supply with high demand = higher prices.

Ford is recognizing this and they are adjusting their price. I am okay with this.

The difference is that the practice of artificially raising prices because they can, is unethical at best. Ford is actually losing because of this practice, just like the band at a concert event. Word gets out and the scalpers are the only one that benefits from this practice.

Price Protection provides help with business that do things unethical. This has nothing to do with supply and demand. Ford is taking care of this but some of the dealerships are taking advantage of it.

That is the difference, plain and simple.

There are no fewer cars made but rather more expensive cars when this happens.

 

[JeanneB]

I have no idea of why you think there would be more of a shortage. The main reason of the shortage is because of lack of parts i.e. chips. Price (in this case) has nothing to do with a shortage.

Once again, some dealerships are still selling for MSRP while other dealerships are taking advantage of the chip shortage and making huge profits on every car sold.

Ford Motor Company would not be included in the "price fixing" but rather the dealerships. We are not suggesting that "Ford" cut their prices to go broke? We would basically be asking the dealerships to sell for what Ford suggested (Manufacture Suggested Retail Price) Note that Ford did not suggest to sell 10K over MSRP. It is the Dealerships taking advantage of the conditions on the ground so to speak.

Let me give you an example that may illustrate this better.

Let us pretend you are in a desert and need water. There is a person that has a container of water that they purchased originally for $1 and they usually sell it for $1.50 (suggested price of manufacturer is $2 in this example). They now see you and decide to sell it for 100k. If you don't buy it, you will thirst to death. You decide to buy it.

Now let us say that someone i.e. (the big bad govt) decides to make the person selling the water to sell it for $2. (the MSRP price) The person is still making money even though they don't have as much water as they used to have. In this example, there would be other people out there selling water for $2 without being forced to.

The water didn't go into a "shortage mode" because he now charged $2 and the man still made 2x what he originally paid for it.

Now you come along and worry that the man that is making 100k is going to sell out of water and then inflation will occur?

The irony of this whole thing is that the dealerships are aggravating the inflation for the consumer and the dominos start to fall even faster. If costs go up, then (the consumer that bought an elevated cost product) would need to charge more for their product to recoup their loss.

Once again, please explain how there would be more of a shortage?

So just a question for you. When and if things return to normal, should everyone pay MSRP and not try to work the dealers for a better price? In normal times there are people who want to buy vehicles under what the dealer pays for them. And will go to 10 different dealers to get as far under invoice as they possibly can. When there is a lot of inventory it's a buyers market, when inventory is low, it's a seller's market just like anything else.

 

[DennisD]

So just a question for you. When and if things return to normal, should everyone pay MSRP and not try to work the dealers for a better price? In normal times there are people who want to buy vehicles under what the dealer pays for them. And will go to 10 different dealers to get as far under invoice as they possibly can. When there is a lot of inventory it's a buyers market, when inventory is low, it's a seller's market just like anything else.

I have never known a Dealer to get "screwed" on price. I have known many consumers that have gotten "screwed". Dealerships will try to sell add on crap and a host of other things that you don't really need. I am not too worried about them when price is concerned. So to answer your question, yes I will try to negotiate a lower price.

Like I have said all along, a few Dealerships (in this rare moment) are taking advantage of both Ford and the consumer (just like the scalper does).

It is legal but unethical IMO.

I was just trying to point out that this "shortage" would exist with or w/o the ADM that they are charging.

 

[Kevin P]

Charging market price for something isn't unethical. Its business. I can't believe people are complaining that someone is willing to pay more for a product than they are. Have you seen some recent reports saying that 86% of new car sales were at ABOVE MSRP?

Did you all complain when the dealers (and manufacturers) were forced to sell almost everything at well below MSRP (because below-MSRP was the market value?) Was that unethical too? Its stealing sales away from those dealers who refuse to do it!

One thing to remember as well... At MSRP, Ford dealers make almost no money on a Mach E, and also, they will hardly ever make money servicing it (which is the primary revenue stream for dealers).

What WOULD be unethical is if certain dealers bought every Mach E available and then jacked up the prices, like certain idiots tried to do with toilet paper 2 years ago.

The above comes from someone (me) who generally has a very anti-dealer opinion, and only let them touch my cars when I have no other choice (or its free/warranteed.)

 

[DennisD]

Charging market price for something isn't unethical. Its business. I can't believe people are complaining that someone is willing to pay more for a product than they are. Have you seen some recent reports saying that 86% of new car sales were at ABOVE MSRP?

Did you all complain when the dealers (and manufacturers) were forced to sell almost everything at well below MSRP (because below-MSRP was the market value?) Was that unethical too? Its stealing sales away from those dealers who refuse to do it!

One thing to remember as well... At MSRP, Ford dealers make almost no money on a Mach E, and also, they will hardly ever make money servicing it (which is the primary revenue stream for dealers).

What WOULD be unethical is if certain dealers bought every Mach E available and then jacked up the prices, like certain idiots tried to do with toilet paper 2 years ago.

The above comes from someone (me) who generally has a very anti-dealer opinion, and only let them touch my cars when I have no other choice (or its free/warranteed.)

From what I have researched, Dealerships make closer to 3K if selling at MSRP.

In short, the vehicles hold no profit margin. Instead, the invoice given to franchises comes at the MSRP of the car. The profit is solely made through the manufacturers bonus’s. At most, the Ford Mustang Mach-E will leave dealerships 4.9% + $250 of “wiggle room”.

• 1% + $250 as a delivery allowance. This is meant to compensate the dealership and employee cost to physically prep and deliver the vehicle.
• 1% in ad covenant is money to be used for marketing purposes.
• 2% in EV Funding is a bonus for maintaining proper EV certification and on-site chargers. Forcing EV education is a must especially with all the misinformation we’ve received from today’s Ford network.
• 0.9% is made up of two bonus’s, one for maintaining a positive customer feedback quota, and another for registering a minimum of 70% of new car customer through Ford’s app, FordPass.”

So if MSRP is $48,000 the dealership would make $2,602 (4.9% + $250).


Now to the point that I was trying to make that is falling on deaf ears.

It is LEGAL and yes, they can do this. IMO, I think it is unethical to make over 13k on a car if you factor in 3k on MSRP along with 10k on ADM.

They are coming very close to what is called price gouging. (which is unlawful in many States) They are taking advantage of the chip shortage created in a large part due to the pandemic and they are stepping on the throat of the consumer through this process.

With that being said, the chip shortage is allowing some Dealerships to "rape" the consumer when they can. The Dealership will never sell a new car at a loss. I don't care what they tell you, they just don't.

Crocodile tears for the Dealerships won't work for me.

 

[AllenXS]

When I joined the forum over a year ago I said one reason I was buying the MME because it would retain its value. I had people laugh and say as an EV it would lose so much value.
Didn't count on supply issues, pandemic, war, etc. etc. to prove me right. But still, what will it be like in five years?

 

[JeanneB]

Charging market price for something isn't unethical. Its business. I can't believe people are complaining that someone is willing to pay more for a product than they are. Have you seen some recent reports saying that 86% of new car sales were at ABOVE MSRP?

Did you all complain when the dealers (and manufacturers) were forced to sell almost everything at well below MSRP (because below-MSRP was the market value?) Was that unethical too? Its stealing sales away from those dealers who refuse to do it!

One thing to remember as well... At MSRP, Ford dealers make almost no money on a Mach E, and also, they will hardly ever make money servicing it (which is the primary revenue stream for dealers).

What WOULD be unethical is if certain dealers bought every Mach E available and then jacked up the prices, like certain idiots tried to do with toilet paper 2 years ago.

The above comes from someone (me) who generally has a very anti-dealer opinion, and only let them touch my cars when I have no other choice (or its free/warranteed.)

My point exactly.

 

[mkhuffman]

I totally get the supply and demand law. Low supply with high demand = higher prices.

Sorry, but it does not look like you understand based on what you have posted.

There are no fewer cars made but rather more expensive cars when this happens.

The shortage I am referring to is the shortage of cars available for you to buy. If Ford is not able to increase production, the same number are made. But that does not mean there are the same number available to buy. You are conflating what is produced with what is available for a consumer to purchase.

IMO, I think it is unethical to make over 13k on a car if you factor in 3k on MSRP along with 10k on ADM.

This is not an economic or factual argument. It is an opinion. I am making a factual and economic point and you keep responding with your opinion about how it is unfair for dealers to charge more than MSRP.

By the way, MSRP = Manufacturer's Suggested Retail Price. MSRP is NOT the market price. As others have pointed out, prior to COVID shutdowns and the resulting shortages many cars were sold for less than MSRP. That is because Ford does not set the market price, the market does that.

The market consists of the sellers and the buyers. Ford is irrelevant and is neither the seller or the buyer.

Sellers and buyers negotiate on a price and then the transaction occurs. If a seller wants a price that is too high, the buyer does not buy. But the seller wants to make as much as possible on the transaction, which is why there is a negotiation. Dealers know the demand for cars is high, so they are adding ADM. When they do that, it causes demand to drop in the market. Again, Ford is neither the buyer or seller, so Ford is irrelevant.

The law of supply and demand applies to buyers and sellers in a market, which happen to be dealers (sellers) and consumers (buyers). If you force the seller to sell for a price that is lower than what the buyers are willing to pay, more will be purchased and shortages will increase. I keep repeating this point because it is a FACT. Not an opinion.

You don't like it, but that is your opinion. You think the sellers are behaving unethically, but that is your opinion. It is not a fact. The law of supply and demand is a fact.

 

[DennisD]

Sorry, but it does not look like you understand based on what you have posted.



The shortage I am referring to is the shortage of cars available for you to buy. If Ford is not able to increase production, the same number are made. But that does not mean there are the same number available to buy. You are conflating what is produced with what is available for a consumer to purchase.



This is not an economic or factual argument. It is an opinion. I am making a factual and economic point and you keep responding with your opinion about how it is unfair for dealers to charge more than MSRP.

By the way, MSRP = Manufacturer's Suggested Retail Price. MSRP is NOT the market price. As others have pointed out, prior to COVID shutdowns and the resulting shortages many cars were sold for less than MSRP. That is because Ford does not set the market price, the market does that.

The market consists of the sellers and the buyers. Ford is irrelevant and is neither the seller or the buyer.

Sellers and buyers negotiate on a price and then the transaction occurs. If a seller wants a price that is too high, the buyer does not buy. But the seller wants to make as much as possible on the transaction, which is why there is a negotiation. Dealers know the demand for cars is high, so they are adding ADM. When they do that, it causes demand to drop in the market. Again, Ford is neither the buyer or seller, so Ford is irrelevant.

The law of supply and demand applies to buyers and sellers in a market, which happen to be dealers (sellers) and consumers (buyers). If you force the seller to sell for a price that is lower than what the buyers are willing to pay, more will be purchased and shortages will increase. I keep repeating this point because it is a FACT. Not an opinion.

You don't like it, but that is your opinion. You think the sellers are behaving unethically, but that is your opinion. It is not a fact. The law of supply and demand is a fact.

Price Gouging is a fact, yet you bend over backwards in defense of that practice. Telling.

https://www.motortrend.com/news/ford-f-150-lightning-ev-dealership-price-gouging/

It may be all a mute point in the near future anyway.

Ford may eat their own for those that are price gouging.

 

[mkhuffman]

Price Gouging is a fact, yet you bend over backwards in defense of that practice. Telling.

https://www.motortrend.com/news/ford-f-150-lightning-ev-dealership-price-gouging/

It may be all a mute point in the near future anyway.

Ford may eat their own for those that are price gouging.

Price gouging is an opinion, not a fact. In my opinion, there is no such thing as price gouging. It is a made up term for people who don't like the market price of something.

If you don't like the market price, don't buy it. Pretty simple. Then you are not gouged. ?

Pretty funny how people think they are somehow wronged when they voluntarily pay for something they want. Maybe taking personal responsibility for our own decisions isn't something some people want to do. They would rather blame others.

 

[RickMachE]

Price gouging is an opinion, not a fact. In my opinion, there is no such thing as price gouging. It is a made up term for people who don't like the market price of something.

Um, no. States don't have laws against things that don't exist.

https://www.ncsl.org/research/financial-services-and-commerce/price-gouging-state-statutes.aspx

 

[bp99]

Price gouging really only applies to necessities such as food, especially during a natural disaster. Those are the scenarios where state laws are aimed. A > $50k car is not a necessity for anyone. There is no price gouging here. As has been stated, it's simple market economics. If dealers don't mark up, no one would ever see one on a lot. Most people's only option would be buying "used" from people flipping them.

If you don't like the market price, you have options. First, you can order from a dealer that sticks to MSRP on orders and wait or you can work the phones/email until you're lucky to find one within a distance you're willing to travel on a lot at a price you're willing to pay. Instant gratification means paying local market value (or getting extremely lucky). Getting mad at dealers for selling at a price the market supports is just being whiny about not getting your way (odds are you would never get one if they priced below market with current supply levels and you'd be bitching and moaning about no dealers having one for sale).

Some of the extreme markups seen could also be more of a marketing play than a greed play as well. A dealer might want to keep at least one hot car on the lot to get traffic to either get orders placed or to sell cars with lower desirability. I'm sure they'd accept full price offers for $20k ADM, but most likely those cars are priced to not sell. Deferring a few thousand dollars profit a few months could be a really cheap marketing expense.

 

[mkhuffman]

Um, no. States don't have laws against things that don't exist.

https://www.ncsl.org/research/financial-services-and-commerce/price-gouging-state-statutes.aspx

Um, yes, it is my opinion.

So your opinion is always the same as the government's? I think for myself, and I don't just believe something is true because the government says it is.

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