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

[kennethjk]

Why would intent matter? Isn't it a matter of numbers?

Intent does matter under the code, if you purchase something specifically for resale tax treatment can be different depending on a number of things

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[FLmac]

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?

Your example is called price gouging and it is illegal. The government says so.

I was impatient for a car and would like to think it was an emergency situation, but it was not in any way. I have a hard time believing anyone has an emergency situation that they need a $50k+ EV.

I believe in free markets and the ability for the market to set the price.

Now if you want the price locked in at MSRP and if I was rich I would be more than happy to go buy every MME I could find and turn them for a profit. Thats the problem. You’ll have a few of the wealthy buying every car they could get and normal people will still be paying $10k over and not getting the tax credit.

 

[FLmac]

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.

I sell RVs and have for long enough to remember when there weren’t supply issues and high demand. It’s a similar industry. I’ve seen plenty of new RVs sell at a huge loss. I don’t know how car dealerships do it, but most RV dealers floorplan. It’s how they pay for the RVs until they sell. They get so much time without interest, then interest kicks in. Sometimes there will be holdback or rebates to sell leftover inventor, but most of the time when they take a loss all they hope is they can get some money on financing, warranty or accessories.

 

[DennisD]

Your example is called price gouging and it is illegal. The government says so.

I was impatient for a car and would like to think it was an emergency situation, but it was not in any way. I have a hard time believing anyone has an emergency situation that they need a $50k+ EV.

I believe in free markets and the ability for the market to set the price.

Now if you want the price locked in at MSRP and if I was rich I would be more than happy to go buy every MME I could find and turn them for a profit. Thats the problem. You’ll have a few of the wealthy buying every car they could get and normal people will still be paying $10k over and not getting the tax credit.

If you sell RV's for a living you would know that the "wealthy" can not do what you are suggesting.

They can't turn a profit by purchasing many cars when it comes to a tax credit. If they didn't claim the tax credit and had to pay sales tax, they wouldn't be far enough ahead to make it worth it. Also, if they bought multiple cars they would need a dealership license thus becoming a car dealership. A used MME would not generate enough money if you couldn't take the tax credit.

The "wealthy" would be in the same line so to speak to purchase an MME as the "normal" guy. If they got their hand on one, they would be lucky.

The "normal" guy is paying 10K ADM now. How would locking in the MSRP make it worse for the normal guy? Because the ADM is 10K, many times, only rich (or foolish people IMO) are purchasing them now on the lot at 10K ADM.

Please explain to me how the wealthy would be able to jump ahead of the line to hoard and purchase all of the MME's if it were set at MSRP's?

I believe that Ford is seeing and setting the market correction now. They are raising their prices on the new cars MSRP's. I believe that a few sleazy Dealerships are taking advantage of the shortage by price gouging well above the MSRP's.

This practice is legal but IMO, I think it is sleazy of them to do so. That's all I am saying...........

 

[mkhuffman]

If you sell RV's for a living you would know that the "wealthy" can not do what you are suggesting.

They can't turn a profit by purchasing many cars when it comes to a tax credit. If they didn't claim the tax credit and had to pay sales tax, they wouldn't be far enough ahead to make it worth it. Also, if they bought multiple cars they would need a dealership license thus becoming a car dealership. A used MME would not generate enough money if you couldn't take the tax credit.

The "wealthy" would be in the same line so to speak to purchase an MME as the "normal" guy. If they got their hand on one, they would be lucky.

The "normal" guy is paying 10K ADM now. How would locking in the MSRP make it worse for the normal guy? Because the ADM is 10K, many times, only rich (or foolish people IMO) are purchasing them now on the lot at 10K ADM.

Please explain to me how the wealthy would be able to jump ahead of the line to hoard and purchase all of the MME's if it were set at MSRP's?

I believe that Ford is seeing and setting the market correction now. They are raising their prices on the new cars MSRP's. I believe that a few sleazy Dealerships are taking advantage of the shortage by price gouging well above the MSRP's.

This practice is legal but IMO, I think it is sleazy of them to do so. That's all I am saying...........

There is no such thing as price gouging.

 

[FLmac]

If you sell RV's for a living you would know that the "wealthy" can not do what you are suggesting.

They can't turn a profit by purchasing many cars when it comes to a tax credit. If they didn't claim the tax credit and had to pay sales tax, they wouldn't be far enough ahead to make it worth it. Also, if they bought multiple cars they would need a dealership license thus becoming a car dealership. A used MME would not generate enough money if you couldn't take the tax credit.

The "wealthy" would be in the same line so to speak to purchase an MME as the "normal" guy. If they got their hand on one, they would be lucky.

The "normal" guy is paying 10K ADM now. How would locking in the MSRP make it worse for the normal guy? Because the ADM is 10K, many times, only rich (or foolish people IMO) are purchasing them now on the lot at 10K ADM.

Please explain to me how the wealthy would be able to jump ahead of the line to hoard and purchase all of the MME's if it were set at MSRP's?

I believe that Ford is seeing and setting the market correction now. They are raising their prices on the new cars MSRP's. I believe that a few sleazy Dealerships are taking advantage of the shortage by price gouging well above the MSRP's.

This practice is legal but IMO, I think it is sleazy of them to do so. That's all I am saying...........

First, I think you may be confused that only “wealthy“ people buy RVs, but I understand that you are allowed to have your opinion and my facts don’t change that opinion.

I don’t believe Ford is increasing prices due to dealers charging ADM. I believe the cost to build the cars is getting more expensive, but then again I’m shocked Ford is price protecting orders.

The problem is you keep using the term price gouging to define something that isn’t actually price gouging. What makes you think anyone needs a $50k+ car? I lived 15 years of my adult life without any car.

In this hypothetical situation where the government sets the price for new cars, I think that supply would dwindle even more than now and used prices would go up even higher. Even without the tax credit, if I could buy a car at MSRP and turn around days later and sell it for $5-$10k over that would make sense to most I’m sure. I don’t know all state laws on dealer licenses, but in my state (from the little I know) it wouldn’t be much to cover those costs to make it worth it.

The big reason there is new stock out there is because of ADM. I was happy to pay ADM because I wanted the car sooner. I also negotiated the ADM down and I am ok with the amount I paid. I don’t think the dealership was sleazy or unprofessional. I think they were following the market.

Ironically, it sounds like if Ford increases the price in the next few months by another $5-$7k depending on configuration you have no problem with that.

 

[FLmac]

There is no such thing as price gouging.

The only thing I know if that’s price gouging is this example… when a store in FL marks up their bottled water by 500% or something similar during a state of emergency like during a hurricane because people need it.

A dealer charging over MSRP because the market warrants it isn’t price gouging. It’s supply and demand.

 

[ridgebackpilot]

The only thing I know if that’s price gouging is this example… when a store in FL marks up their bottled water by 500% or something similar during a state of emergency like during a hurricane because people need it.

A dealer charging over MSRP because the market warrants it isn’t price gouging. It’s supply and demand.

I guess in your world, there's no such thing as business ethics. 90 percent of Ford dealers seem to agree as they gleefully mark up the few MMEs available by thousands of dollars.

But the other 10 percent of dealers refuse to engage in the unscrupulous business practice of levying ADM. They regard that as short-term price gouging and they realize it will chase their customers away. They take the longer view that customer retention and brand loyalty are more important than making a fast buck. Ford agrees, which is why they're considering limiting allocations of in-demand vehicles to dealers that slap on ADM. In Canada, Ford already does that.

My problem with ADM is simple: Dealers don't add value by charging ADM, they simply add price. I'd love to see a class-action lawsuit against them for violating US anti-monopoly laws! At any rate, eventually the market will work against them and they'll lose customers to more scrupulous dealers that refuse to price-gouge their customers. It's already happening: The single largest Ford dealer in northern California makes a point of advertising that they don't apply ADM to any of their cars.

 

[bp99]

I believe that Ford is seeing and setting the market correction now. They are raising their prices on the new cars MSRP's. I believe that a few sleazy Dealerships are taking advantage of the shortage by price gouging well above the MSRP's.

Price increases from Ford are most likely due to increased costs for parts and manufacturing. They had been keeping the base MSRP magically just below the $50k threshold of many State's rebate programs. That seemed very intentional. It's likely with the current costs, they couldn't do so and maintain any margin.

 

[RickMachE]

I guess in your world, there's no such thing as business ethics. 90 percent of Ford dealers seem to agree as they gleefully mark up the few MMEs available by thousands of dollars.

But the other 10 percent of dealers refuse to engage in the unscrupulous business practice of levying ADM. They regard that as short-term price gouging and they realize it will chase their customers away. They take the longer view that customer retention and brand loyalty are more important than making a fast buck. Ford agrees, which is why they're considering limiting allocations of in-demand vehicles to dealers that slap on ADM. In Canada, Ford already does that.

My problem with ADM is simple: Dealers don't add value by charging ADM, they simply add price. I'd love to see a class-action lawsuit against them for violating US anti-monopoly laws! At any rate, eventually the market will work against them and they'll lose customers to more scrupulous dealers that refuse to price-gouge their customers. It's already happening: The single largest Ford dealer in northern California makes a point of advertising that they don't apply ADM to any of their cars.

90 percent? No way.

Citation?

 

[mkhuffman]

The only thing I know if that’s price gouging is this example… when a store in FL marks up their bottled water by 500% or something similar during a state of emergency like during a hurricane because people need it.

A dealer charging over MSRP because the market warrants it isn’t price gouging. It’s supply and demand.

That is a reasonable perspective. I do think the market price is what the market will pay, regardless of the circumstances or product, and the free market price naturally reduces (and usually eliminates) shortages. We definitely don't want water shortages after a hurricane. I understand that my libertarian perspective is not shared by the majority, but that is OK with me. One day everyone will agree with me. I hope!

But since this is not a water forum, I am glad we agree on cars!

 

[ridgebackpilot]

90 percent? No way.

Citation?

Here's your evidence: My informal survey in this thread suggests that currently about 90 percent of Ford dealers in northern California are applying ADM to the MME. From many reports here, in southern California it's closer to 100 percent! ADM amounts range from $3,000 to $20K.

 

[RickMachE]

Here's your evidence: My informal survey in this thread suggests that currently about 90 percent of Ford dealers in northern California are applying ADM to the MME. From many reports here, in southern California it's closer to 100 percent! ADM amounts range from $3,000 to $20K.

California isn't the US. One of the reasons that dealers in California would add ADM is because of the very high salaries that are paid in the state.

Have you looked at this list of dealers nationwide? Not near 90% and that's just 10% of the dealers. https://www.macheforum.com/site/threads/official-list-no-adm-mach-e-ford-dealers.95/

 

[ridgebackpilot]

California isn't the US. One of the reasons that dealers in California would add ADM is because of the very high salaries that are paid in the state.

Have you looked at this list of dealers nationwide? Not near 90% and that's just 10% of the dealers. https://www.macheforum.com/site/threads/official-list-no-adm-mach-e-ford-dealers.95/

That's like saying, "Michigan isn't the US"! The point is that patterns of ADM vary widely across geographies, even within states. In affluent areas like southern California where buyers can afford ADM, more dealers tend to apply it.

Buyers willing to pay ADM make the situation worse for all of us. And, thankfully, even in some relatively affluent areas, a few standout dealers refuse to engage in the practice. We should all celebrate and reward them!

 

[RickMachE]

That's like saying, "Michigan isn't the US"! The point is that patterns of ADM vary widely across geographies, even within states. In affluent areas like southern California where buyers can afford ADM, more dealers tend to apply it.

Buyers willing to pay ADM make the situation worse for all of us. And, thankfully, even in some relatively affluent areas, a few standout dealers refuse to engage in the practice. We should all celebrate and reward them!

Totally agree with every point you've made, except that 90% of dealers charge ADM. If 90% of California dealers charge ADM, that's not representative of the country.

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