There’s good reason for sticker shock — let’s break down what could be happening.
Ever since we started running our dealer markup series — with our last update featuring the “Big Cojones” award — a ton of you have kindly sent in egregious examples of dealer markups across the country. Again, we’re not just talking about insanely hot, hard-to-get vehicles like the Ford Bronco or sports cars like the Chevrolet Corvette, either.
There’s a dealership in Oakland, California right now (as of November 23, at least) asking $96,442 for a brand new Toyota RAV4 Prime, according to a particular image that’s been making the rounds on Reddit among other places. The dealer, of course, is withholding the actual price until you call them — although I’m certain they’ve encountered a fair amount of disbelief/outrage at that sort of sticker price.
Far from the only example, a Volkswagen dealer in Nashville, Tennessee is selling a rear-wheel drive ID.4 Pro — with Navigation! — for an eye-watering $99,999. Now, that second one had me a bit suspicious, and I wanted to see if that played into a theory I had when we started doing this series.
Here’s something to keep in the back of your head…and some crap to call your dealer out on:
So, what the dealer told me about that Volkswagen is that it’s purely a demo unit, and they don’t actually intend to sell the car for that price. Basically, if they actually sell a car at MSRP, then they’re out of luck when other folks come by wanting to try out the ID.4. Going back to late October, I put out a theory that some dealers may be pulling that move to scare folks away from the few precious cars they actually have, period. I know the whole reason for their existence is to sell cars, but the game here is likely to keep that demo unit on the lot — so it’s not completely empty — then steer folks toward the ordering process to get their own vehicle, albeit down the road.
That’s not to say some dealers aren’t just flat out greedy and sticking tens of thousands worth of markups on new vehicles because they can. To that point, let’s look at the Toyota RAV4 Prime again, where you have the following “add-ons” while your brain tries to grapple with the absurd $40,000 markup:
- Ceramic coating: $2,495
- Lojack (if you trust it to begin with): $1,795
- “Invisa Shield” paint protection: $1,395
- Hitch Installation (arguably the only useful one): $599
- Nitrogen-filled tires: $499
Great. $6,783 in optional extras (it’s worth noting at least the sticker says the noted additions are “Optional”), then your doc fees, then an extra $40,000 on top, sales tax on the final purchase price, and if you’re lucky, you’re out the door for $110,000. On a $49,659 Toyota RAV4 Prime.
Obviously, don’t reward this behavior if it is malign
Ultimately, I can’t speak to the motivations of every single dealer. Some are clearly more transparent in their pricing policies than others. At least the Volkswagen dealer, to their credit, shows the price on their website. Although it makes little sense to my mind why they can’t just put “Demo unit — not for sale” or something to that effect to stave off potential customers who think they’re just out to gouge them into oblivion. They also have another ID.4 in their inventory now with a much more reasonable asking price.
Some dealers use that crazy price as a negotiating tactic to achieve a mark somewhere north of MSRP — but by “negotiating” with the customer, they still believe they’re landing a good deal, with how crazy the market is. And yes, others are just out for straight profit, regardless of how they tarnish their reputation in the process.
Our stance on this mirrors what you’ll likely see from other folks with a voice on the topic: If you can wait, do it. Don’t reward these sorts of tactics. I know the supply shortages have been dragging on for months, and there are plenty of doom-and-gloom pieces noting it could go on for quite awhile yet. While there may be some truth to that, the situation will get better in time. New cars are always on their way, and it’s not worth leveraging a massive amount of unnecessary debt just to get into something like, say, a Toyota RAV4 Prime right now.
Through our last bits of coverage — namely here and here — we’ve been trying to name dealers who are selling at (or at least near) MSRP for you guys. We also post those dealers across our YouTube community pages, so check those out if you need to find a deal soon. You may have to travel a bit, but there are some deals to be had while we collectively wait for the market as a whole to return to normal.