Opinion: How to Kill a Good Sports Car? Two Words: Dealer Markups

Oh yes, exorbitant markups are still alive and well

(Images: TFL Studios, unless otherwise noted)

It’s time for another dealer markup update — and all I have to say is, “oof”…

As we all live and breathe, we’re within spitting distance of 2023. This year has shaped up to be fantastic in terms of new sports cars, not least of which is the 2023 Nissan Z. At least, it looks great on paper, at MSRP…In the real world? Not so much, as enthusiasts and prospective buyers are still facing intense dealer markups when they walk in to put their money down on their long-awaited sports cars.

Take TFL reader Ryan, whose dad has been waiting to buy a brand spanking new Nissan Z. It’s been over a decade since we’ve had an all-new Z car, and this one largely lives up to the agonizingly long wait. Until he walked into a Las Vegas dealer, where his ambition to buy the car was summarily crushed by two words we’ve come to dread in the past couple years: dealer markup.

Before we go any further, take your time and digest the dealer’s hand-written asking price, shown below:

Nissan Z dealer markup

Ryan sent us this shot of the car’s window sticker, along with a brief message.

Yep, $50,000 markup on a 2023 Nissan Z Proto Spec. Factor in the dealer’s “Desert Protection Package” add-on, and the final asking price is $107,299. Mind you, the car’s MSRP as noted on the sticker is $54,915, so they’re nearly asking double that for the privilege of driving this Z home.

Here’s what he had to say on seeing and snapping this car’s sticker:

“My dad’s been waiting well over a year waiting in line with a deposit for a new Z in Vegas and this is what he walks into the dealership to see…. What is the world coming to!?”

I feel your pain, Ryan.

This is not illegal, but…

As ever, I want to point out the usual nuances that come with talking about dealer markup. First, the franchisee receiving the car is not bound by the automaker to stick to their “suggested” retail price. That works in either direction — though we’re clearly way off talking about discounts on the new Z at any point in the near future. As such, Nissan (or any other manufacturer) cannot legally force their dealers to cap or eliminate markups as part of their business operations. That’s the free market for you: Dealers get allocations for hot new models. They know people want them, and some will go out of their way to get the car, no matter the cost.

The Proto Spec, for its part, is indeed a rare version of the new Z, as well. Nissan only allocated 240 examples for the U.S. market, so that exacerbates the tendency to charge well over sticker to potential buyers.

Per the dealer’s website, there’s currently no direct mention of the $107,299 price tag. There’s just the $54,915 MSRP, and you have to inquire on the “E-Price” or visit in person to get the whole picture. This is far from the only car to see substantial dealer markups, and by no means is this the only Nissan dealer to mark up a Z Proto Spec. I’ll come back to that in a moment.

Nevertheless, such substantial markups (naturally) evoke a strong response from would-be customers. That sense of “Oh, come on!” as you excitedly anticipate maybe landing your dream sports car in the wake of endless news on supply chain shortages, low dealer inventories and rising transaction prices.

2023 Nissan Z

Is it a “miscommunication”?

Some folks will argue simple economics, in favor of the dealers, when these situations come up. Low supply, high demand…that’s the perfect opportunity to maximize profit, right?

That it is, but there’s another angle to consider in terms of that dealer’s long-term customer relationships and image. Take the case of a Louisville, Kentucky dealer (as posted on NewNissanZ.com) that also allegedly marked up a Z in August to the tune of $50,000. After media coverage and an intense wave of public pressure ensued, the general manager argued the information was simply “wrong”, and that the dealer was not in fact marking up the car after all:

“Hello Everyone! My name is Stephen Tevis and I am the General Manager at the dealership in question! The information that was sent via text was incorrect, the info got trickled down to our internet manager thru a couple of different people thus the info being wrong. Nevertheless, we are NOT marking ‘our’ Z up $50K!! It was a discussion that I personally had with a few other Nissan dealers and the $50K number came up in that conversation. We have never marked a car up that much and just wouldn’t. We have been in business for almost 50 years and gouging our customers is not how we achieved longevity. The Z is an incredible car and we are looking for to seeing it as I’m sure you all are, there are only 11 coming to our region which includes over 230 dealers. We are proud of the heritage of the Z but not so proud that we will bend our morals to sell it. I hope that this clears up any confusion, I am always available to give accurate and timely information, james.tevis@jeffwyler.com. Thank you for your time.”

Notice he said, “we are not marking ‘our’ Z up $50K”. Another example of a Tacoma, Washington dealer posting a “market adjustment” on the new Z made the rounds at about the same time. Not to mention there’s an ongoing thread of dealer markups on NewNissanZ.com for folks to post examples in their areas.

It may not ultimately kill the new Nissan Z, but it’s certainly a bummer.

Without concrete evidence, it’s not legally advisable to throw out a certain word that begins with “g” and ends with “reed” to definitively attribute this practice to specific dealers, for the Nissan Z or any other car. And again, U.S. dealers are within their rights to ask whatever they believe customers will pay.

Still, the optics of this practice don’t play well, hence why some dealers seem to be reversing course on marking up cars. One response on the aforementioned Z forum caught my eye:

“It’s only a mistake now because its gone viral on the Z forums/Facebook groups. Nice try there to save your dealership reputation on Google as well. For me though i ain’t buying the bs.”

@bossnguyen92, via NewNissanZ.com

It’s unfortunate for two reasons: One, because it hampers public sentiment and availability for the 2023 Nissan Z. Even with its flaws, it’s still a solidly good sports car, and some just can’t get their hands on one.

Two: The only way to effectively do anything about exorbitant dealer markups is to call out the practice in hopes of changing attitudes to benefit the consumer. Will it always work? Of course not. That said, there are a ton of folks out there like Ryan’s dad who are perfectly willing to buy a long-hyped new model…but not until prices get far more reasonable.

If that happens later rather than sooner? Customers will — and should, in my opinion — walk away from buying that car altogether and find an alternative. Much like dealers can set the tone for a car’s price, buyers can vote with their feet and their wallets to discourage this practice from carrying on unchecked.

Hold the line, folks — hold the line.