Constrained supply and strong demand has pushed up car prices and wait times, prompting some manufacturers to stop gouging by dealers
Ford Motor Company CEO Jim Farley has renewed his commitment to stamp out excessive price mark-ups by dealers on new cars.
A shortage of semiconductors and other supply chain disruptions have hampered the flow of new vehicles across the global automotive industry, resulting in many dealerships ramping up the price of new and lightly used vehicles.
Ford has seen sizeable mark-ups on popular US models such as the Bronco 4WD, Maverick and F-150 Lightning utes and more could follow with the T6.2 Ranger’s imminent arrival.
US models such as the Ford Bronco have attracted high mark-ups
Mr Farley told Fox Business that 10 percent of Ford’s US dealer network has been pricing vehicles higher than the manufacturer’s suggested retail price (MSRP).
“We have very good knowledge of who they are, and their future allocation of product will be directly impacted,” he said.
This is despite news earlier this year that Ford’s head of sales in the US and Canada, Andrew Frick, sent out a warning letter to dealerships following the announcement of the F-150 Lightning, threatening to strip back allocation of the EV ute if customers were overcharged.
Ford CEO Jim Farley says 10 percent of its US dealer network is still overcharging
Mr Farley said it is of particular importance that prices of Ford’s electric vehicles remain at official list prices as rivals such as Tesla, Rivian and newcomer BYD offer a direct sales model, with Honda and Mercedes-Benz also moving to fixed-price sales models in Australia.
“This is quite an important topic because the margins that we want to build in to BEVs (Battery Electric Vehicles) are going to be heavily dependent on a different go-to-market and customer experience,” he said.
Kia Australia says it will not tolerate its dealers placing mark-ups on the EV6
Kia Australia to stamp out EV6 mark-ups
Kia Australia’s Chief Operating Officer Damien Meredith told Chasing Cars it would not tolerate any mark-ups on the highly anticipated and fully electric EV6 midsize SUV.
Mr Meredith said the issue had already been discussed internally after it became apparent that the limited supply of 500 EV6s for all of 2022 had the potential to cause issues.
The allocation is not expected to meet demand, with Hyundai also carefully distributing supply of the closely related Ioniq 5 midsize SUV after its first batch rapidly sold out.
The price for a Toyota Land Cruiser 300 Series is 28 percent over the listed driveaway price on average
Toyota Land Cruiser 300 prices soar
Market analysis by Chasing Cars found that Australian Land Cruiser 300 Series prices were commanding a staggering 28 percent mark-up on the original manufacturer prices on average.
This problem was compounded by the limited supply of just 500 vehicles in the first batch to Australia, which has only been worsened by recent delays at factory level.
Toyota Australia has taken the opposite approach to mark-ups as Ford in the US, with its sales, marketing and franchise operations vice president Sean Hanley telling the motoring press in October 2021 that he had faith in the dealership network.
“In terms of selling practises, our dealer network is very responsible, I believe very ethical, through the Toyota standards that we set,” he said.
“We have a recommended retail price on [the Land Cruiser 300 Series], and our dealers are free to trade accordingly based on the market condition.”
Keyword: Ford CEO pledges to stamp out mark-ups amid stock shortages