Dealers Defy Ford, Overcharge for Cars

Ford management said it would punish dealers who overcharge for new cars. Among these punishments could be that these dealers will get smaller shipments of new car inventory. In an environment in which supplies of new cars are extremely tight, the threat has real teeth. Ford went even further as CEO Jim Farley said about these dealers, “We have very good knowledge of who they are.” However, evidence suggests that Ford has not followed through.

For its recent Which New Cars Are Priced the Highest Over MSRP in Today’s Market? report, iSeeCars reviewed 1.9 million new car listings. According to the data, new car prices are listed for 10% over manufacturer’s suggested retail price on average. iSeeCars Executive Analyst Karl Brauer noted, “In today’s market, consumers are willing to pay well-above sticker price for new cars because inventory is so scarce and because they know that new car pricing is not expected to improve until 2023 at the earliest.”

The reason for the overcharging is simple. Today, dealers rarely have to offer expensive incentives to lure buyers. That means their profit per unit is high. Unfortunately, they have few cars from manufacturers to make money across large lots of new cars. Overcharging is a means to offset this profit problem.

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Ford dealers are overcharging an average of 21.6% for the popular Bronco. That translates into $8,697. There are two versions of the model. The Bronco has a base MSRP of $31,300, and the Bronco Sport has a base price of $21,815. Ford also introduced a much higher priced version, the Bronco Raptor. In the first eight months the Bronco has been available, Ford has sold over 140,000 units.

Ford dealers also charge 18.4% over MSRP on average for the Maverick, which translates into $4,614. The Maverick is Ford’s least expensive pickup, with a base MSRP of $20,995.

As customers face gouging by dealers, where is Ford’s management?

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