Car Dealership Market Adjustment Markup
On occasion when there is a hotly anticipated vehicle or if there is a vehicle already on the market but is extremely difficult to locate, some dealerships will add a “market adjustment” over and above the MSRP of the vehicle. Recent examples of vehicle prone to market adjustments include the Chrysler PT Cruiser, Volkswagen New Beetle, Pontiac Solstice, Pontiac GTO, and even the Harley-Davidson edition Ford F-150. The market adjustment on these vehicles was running into the thousands of dollars, and if buyers would have waited a few months they could have purchased the vehicles at or below MSRP.
The reason market adjustments are applied to vehicles is due to the simple economic principle of supply and demand. The fewer of a highly desirable automobile there is the more people are willing to pay to attain one if they can be one of the first to do so. Some dealerships will choose to respond to this situation and add a market adjustment which is pure profit for the dealer. Other dealers will simply stick to MSRP and not negotiate downwards. Other dealers will sell the vehicle as it would any other vehicle. The overriding factor here is that given a few months, the availability of every vehicle produced -- except those vehicles which are meant for truly limited production -- will meet the demand.
Regional factors can also come into play with market adjustments. We here at Autotropolis can not remember how many times we’ve read than a specific vehicle was “impossible to find” and yet could drive down to our local dealership and find multiple examples of the very same vehicle on the lot available for MSRP.
What do you do when faced with a market adjustment? If you really feel that you need this particular vehicle and you are willing to pay the adjustment to get it then you can go ahead and make the purchase. If you feel the adjustment is unfair or excessive, you can choose to either ask the dealer to waive or reduce the adjustment, or you can wait a few months and likely be able to purchase the car normally for at or near MSRP. You may also have luck by shopping different dealers as no two dealers handle market adjustments the same way. For example, when the Harley-Davidson edition Ford F-150 had just been released, a local dealer had two trucks each with a $7000 market adjustment over and above the $32,780 MSRP. Meanwhile, another dealer across town had in stock a very similar Harley-Davidson edition truck that could be purchased at or near MSRP.
Is this practice unscrupulous? It can be, but not always. Economic factors and consumer’s desires to be the first on the block with the new toy can drive prices of any product up. Dealers are simply responding to a high demand as any other business may choose to do when supplies are limited. The ultimate downside to paying a market adjustment is that a year from now chances are your currently highly sought-after new car will be just another used vehicle, and you will never recover the market adjustment markup when it’s time to sell your car.