As demand for new cars outstrips supply, many buyers are being asked to pay hundreds, or even a few thousand dollars, more than the advertised price.
There’s the shock of the label, and then there’s the shock of label after label.
With demand for new cars outstripping supply in North America, many buyers find to their surprise and dismay that the price quoted may not be the final price they are asked to pay.
It could be hundreds, or even a few thousand dollars, more than the advertised price.
Just ask Lisa Smedman, who has been frustrated in her search for a no-frills economy car she can afford.
“This nice car salesman was very apologetic, said, ‘Yeah, there’s a $2,000 secondary fee now that we have to put all the cars on,’” Smedman said.
That was for a lower-end Mitsubishi; a Kia salesperson told him the dealer’s markup on the MSRP and associated fees would be an additional $3,995.
Smedman was told it’s a “market adjustment” fee, and it’s a fee even people who resell concert tickets might blush trying. As a single mother, she is shopping for a replacement for her current car, which she has nearly broken down on.
“New car dealers have always charged freight and documentation fees, but in recent months they have pushed prices even higher by applying an additional market adjustment fee,” he said. “In a nutshell, there is little supply and a lot of demand, so they have raised prices arbitrarily.”
The British Columbia New Car Dealers Association, as a trade association, does not monitor or comment on car prices for Competition Bureau purposes, the group’s president and CEO said.
“However, we recognize that current market conditions and supply chain issues mean that in some cases supply is well below demand and is affecting current retail prices for cars, just as in other retail products,” said Blair Qualey.
The second letter in MSRP, after all, stands for “suggested” and car dealers are independent businesses.
“(Dealers) may sell a vehicle above MSRP based on current market conditions and manufacturer stipulations,” Qualey said.
There isn’t much consumers can do other than shop around or wait for a more favorable supply-demand balance.
The restrictions that exist in Canada apply to the tied sale, said the director of the Automobile Protection Association (APA), when a customer is forced to take a discretionary service that he does not want as a condition of obtaining a new vehicle.
“Six provinces require car dealers to advertise all-in prices,” said George Iny. “That means the post-pandemic ‘price adjustment’ needs to be included in the total advertised price of the vehicle.”
But BC has no such regulation in place.
Regardless, if dealers consistently sell above MSRP, manufacturers’ representations are “clearly inaccurate,” Iny said.
Some automakers may have policies or provide guidance limiting sales above the MSRP, he added, and the APA can check individual brand policies for you.
“The restrictions may cause dealers to add unrequested extra features above the MSRP, which their documentation appears to comply with. Of course, that is not what is happening on the ground.”
Some of the complaints that consumers have reported to the APA include:
• The dealer applied a document or additional dealer markup charge at the bottom of the sales agreement just before taxes;
• Dealer overhead charge verbally misrepresented as a document charge;
• The dealer required a trade-in to complete a sale, but the ad never mentioned that;
• The dealer required the customer to finance the purchase through dealer financing paying them a bribe, but their ad doesn’t say that; Y
• The sale price or interest rate on the financing increased after the deal was signed.
“And if the interest rate advertised on the automaker’s website is for a vehicle ordered six months ago, but doesn’t apply to a vehicle ordered today, the information is misleading,” Iny said.
Smedman would like others to know how consumers can be taken for a ride.
“After a month of shopping, I’m almost ready to give up and cry,” she said. “I wanted to believe that there were car dealers who treated potential customers decently, but it seems that the stereotypes have been confirmed.”