FULL PRICE FOR HALF THE EXPERIENCE: THE UNSUSTAINABLE PRACTICE OF SELLING OVER MSRP

[Chris Vitale]

The days of selling at or above MSRP are numbered. What once seemed like an industry standard is now as antiquated as dial-up internet. Dealerships banking on extracting top dollar while delivering subpar service are finding their approach increasingly untenable.



Today's consumers aren't merely purchasing a vehicle; they're investing in an entire experience. And they have an abundance of options. While paying full MSRP might be justifiable if the service mirrored the luxury and attentiveness of a five-star hotel, the reality often resembles a fast-food drive-thru. As inventories swell on dealership lots, the pressure intensifies for them to reassess their pricing strategies and customer engagement.



Furthermore, selling vehicles above MSRP may yield immediate profits, but it sets the stage for long-term issues, particularly negative equity. This financial burden becomes glaringly evident when customers return to the market. Shackled by loans exceeding their vehicle's value, they face daunting obstacles in purchasing anew without carrying over substantial negative equity. Such predicaments not only strain customer finances but also corrode brand loyalty, a cornerstone of the automotive industry. Who would willingly subject themselves to repeated financial disadvantage?



The risks are palpable. A customer embittered by negative equity is a customer lost, potentially for life. The automotive sales landscape is undergoing a seismic shift, and dealerships steadfastly clinging to outdated practices are in for a rude awakening. It's a rollercoaster ride they won't enjoy.



Let's be clear: relying on cash for clunkers is not an option this time around. As inventory levels normalize and consumer expectations for value soar, the days of inflating prices are numbered.



Dealerships must confront a critical question: Is the fleeting allure of sticking to full MSRP worth the enduring peril of forfeiting customer trust and loyalty? And perhaps more crucially, is this the legacy they wish to leave behind in an industry ripe for transformation?

 

[Jeff Scherer1]

The days of selling at or above MSRP are numbered. What once seemed like an industry standard is now as antiquated as dial-up internet. Dealerships banking on extracting top dollar while delivering subpar service are finding their approach increasingly untenable. View attachment 8820



Today's consumers aren't merely purchasing a vehicle; they're investing in an entire experience. And they have an abundance of options. While paying full MSRP might be justifiable if the service mirrored the luxury and attentiveness of a five-star hotel, the reality often resembles a fast-food drive-thru. As inventories swell on dealership lots, the pressure intensifies for them to reassess their pricing strategies and customer engagement.



Furthermore, selling vehicles above MSRP may yield immediate profits, but it sets the stage for long-term issues, particularly negative equity. This financial burden becomes glaringly evident when customers return to the market. Shackled by loans exceeding their vehicle's value, they face daunting obstacles in purchasing anew without carrying over substantial negative equity. Such predicaments not only strain customer finances but also corrode brand loyalty, a cornerstone of the automotive industry. Who would willingly subject themselves to repeated financial disadvantage?



The risks are palpable. A customer embittered by negative equity is a customer lost, potentially for life. The automotive sales landscape is undergoing a seismic shift, and dealerships steadfastly clinging to outdated practices are in for a rude awakening. It's a rollercoaster ride they won't enjoy.



Let's be clear: relying on cash for clunkers is not an option this time around. As inventory levels normalize and consumer expectations for value soar, the days of inflating prices are numbered.



Dealerships must confront a critical question: Is the fleeting allure of sticking to full MSRP worth the enduring peril of forfeiting customer trust and loyalty? And perhaps more crucially, is this the legacy they wish to leave behind in an industry ripe for transformation?

Chris- you bring out several points that have a ripple effect on many facets of the car business. Previous over-invoice and "market value" markups have buried many owners over the past few years, making their trade payoffs untenable. They're now married to that vehicle for the next decade. That crimps the used car market and drives up prices on everything else that's out there. Adding together high interest rates and negative equity is the perfect recipe for disaster.

Secondly, to your point, customer expectations have changed, but most dealers haven't. Remember back in the days where the dealer DID actually control the consumer?