Dealer markups have increased as supply chain issues and semiconductor shortages continue to hamper the new car market, and this has become a huge problem for highly sought after new cars. There may be no more sought after new car than the 2023 Chevrolet Corvette Z06 — but dealers have already been put on notice.
General Motors wants to get out ahead of this issue before the car is even released. Corvette Action Center reports that Steve Carlisle, GM’s president for North America, has sent a memo to dealers to quit their markup bullshit right now. Okay, maybe he didn’t say it quite like that — but the point still stands.
Carlisle identified the issue as “a small number of Dealers [that] have engaged in practices that do not support a positive sales experience for our customers.” And if the dealers don’t end those practices immediately, they’ll lose their Z06 allotments.
The letter points out three bad tactics dealers were doing that should be immediately stopped.
The first jerk move is dealers forcing customers to pay more than the $1,000 reservation fee GM had set for the Z06. The problem already goes back years. Some dealers opened up reservations in 2019, which was more than two years before GM had even announced the car. Some dealers did actually only take the $1,000 — but then there were other places, like one dealer in New Hampshire that said it had more than 1,300 potential buyers who laid out $2,000.
The second shit-tactic Carlisle wants to end is dealers selling cars directly to brokers. When dealers do that, they can skirt around having to ask customers for more money. Brokers are willing to just give them that extra cash up front. He pointed out this tactic is explicitly outlawed in GM’s service agreement with dealers.
The third asshole-dealer-practice in question is the market adjustment — i.e. dealers asking for money on top of the car’s MSRP. He said these methods can be “harmful to the reputation of Dealer, General Motors, or its Products.” It also “puts our collective interests at risk and generates negative press that reflect poorly on GM’s brands and your dealership.”
ADM and other charges are nothing new in the car industry, whether it’s warranted or not. But this market sure isn’t helping matters and is actually giving crummy dealerships a chance to grift extra money where they can. Given the fact that The General’s dealer network is a behemoth with thousands of stores, it will certainly be quite the task to put a stop to all of these crap-tacular selling tactics. But it’s noble that someone is trying.
Right now, it’s hard to say if dealers will listen to what Carlisle has to say, or if they’ll keep being the absolute worst. I'll put my bets on the latter, but I think we all hope car dealers will smarten up.