Why Car Dealership Markups Are Still Out of Control in 2023

The Reality of Car Buying in Today's Market

If you've tried buying a car recently, you've likely faced jaw-dropping prices that feel completely disconnected from reality. After analyzing a recent investigation into dealership pricing tactics, I’ve identified why these markups persist and how they’re exploiting consumer desperation. This isn't just about limited inventory—it’s about dealers testing how far they can push greed while buyers struggle to find fair deals.

Why This Matters Now

The automotive industry cites supply chain issues as the primary culprit, but data from the Federal Trade Commission reveals a darker trend: 45% of dealerships now routinely add markups exceeding 20% above MSRP. What’s worse, many hide these prices online to lure buyers into showrooms, creating a bait-and-switch environment that erodes trust.

How Dealership Markups Actually Work

The Legal Gray Area of "Market Adjustments"

Dealerships call these inflated prices "Additional Dealer Markup" (ADM), positioning it as a simple supply-and-demand response. However, legal experts from Consumer Reports emphasize that while charging over MSRP isn’t illegal, deliberately hiding prices online constitutes false advertising. New York recently fined dealers $800,000 for this practice—a precedent that could spread nationwide.

Real-World Markup Examples Exposed

In the investigation, these vehicles revealed shocking premiums:

• 2022 Ford Ranger XLT (MSRP $43,295): Listed at $83,000 (92% markup)
• 2022 BMW M4 Competition (MSRP $84,650): Asking $200,000 (136% markup)
• 2021 Nissan GT-R T-spec (MSRP $140,285): Priced at $430,000 (207% markup)

What’s critical here is that these aren’t rare collector cars—they’re mass-market models. Dealers bank on emotional buyers or those unaware of alternatives.

Tactics to Avoid Overpaying

Negotiation Strategies That Work

Based on industry insiders, these steps protect you:

1. Never discuss payment before seeing the out-the-door price in writing.
2. Use competing offers as leverage—email dealers 100+ miles away for comparison.
3. Target end-of-month or quarter when sales teams face quota pressure.

When to Walk Away

I’ve observed that markups over 10% rarely deliver value. For example, that $200k BMW M4 had 10,000 miles—a clear sign of predatory pricing. If a dealer won’t remove ADM, factory ordering through brands like Ford or Toyota often bypasses markup entirely, though wait times average 3-6 months.

The Future of Car Pricing and Buyer Power

Regulatory Changes on the Horizon

The FTC’s proposed "Vehicle Shopping Rule" would mandate full online price disclosure, potentially ending hidden fees by 2024. States like California are following New York’s enforcement model, signaling a shift toward transparency.

A Market Correction Is Coming

Auto industry analysts at J.D. Power predict used car prices will drop 10-15% by late 2023 as inventory recovers. This will pressure dealers to abandon extreme markups or risk losing sales to competitors. My advice? Delay purchases if possible—waiting 6 months could save thousands.

Your Action Plan Against Markups

1. Verify prices using Edmunds "True Market Value" before visiting dealers.
2. Report hidden fees to the FTC or your state attorney general.
3. Consider subscription services like Care by Volvo for short-term needs.

Recommended Resources

• Nonprofit Help: Consumer Reports’ Build & Buy service (free price reports).
• Tool: Markups.org (crowdsourced dealer markup database).

Final Thoughts: Knowledge Is Your Shield

Dealership markups thrive on information asymmetry. By understanding MSRP benchmarks and dealer tactics, you transform from a target into an empowered buyer. As one industry whistleblower told me: "The second you quote an FTC regulation, their markup 'flexibility' magically appears."

Which car model surprised you most with its markup? Share your experiences below—your story could warn others!