Car Models With the Highest & Lowest Markup
John Goreham is a life-long car nut and recovering engineer. John’s focus areas are technology, safety, and green vehicles. In the 1990s, he was part of an academic team that built a solar-electric vehicle from scratch. His was the role of the battery thermal control designer. After earning his engineering degree, John also completed a marketing program at Northeastern University. For 20 years, he applied his engineering and sales talents in the worlds of semiconductor manufacturing, biopharmaceutical production, and automotive electronics supply chain. Always a writer, John has published numerous articles in technical journals such as Chemical Processing Magazine. In 2008 he retired from that career and dedicated himself to chasing his dream of being an auto writer. In addition to online publications such as Car Talk, John’s work has appeared in print in dozens of American newspapers, and he provides reviews to many vehicle shopping sites.
The recent work stoppages and a never-ending boom-bust cycle for semiconductors has wreaked havoc on the U.S. auto market.
The result is that a shortage of vehicles is driving the value of used cars up, and new vehicle prices are being marked up dramatically by dealers.
The most commonly-used phrase for the dealer markups is a vehicle “Market Adjustment.” Some people are paying these higher prices. Others are opting not to and are waiting out the crisis.
Stat of the Day: Shortages have had a huge effect on car prices. The average transaction price has increased almost 21%.
Check out our post for more interesting car buying stats & trends >>
Table of Contents
- Car Models With the Highest Markup for October
- Car Models With the Lowest Markup for October
- What Are Dealer Market Adjustments on Cars?
- Why Pay More Than MSRP?
- Why Do Vehicles Have a High Markup?
- Highest Markup Truck
- Highest Markup SUV
- Highest Markup Sedan/Coupe
- Lowest Markup Truck
- Lowest Markup SUV
- Lowest Markup Sedan/Coupe
- Final Words on Market Adjustment
- Best Car Deals by Category
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Car Models With the Highest Markup for October
When popular models overlap with limited production ability, the market adjustments are the most extreme.
#1 Highest Markup: Ford Bronco Base
- MSRP: $34,890
- Market Price: $56,222
- Invoice Price: $34,367
- Markup Amount & Percentage: $21,332 or 161% of MSRP
#2 Highest Markup: Mercedes-Benz E-Class AMG E 63 S
- MSRP: $112,800
- Market Price: $175,033
- Invoice Price: $106,596
- Markup Amount & Percentage: $62,233 or 155% of MSRP
#3 Highest Markup: Ford F-150 XLT
- MSRP: $40,760
- Market Price: $60,313
- Invoice Price: $38,110
- Markup Amount & Percentage: $19,553 or 148% of MSRP
#4 Highest Markup: Chevrolet Silverado 3500HD Work Truck
- MSRP: $41,700
- Market Price: $61,385
- Invoice Price: $39,448
- Markup Amount & Percentage: $19,685 or 147% of MSRP
#5 Highest Markup: GMC Sierra 2500HD SLE
- MSRP: $46,500
- Market Price: $67,515
- Invoice Price: $43,524
- Markup Amount & Percentage: $21,015 or 145% of MSRP
Car Models With the Lowest Markup for October
Not every model is seeing five-figure markups. In many cases, the markups are more reasonable.
#1 Lowest Markup: Chrysler 300 C
- MSRP: $55,000
- Market Price: $42,088
- Invoice Price: $53,790
- Markup Amount & Percentage: $12,911 or 77% of MSRP
#2 Lowest Markup: Toyota Camry XSE V6
- MSRP: $36,745
- Market Price: $32,271
- Invoice Price: $33,438
- Markup Amount & Percentage: $4,473 or 88% of MSRP
#3 Lowest Markup: Infiniti QX80 Luxe
- MSRP: $75,800
- Market Price: $68,251
- Invoice Price: $71,631
- Markup Amount & Percentage: $7,548 or 90% of MSRP
#4 Lowest Markup: Ford Expedition XLT
- MSRP: $62,840
- Market Price: $57,026
- Invoice Price: $60,327
- Markup Amount & Percentage: $5,813 or 91% of MSRP
#5 Lowest Markup: Nissan Armada S
- MSRP: $53,700
- Market Price: $49,882
- Invoice Price: $49,781
- Markup Amount & Percentage: $3,817 or 93% of MSRP
What Are Dealer Market Adjustments on Cars?
The markup on new cars is a way for dealers and manufacturers to make more money on each vehicle they sell during this period of unusually constricted supply. Dealers have relatively fewer vehicles to sell to a market that was in some sense shut down for a period of time. This market adjustment can add a few hundred or a few thousand dollars to the MSRP or sticker price.
That built-up demand of buyers who did not purchase on their normal schedule coupled with the shortages of semiconductors and batteries is putting dealers in the catbird seat when it comes to pricing.
It is important to step back and realize that the “free market” we employ in America means that scarce goods can be priced higher. The converse is also true. Chevy dealers were discounting new Bolts by nearly $20,000 as recently as March of this year.
What Is The Average Dealer Markup?
The average dealer markup is hard to determine since it's based on local pricing, demand, and inventory. However, it’s worth noting that the average transaction price has gone up in the past couple of years.
In some cases, popular vehicles like the Toyota RAV4 Prime have a markup of $10,000, $20,000, or in rare cases, $30,000 over the manufacturer’s suggested retail price.
Couple that with the inventory shortage due to the COVID pandemic, and it comes as no surprise that the average dealer markup will go up as well.
On average, 3-8% over the invoice price is a fair offer for a new car. However, you should check the average market prices to see what others have been paying for your desired vehicle.
Why Pay More Than MSRP?
MSRP is just a starting point for vehicle pricing. Prior to COVID, markups on rare or very popular models were not unheard of.
People purchased these desirable vehicles at above the manufacturer’s suggested retail price because they felt the vehicle was worth the markup. The same holds true today.
Why Do Vehicles Have a High Markup?
Looking more deeply into the market situation, there is a bit more going on than just “shortages mean higher prices". The U.S. economy is shifting in a way it hasn’t before.
Prices for many goods and services are rapidly escalating. Anyone who has priced a home renovation this year knows this to be true. The value of existing homes has also gone up dramatically over the past year to 18 months. In addition, gasoline has gone up by more than 40% in many parts of America in the past year.
Call it inflation, or use another term, the fact is that the cost of many things is headed up rapidly today.
Should I Wait?
Waiting would be a good option if the dealer markups were simply a result of one predictable factor. However, as the 2023 model year ends and new 2024 model year vehicles arrive, manufacturers have a chance to raise prices, and we suspect many will do so. This makes waiting for a game that may never have an ending.
Opting for a used vehicle is a hard choice to make as well. With many models selling for prices higher than the cost of that model new, buying a used vehicle in this climate is a hard pill to swallow.
Waiting for six months if you still have a viable vehicle is a move that seems prudent. If you can repair or maintain your vehicle to get through the coming winter, the spring may be a better market for both new and used vehicles. This assumes that COVID doesn’t push us out of our manufacturing jobs again.
Final Words on Market Adjustment
Many articles you may find on the subject of today’s vehicle prices try to oversimplify the situation. “It’s the semiconductor shortage” is a common theme. “It’s because auto factories were shut down”, is another. “It’s because people didn’t shop during COVID,” yet another common refrain. Some people even try to pin the situation on one politician or one party.
Having covered vehicle pricing for a decade and having spent two decades working in the semiconductor manufacturing industry, it is apparent to this vehicle expert that no one reason is to blame for today’s vehicle price markups. This unusual market disruption is a combination of many effects, all of which are in one way or another COVID-related. COVID isn’t over, but most of America is back to work, and in many cases, we are all working harder than ever.
Inflation has a definition when it comes to economics. If home prices, energy prices, and vehicle prices are any measure, inflation is headed up at a steep rate. Dealer markups a.k.a. market adjustment pricing is just one of many new normals we hope will reverse course at some point soon.
