General Motors has sent a letter to its dealer body, warning them they could have their vehicle allocation redirected if they charge customers above MSRP for products like the 2023 Corvette Z06 and 2024 Chevy Silverado EV, among others.
Car dealerships will often apply so-called market adjustment fees to new vehicles that are in high demand or that may be hard to come by to increase their profit margins. In the letter sent to dealerships this week, GM said it is aware of some dealerships that have been “demanding money above and beyond the reservation amounts set in GM’s program rules and/or have requested customers to pay sums far in excess of MSRP in order to purchase or lease a vehicle.” This applies to 2023 Corvette Z06 and 2024 Chevy Silverado EV orders, but also those of all upcoming products such as the Cadillac Lyriq, the GMC Hummer EV pickup and Hummer EV SUV, the GMC Sierra EV as well as the Chevy Equinox EV and Blazer EV crossovers.
In the letter, GM said it will be “forced to take action if it learns of any unethical sales practices or brokering activities that undermine the integrity,” of its brands. This could include rerouting a dealership’s 2023 Corvette Z06 or 2024 Chevy Silverado EV allocations to a more well-behaved storefront, or taking “other recourse prescribed by the Dealer Sales and Service Agreement.” It’s worth noting that GM has no legally backed way to force dealerships to sell its products for a certain price, so these retailers are not breaking the law with this practice, but are simply engaged in behavior that GM corporate finds unbecoming of the brand.
While market adjustment fees are nothing new, they have garnered more attention amid the COVID-19 pandemic and microchip shortage. With vehicle demand high and inventory levels at record lows, dealers are looking to capitalize on consumers’ desperation and squeeze high market adjustment fees. Back in July 2021, we reported on GM dealers marking up C8 Corvette units, in one case by as much as $99,516 over the car’s MSRP.
It will be interesting to see if GM’s threat to pull product allocation from certain dealerships will prevent market adjustment fees from being applied to the C8 Corvette Z06, 2024 Chevy Silverado EV and other future in-demand Cadillac, Chevy and GMC products.