GM Warns Dealers Over Corvette Z06, Silverado EV Market Adjustment Fees
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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.
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In 1978 , dealers pasted huge markups on pre-order and on the floor Corvette Indy Pace cars. There was a huge uproar, as I recall.
Forty- four years later, same problem .
Of course, Ford and Chrysler dealers engage in the same as do some foreign manufacturers.
It’s up to the buyer to walk or pony up.
WAINE from Canada .. ive been trying for months to try a purchace a 2022 Blazer. finally got the price down from 67.000 to 60.350.. THEN I NOTICED the srsp. went from 47.995 to 55. 995 ///???? .. with paying cash . they said no enishative …….. HUMBER VIEW CHEV. THEIR GUY COULDNT ,,WOULDNT CLOSE THE DEAL .. ISAID NO PROBLEM.. I WAIT FOR THE 2023 ..
Who do you contact at GM for this?
I put a deposit on the Silverado EV and the dealer I went through is asking for another $900 Deposit.
Technically the reservation is with GM, so the dealer cannot force you to put down more right now or cancel the reservation, but they probably will once it comes time to actually place the order and may ask above MSRP when it arrives. You should go to another dealer. You can call the GM number on the reservation receipt which should have been emailed to you and have the reservation transferred to another store. If you’re close to me in Detroit, MI, feel free to use us or another dealer who won’t charge over.
Hello Cole,
I tried desperately to get a reservation for a 2023 Z06 without any luck. In Los Angeles one dealer said they had a reservation available and required a $50k deposit that will go directly to the dealer when the car arrives. Of course, I would pay the MSRP on top of that. For that matter most dealers here are charging 20-30k over sticker for 2022 Corvettes. I would love a new Corvette, but I am not paying over sticker for any car.
Hey Raymond,
My Z06 list is full to the brim already. Based on my allocation estimates, a 3-4 year wait is likely. You can imagine there’s no shortage of people wanting to pay MSRP, and some of the people first on that list were thinking about it 2 years ago when the Stingray was first making a splash. Stingrays from me are about 10-12 months out right now. I’m shipping cars all over the country though if you’re interested. Feel free to shoot me an email: cole(dot)[email protected].
Won’t buy cars that are high priced but will buy a Chevrolet for upwards to $150,000-$200,000 then sell it for 75-80
Tried reaching out to you and had no luck. Emails returned undeliverable.
Cole(dot)[email protected]. Replace (dot) with an actual “.”
Trying to avoid spam bots.
Watch the guy from Genesis. He will try to scam you as he did me.
Who are you? I haven’t had anyone accuse me of scamming. Guess keeping an honest list and selling at MSRP is bound to attract some haters.
Sounds like an additional $900 ‘deposit’ towards the order–not an additional $900 over the sticker price—2 different things
@AM .. you better walk away now from that dealer. If they are doing this now, just wait till the vehicle comes in.. They will hold it hostage until you pay them More than MSRP. This dealer is showing their colors early, you better wake up and walk.
My suggestion, don’t go electric man. You’ll regret it
I just contacted GM over a corvette that is 26,000 over msrp in ithaca ny.. they said dealers own their vehicles and can do whatever they want.. they can’t comment on 3d party articles like this.
So, GM sent a toothless warning letter to dealers. Just part of their advertising campaign to try and look good. I realize that the current C8 production capacity is causing dealer anguish, but asking for excessive markups will bite them in the butt eventually. Car dealers aren’t the only ones suffering during the pandemic.
I say this because there are a lot of dealers willing to sell at MSRP. It may take a while to get an allocation, but if you’re patient your dreams will come true.
Call GM marketing department and report the dealership. Yes, they can charge what they want for the cars they already own BUT they won’t get any more.
I contacted GM and reported two dealerships doing the same thing. Yes, the dealership can sell ANY cars they OWN at whatever price. But if GM finds out about it they will be getting FEWER allocations in the future. Keep the pressure up.
Maybe if we had more than 3 new vehicles to sell we wouldn’t have to ask for more money. We used to stock 60 new vehicles. We can’t keep the doors open with how little they send us.
Remember tha Buick GNX MClaren??? The dealer here was selling for $75k way back then
GM dealer in Peoria up the cost of a C8 corvette to 30,000 over MSRP
They have lost my business, I think GM should have the maximum price under contract MSRP with all their dealers.
Hmm, do you think they should also mandate a “minimum” of MSRP? Serious question, I’m always wondering if customers would prefer to sacrifice negotiations for “price security.”
Serious question the automotive companies that want to get rid of the dealers and sell directly themselves do you think they should have that right?
Yes. In fact I’m in favor. Brand-owned stores are good news for independent franchises, because it means more top-down price control in the industry, which means less discounting and more consistent revenue. GM doesn’t want to move to a direct to consumer model yet, but when they do, they’ll have to enter slowly as the cost of taking over 5,000 independent franchises will be too much to handle at once. The good operators who are allowed to remain and operate alongside factory owned stores will benefit from less “cannibalism” from competing stores of the same brand. GM doesn’t want to compete with themselves, so they’ll have to set pricing standards, much like McDonald’s, which has both independent and non-independent franchises, yet they all charge the same price for the same Big Mac.
The question is, are you ready to pay full MSRP for every new car you buy? Not just now, but even in the future when cars are no longer like gold?
Unless the franchise agreements change, dealers will be able to charge less (or more) than MSRP. However, since GM will be selling at MSRP, dealers who want to make a sale will have to match that price.
Since most states currently require that a franchise dealership must complete the sale (except Tesla), the local dealer will probably receive a small payment for actually prepping/delivering the vehicles sold by the manufacturer.
However, if they get the sale by charging less than MSRP, they’ll keep the profit between wholesale and retail. That would be a win-win for both the customer and dealership.
That’s free market economics.
I don’t think the model you’re describing would happen because dealers would just undercut the manufacturer price every time. GM is already working on a customer order system, I hear, which will allow customers to order directly from the factory, but the dealer will deliver the vehicle, make full profit between invoice and sale price, and will probably still have control over the final price of the sale. What’s more likely to happen is that, if franchise laws change (which they already have in some states), manufacturers will end up opening their own points or taking over current ones and selling directly to customers, like Tesla. At that point, GM would mandate sale prices because they aren’t going to be interested in competing with themselves and having dealers undercut them.
Uh, this past summer we took a road trip out west with our RV. If moving on from our camp site, we stopped at the nearest McDonald’s and bought the exact same breakfast-to-go. Our costs for the same breakfast items varied from a low of $14 to a high of $29. All McDonald’s do not charge the same price for the same item.
That’s correct. I believe it varies by region, but I think all McDonalds in the same vicinity (town) charge the same price or else they would lose customers to the other store(s). But, different areas can support different price structures. At least that’s what I’ve encountered.
Agreed, a dealer in Scottsdale pulls the same trick and I walked. So what they do now is put sold signs in every Corvette, however I don’t understand why 8 corvettes have sold signs and are still sitting on the lot. If it was me and I made the purchase I would certainly want to drive that home and show it off. It’s another dealership scam. That way they can claim its sold – but still sitting on the lot weeks later.
Uh, highly unlikely that a dealer wants to willing sit on inventory when they could slap a $20k markup on those and sell them in a week. Most likely sold units that haven’t been picked up yet, possibly out-of-state waiting on transporters, etc.
I just reported two dealerships for adding between $20K and $30K marketing markups. GM said they would change their allocations. Not recommended.
Jeff, who did you contact with this information. There is a local dealership here charging $68k over MSRP. I
Purchased a 2019 ZR1 from the same dealership and salesman. I made an offer of $20k over sticker on the 2023 Z06 on their sales floor and he laughed…..no more business from me. And there are way more charging this for sure
It’s been a while but I think it was GM Corporate at 1 (800) 462-8782.
In Colorado John Elway Chevrolet pledged NOT to charge over MSRP and after a two year wait they STILL honored the ORIGINAL MSRP price. Depending on how far away you are it might be worth contacting John Elway Chevrolet at (303) 761-0333 and either driving it back or even with shipping it wouldn’t cost $30K more. Talk with Daniel in sales and tell them Jeff sent you over. I don’t get anything for this.
Karma baby
@ Barnaclegoose
Here is the worlds smallest 🎻 playing for you. 🎼🎵🎶🎵🎶 in case you can’t read the notes the song is called cry me a river.
I hope this finally rings true!
In 2012, my father retired (age 55) and wanted a new ZL1 as a gift to himself. He went to every dealership within ~75 miles of his home. They all wanted $10-15k over sticker, as they only produced ~1,885 ZL1’s. I finally found him one 600 miles away, and they sold it to him for $500 under sticker. It was just what he wanted: Black, 6-speed, sunroof, exposed CF hood, etc.. He wrote them a check and drove it home. I do the same with my Corvettes. When you find an honest dealership, stick with them. As far as the ones that rake people over the coals, allow their cars to sit and rot. Period.
under sticker = honest profit = EVIL HUH $500 under sticker this dealership is weak and the salesman is weak
your dad choose one of the best if not the best Camaro ever . but the salesperson failed to build enough value in the 1 of only 1885 units produced in the world . the world has 7.753 billion people in it . that dealership should be stripped of any performance vehicles period . whoring out and dropping their kakis at the first customer who makes a offer is bad for the market and bad for your investment .Kelley Blue Book®
Fair Market Range
$25,532 – $28,963 but the car sells for 32599.00 with 123,593 miles
Red Exterior
Black Interior
6.2L 8-Cylinder Supercharged Gas Engine .still i hope you make a profit if and when you sell it .and i hope the salesperson is working for the goodwill tagging used underwear .for resale
Word salad to justify lack of integrity. How would you like to have to buy a car from this crook?
Can’t find ONE dealership in the US that will sell the corvette for even CLOSE to full MSRP (contacted over 100 dealerships over the past 5+ months). If you can show me ONE, I will stand corrected.
I found one good dealership in Colorado. I also turned in two that were adding a marketing upcharge and GM said they would be changing their allocation to those dealerships.
There are several on the CORVETTE FORUM
ABOUT FRIGGIN TIME!!!!!!!!!!!!!!!!!!!!
Nice to see GM push from their end to stop these practices. Now, we as consumers, have to push from ours by refusing to buy under these terms. If we take the time to find an honest dealer for that new C8 or Silverado, the dishonest ones will get the message. Nothing convinces more than a yard full of cars racking up dealer fixed costs without the revenue coming in to pay them.
I agree. I’m a Camaro owner, but I’m on a couple of waiting lists for a limited edition specialty sports car (not a Corvette) to add to my garage. I will only buy from a dealer that sells at MSRP and I have told some potential dealers “no thanks”. Unfortunately, there are enough other folks willing to pay over MSRP that those dealers will sell all of their allocations (and then some). Sad, but it does explain why car dealers are generally not well liked. If you find a good one stick with them.
I turned in two that were adding a marketing upcharge and GM said they would be changing their allocation to those dealerships.
I considered trading in my 2011 Corvette Grand Sport on a C8 and was told by the dealer that it would cost $20,000 over MSRP. I reminded the Salesman that I bought 4 new Cadillacs from him in the past 5 years. His response was, “For you $10,000 over. Needless to say I still have my 2011 Grand Sport. I refuse to pay over MSRP. If that means keeping my 2020 Cadillac CT6, My 2021 XT5 and 2011 Grand Sport forever, I will.
Hopefully dealerships will make known that they do not markup the MSRP and GM will allow reservations to be transferred to those dealerships. Ford Motor Company and Ford dealers are doing that for the Bronco.
This all sounds good but I suspect it’s mostly tongue and cheek. Sadly, it has no teeth as GM cannot legally enforce the threat and may even find themselves as the defendant if they discriminate on certain dealers allocations. But, I guess allocations are pretty arbitrary already.
Plenty of dealers that don’t sell over MSRP just buy from them. The dealers that overcharge have a small allocation to begin with, my dealer delivered over 200 C-8s last year and they were all at MSRP.
Can you share, please? Can’t find ONE dealership in the US that will sell the corvette for even CLOSE to full MSRP (contacted over 100 dealerships over the past 5+ months). If you can show me ONE, I will stand corrected.
GM should have put a stop to these outrageous prices long ago. I had to order my C8 Corvette from out of the state to get someone to sell at MSRP which already is over priced! Tomg
Can’t find ONE dealership in the US that will sell the corvette for even CLOSE to full MSRP (contacted over 100 dealerships over the past 5+ months). If you can show me ONE, I will stand corrected. Please share!
Try Jeff Gordon Chevrolet. Wilmington, N.C
Hello. We sell at MSRP. I do have a waitlist for the Z06 and Stingray, but so does every dealer who sells at sticker. Shoot me an email if you’re interested: cole(dot)gagliano(at)genesischevy.com.
Alpine GMC in Denver is charging $5K over sticker for the privilege of purchasing a 22’ Sierra 2500hd.
Unfortunately, that is about the same story in the Indianapolis area, too.
What is the reservation amounts set in GM’s program rules?
Only applies to vehicles with the online reservation process. The Cadillac Lyriq, the Chevy Silverado EV, and GMC Hummer EV for instance all had “online launches” which took $100 deposits. The Corvette Z06 had no such launch (yet) so there is no set reservation amount.
The $100 reservation is sent to the customers nearest Caddy/Lyriq store–Caddy store in turn contacts the customer to write up a bill of sale-review colour selection and from there usually ask client to anti up an additional deposit (depending on stores policy) to secure the client order
You can select a store during the reservation process, or yes if you enter a zip code it will use the nearest one.
Exactly right. It’s the market. The market decides what it is willing to pay whether that’s above or BELOW MSRP. Unfortunately, there will always be someone that is willing to pay more to get a popular car rather than waiting in line – and I guess the dealers are allowed to accommodate them. I don’t like it either – but it’s the world we live in. Free Market Capitalism
Free market capitalism is fine for discretionary products like a Corvette but not necessities like gas or food. Then the government should step in and make life miserable for the vendors involved. There has to be some consideration for civility and humanity.
Jay S. I totally agree. But I also strongly suspect that with respect to food, gas, and other staples it’s not the vendors that are price gouging, and perhaps not even the distributors. I think it starts at the supplier and is being jacked up further by transporters. As an example, new construction is also at an all time, but it’s not the contractor nor the local lumberyard that’s getting the windfall – rather it’s the lumber, concrete, etc. suppliers. Just look at lumber futures. They’re FIVE times higher than they were when the pandemic began.
$100 deposits were taken back in the 40’s when cars were priced around $2500 or less —-wake up its 2022–$80,000 vehicle deposits at 5% of car makes sense
The local Chevy dealer in Temecula, Ca is charging $30K – $35K over MSRP for a new Corvette!!
May he eventually get what he deserves
Unfortunately that’s not out of the ordinary. The dealer I bought my ’21 Z51 3LT from is already expecting he’ll charge a dealer premium of $25k – $30k for a Z06
They can charge anything they want as long as the consumer wants to pay for it
What does a dealer make if he(she) sells a vehicle at MSRP. Use a 2021 Corvette as an example. Base MSRP for a 3LT Coupe of $71K plus, $16K in options & destination charges for a total sticker price of $87K. Just how much of that does the dealer make after his cost and ANY OTHER incentives, adjustments, or kick-backs he gets from GM.
You ready? I’m going to tell you. I sold an $88,605 2022 Stingray similarly spec’d to that not too long ago. We only sell at MSRP, so there was no additional markup. Our invoice cost, less holdback (read: cost WITH “KICKBACK”) was $81,173.25. Total profit was $7,431.75. That’s roughly an 8% margin, and for a dealer who sells at MSRP, that’s the most we’ll ever make on a new car since C8’s are our most expensive units. If a customer finances (this customer didn’t), SOME banks/CU’s will pay us a 1-2% of amount financed kickback.
Besides that, the dealer gets a $300 flat, non-commissionable payout from GM 3 months later if other criteria are met for the quarter. This amount has varied in the past and is set quarterly.
If you’re familiar with retail margins, 8% is pretty miniscule. Most retailers markup products 20% at minimum, in some cases WAY more. On a nominal basis, you could consider it a decent profit, but it’s definitely nothing compared to what some people seem to think we make on these cars. Manufacturer’s are greedy SOB’s too. At MSRP, which we could NEVER ask for on regular vehicles until recently, generally we make 7-9% at MSRP on SUVs/trucks, and 5-6% on cheaper ones (crossovers, sedans).
There you go.
Cole. Thank you so much for enlightening us. At least for me, that’s an eye opener. I would never pay, and could not condone, some of the 30+% markups we’ve seen reported on here, but it does not seem that a 10% – 15% markup is that unreasonable. After all, dealers have overhead and business costs like any other retail entity – and if you can’t make it on volume – which I suspect is a dealers biggest challenge nowadays – ya gotta do something. Kinda sounds like the culprit here is GM with unrealistically assigned MSRPs.
No. It’s NOT GM. A NET profit of 8% is HUGE. The 20% markup some dealers are trying to say is minimum is GROSS margins and NOT net. You can judge for yourself. Look at the fancy buildings and property they own. You can’t do that with an 8% gross margin. Don’t let them fool you. Any amount they want more they make BIG profits margins on their service departments and used car resales.
Jeff, the scenario I outlined above is 100% accurate and is the gross profit, not the net (purely revenue less cost of good sold, basic accounting). You can Google the average new car gross profit margin for dealers yourself, you’ll see that it is actually significantly less than 8%, but this was a Corvette so the margins are slightly higher.
It is well known that new car sales isn’t a 20% margin business for us or the manufacturers, and you clearly know this because you mention service and used cars, which do account for a significantly larger portion of profitability. Like every franchise that stays in business, we’re profitable but there is no golden goose to be had. The general rule of thumb in the industry for a well run store is total net profit between service, sales, and parts divided by total number of vehicle sales should equate to roughly $2k per vehicle. Therefore, a well-run store selling 100 units per month would net around $2.4 million per year, not at all out of line with most businesses of our size. Considering a store of that size should have revenue of at least $60-70 million per year (avg car price is ~$45k x 100 x 12, plus service and parts), that’s a net margin of 4% at the high end, which is in line with the average net profit of any business.
Consider the free market. If we were printing money, there would be dealerships on every corner, but there aren’t. Find another bogeyman to rant over.
You do know that the 20% margin is on WHOLESALE and NOT MSRP. When I sold equipment I obtained it AT a wholesale price. I then marked it up the mentioned 20%. Most of the time it was STILL UNDER MSRP. So anyone selling OVER MSRP is LYING to you if they say that they aren’t making money. Until consumers get that we are sheep being led to a slaughter. Think about another scam. 6% to sell your house. If you have a $600K house that’s $36K for ONE house. They get multiple listings and if they share a sale that’s still $18K. Sell two houses a month and that’s $432K for putting your house in an MLS and waiting. Sure you might have to show it a few times.
You do know that when we buy vehicles from GM we do so at wholesale prices right? It’s literally the same retail business model that you mention, except our mark up is 2-3% on average instead of the 20% you did. This is ok because a car is a five figure purchase and the market couldn’t support a higher mark up, which undercuts your whole understanding.
ON AND ON THEY SAY THAT CRAP BUT IF THEY LOOKED ON THE INTERNET AND WATCHED AUTOLIST CARGURUS ETC. THEY WOULD SEE THAT THEY ALL HAVE CARS ON THEIR LOTS FOR DAYS AND WEEKS AND THEY KEEP GETTING THEM. NO REPURCUSSIONS
My parents always said, “Two wrongs don’t make a right”. I’ve lived by that philosophy my whole life. I also believe that just because you can, doesn’t mean you should. And, it’s always easier to justify bad behavior, than to do the right thing in the first place.
But, some folks look at things differently.
Wrong? Right? There is no wrong or right, only the free market. Is it wrong that gas is approaching $4/gallon? Nope, it’s market supply fears combined with demand taking oil towards $100/bbl when it was under $40 just over a year ago. The cost to produce didnt rise anywhere yet buyers are bidding the price up and the producers are making out. Not right, not wrong, buyers making the market.
Nobody cares about that ugly electric Silverado anyway. Fix your lifter issue if you care about your customers