Hyundai, Genesis, Subaru warn their dealers about markups

Six weeks ago, word got out that Ford's VP of sales for the U.S. and Canada wrote one of those "It has come to our attention..." e-mails to the automaker's dealer body. The VP's problem was dealers trying to get reservation deposits for the Ford F-150 Lightning well above the official $100 fee. The tomfoolery resulted in interactions "with customers in a manner that is negatively impacting customer satisfaction and damaging to the Ford Motor Company brand and Dealer Body reputation." Two weeks later, GM told its dealers to cut out the reservation gaming and the markups on the 2023 Chevrolet Corvette Z06, banditry that's been going on for two years. Two weeks ago, Ford was back at it, this time about markups on the Bronco. Last week, Asian automakers swept into the melee, with Hyundai and Genesis, Subaru, and Infiniti writing letters to their dealers to deliver some variant of, "Stop pissing off the customers."

Automotive News reported an SVP at Hyundai Motor America and the COO at Genesis Motor North America sent letters to their dealers expressing disappointment at "certain pricing practices which, if left unchecked, will have a negative impact on the health of our brand." One of the practices mentioned was dealer markups, another was the bait-and-switch, with dealers advertising one price then charging a higher price once the customer showed up at the lot. The letters acknowledged that dealers are separate companies to the automakers and have the right to set their own prices. The automakers cannot interfere with that; their leverage is distributing allocations and perks such as advertising support and financial incentives. So, like a movie boss letting the protagonist go on a technicality, the brands wrote, "we cannot stand idly by watching the actions of the aforementioned dealers undo all the efforts we collectively have put into making these brands what they are today."

Jalopnik got tipped to a letter Subaru of America CEO Thomas Doll sent to that brand's dealers. Doll's polite yet insistent tone was the result of a letter a loyal Subaru owner sent to the automaker's VP of Customer Advocacy. In the market for a third brand-new Forester, the owner said they encountered a "tax" labeled a "Low Inventory Surcharge" of as much as $6,000, putting the Forester out of reach. And that wasn't the only one, Doll informing the outlets that "We are receiving increasing numbers of customer letters and emails voraciously complaining about sales of our vehicles at prices above MSRP." He reminded readers that the brand strategy has been to differentiate Subaru "retailers" from a "typical car dealer," to deliver on the brand's "Love Promise," and to believe in the long-term rewards of customer goodwill, then asks everyone to refrain from selling cars above MSRP.

And then there was Infiniti, dealing with an issue well after the contract is signed. CarsDirect reported on a letter Infiniti Financial Services sent to the dealer body because some dealers were changing the purchase terms at the end of the lease, knowing they could extract more money than the amount written into the lease contract. The letter addressed a few unfortunate tactics, including dealers charging extra fees if a customer didn't finance the buyout through the originating dealer, or charging wildly imaginary premiums like "Covid fees," or outright refusing to honor the purchase quote. For Infiniti lessees having problems converting to purchase, the automaker told Motor1, "We expect Infiniti Retailers to honor the lease agreement. Additional information for IFS lessees is available ... and clients may also contact IFS at 800-887-5159 with questions about their purchase options." 

With Edmunds reporting that 82% of new vehicles sold in January went for prices above MSRP, we have our doubts about how much these warnings can tamp down the furor of the free market, but we have popcorn in the microwave while we wait for what comes next. 

By Jonathon Ramsey