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Hyundai and Genesis are the latest automakers in the US to threaten dealers with penalties for raising vehicle prices. Automotive News get the letters that the brand sends to the showroom.
“We are writing now because very regularly our customers across the country voice displeasure with certain pricing practices which, if left unchecked, will have a negative impact on the health of our brand,” the letter said.
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Automakers cite behaviors like advertising one price online but having a higher fee in showrooms as examples of what dealers shouldn’t do. The company warns that high markups “undermine our brand’s long-term ability to capture new customers and retain loyal ones.”
If a dealer does this, Hyundai or Genesis may respond by reducing vehicle allocation or by eliminating advertising benefits. “We cannot stand idly by as the actions of the aforementioned dealers nullify all the efforts we have put together collectively to make these brands what they are today,” the letter said.
With the lack of supply from the ongoing shortage of computer chips, there is still a high demand for vehicles. Dealers responded by placing a markup on the vehicle because the buyer was willing to pay the extra money. Some showrooms are taking this to extremes like asking for nearly $80,000 for the Kia EV6, which is nearly $19,000 over the sticker price.
Some automakers have responded by warning dealers not to place too high a markup on vehicles. For example, Ford suggested a two-part strategy for the F-150 Lightning. First, it threatens dealer allocations of electric pickups if the automaker catches the showroom doing something immoral.
At the same time, Ford allowed dealers to conclude contracts with buyers that would prevent customers from selling the F-150 Lightning for one year. This prevents someone from buying an electric truck and immediately flipping it for a profit.
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