Shop smart: Vehicle buyers beware of market adjustment fee
by Chuck Wisman
If you’re in the market for a new car, please look out for a new fee with growing popularity at certain new car dealerships. It’s a “market adjustment fee.” The phrase is recently popular only in the sense of its proliferation among a number of new car dealers, notably in the fine print.
Because of the pandemic, the disruption of the worldwide manufacturing supply chain, and the significant shortage of computer chips (primarily manufactured overseas), the supply of new cars is severely restricted. Large dealerships that ordinarily have 400-600 new vehicles on their lots now have only one or two, if any. It’s now a seller’s market. In order to increase their profits with far fewer new vehicles available, car dealers are instituting this market adjustment fee and dealer-installed high-profit accessories, among other things.
Beware or at least be aware
In a recent foray into purchasing a new vehicle, I found one advertised online at a metro Detroit car dealer, and it seemed perfect for my needs. The advertised manufacturer’s suggested retail price (MSRP) for this vehicle was $30,950 as delineated on the dealer’s website. Upon inspecting the vehicle at the dealership, the listed price of the vehicle was $38,613 (before tax, plate, destination fee, etc.).
What the heck?
The price was increased by $5,000 due to a delineated “market adjustment fee.” According to the salesman, this fee was instituted by the dealer to recoup costs due the shortage of vehicles, and it was non-negotiable. He noted this was industrywide (NOT!). This particular dealer also installed a non-negotiable $2,000 GPS Tracker to help locate your vehicle if stolen. Wheel locks, nitrogen in the tires and an All-Season Package also were added for a total of $673. So, a vehicle with a publicly advertised MSRP price of $30,950 was now $38,613 due to the market adjustment fee and dealer-added accessories. That’s an increase of 25% over the original advertised price. Plus, a buyer would pay added sales tax on all those additional items, including the market adjustment fee.
Shopping around
Subsequently, a new car dealer near Jackson, Michigan, was queried regarding a similar vehicle. In response to specific questioning, the salesperson stated the dealership also had a market adjustment fee but this one was $1,500, not $5,000. The salesman stated this amount was “recommended by the manufacturer.” Yet another car dealer for the very same manufacturer near Ann Arbor was queried, and this dealership had no market adjustment fee.
Additionally, a salesperson for a metro Detroit Big Three dealership stated his dealership would never institute a market adjustment fee since the dealership highly valued customer loyalty. If they instituted such a fee, they would lose those customers to other dealers.
According to a recent Detroit News article, “Dealerships have leverage to set prices by way of added accessories and price increases. These so-called market adjustments and, by extension, dealer-added accessories on new cars were once reserved for highly anticipated vehicles or limited-edition models. But now they are commonplace and part of the cost of doing business in today’s market of low inventory and inflated prices.”
Even though certain new car dealers are inflating the price of their vehicles beyond the MRSP, manufacturers are trying to limit or eliminate this practice by threatening dealers with their respective vehicle allocations. The manufacturers appear rather unsuccessful at this point.
So, if you’re in the market for a new car, save yourself time and money by first asking the salesperson whether the dealership charges a market adjustment fee and what accessories, if any, the dealer installed as a requirement of the sale. If either of those items or both are required by the dealer, you may want to try shopping elsewhere.
