Supply and Demand or …

For a number of reasons, I’ve decided to get a new car. I’ve settled on the Toyota RAV4 Prime as it is really the vehicle I wanted 5 years ago when I was searching for a car. The car is a plugin hybrid (PHEV) which means that most of my driving will be on electric (42 miles on electric). With my newly installed solar, I won’t be paying extra for the electricity (I’ve already paid for it and factored in this car when sizing the system).

The problem now is that the car is in such high demand and Toyota is going to make less than 5000 this model year. While the vehicles are starting to show up according to reports on forums, dealers in Southern California have decided that a $10,000 markup is the way to go. I’ve read that in other regions (Southern California including San Diego is considered the LA region) such as the northwest and east coast, people are getting the cars at MSRP which is reasonable.

Every dealer I’ve communicated with in San Diego and LA is adding the markup no matter the trim. That number is ubiquitous across the board. On one forum that I posted this to, someone suggested that I look at an article on the FTC’s website. The article says that while dealers can charge what they want for a vehicle, they basically have to come to their pricing on their own independently of other dealers. Given that they all (of the ones I’ve contacted) are charging the exact same amount over MSRP, did they come to this conclusion on their own or did they come to the pricing together as a region? One salesman speculates that it is regional. However, there are some people on RAV4 forums who are talking about different markups; I’m not sure of their regions.

Is what the dealers doing legal? I have no idea. Is it right? In my opinion, no and it goes into the feeling that many people have that car dealers are not the most honest people. Going into a dealership makes me cringe and this just reinforces it.

I guess I’ll be waiting awhile for the vehicle I want; hopefully I can get it before the federal tax credit runs out.

10 Replies to “Supply and Demand or …”

  1. Many people think that the best part of a Tesla is the freakishly nimble powertrain performance, or the low cost per mile of operation, or the lack of tailpipe emissions, or the simplicity of maintenance and repair, or the world-leading autonomous driving capabilities. They’re not wrong, but also, they’re all wrong. The best part of a Tesla is NO DEALERS! Tesla sells every car they make direct to consumer. Tesla bet their entire company on having no dealerships. They see clearly what no one else sees.

    1. Hi David,

      Absolutely if I could purchase directly from Toyota, I’d do it. The whole concept of dealers for buying is outdated; there are actually a few states where Tesla can’t sell directly because of outdated laws.

  2. Fly to somewhere you can get it at MSRP and enjoy your new dream vehicle’s debut as a nice road trip.

      1. Rent a card and drive to New Mexico or Nevada? Rental cars should be safe: you can sterilize them yourself and also sunlight and heat has pretty much sterilized them anyway.

        1. Unfortunately those areas aren’t getting the cars as far as I know; it is east coast and west coast. I’m not willing to drive that far to get a car. A car is nice to have, but if I don’t get it so be it.

  3. You can buy the car from an East Coast dealer and have it shipped across the country by a third party or the dealership can arrange it. This is usually between $500 and $1500. Even better if they can make it so you take delivery of it when it arrives to you so you don’t have to pay the state sales tax wherever the dealership is. You’d pay the sales tax directly to California at the DMV when you register the car.

      1. You’d be surprised. If you find a dealership that can’t have people come inside due to the pandemic, their sales numbers may be low and desperate to sell a vehicle. So try some dealerships in NY, NJ and MD and see what happens. Ask for the Internet Sales director.

        I previously did something similar when all the local dealerships were wanting higher than MSRP near me about 5 years ago. I live in Vegas, bought from a dealership in Palm Springs, took delivery of the car in AZ and registered it myself in NV. Complicated, but they were the one of 2 dealerships we spoke with that were reasonable and would order the car to the spec that I wanted. Other dealerships were lying and saying they only had an allocation for the particular model and they had already placed their orders for general stock so they couldn’t do any special orders.

        Dealerships suck almost as much as getting an Apple device repaired. I’d rather go see my dentist weekly than deal with either of them.

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