Study Finds 25% Of Car Buyers Won’t Return To Dealership That Charged Above MSRP

A new study from GfK AutoMobility should put automakers and price gouging dealers on alert as it reveals markups are a surefire way to hurt both of their reputations.

According to the study, 80% of car buyers in May and June paid MSRP or above. That’s a sign of the times, but a whopping 34% paid fees they had never heard of before, presumably an effort by dealers to pad their bottom line.

With shortages and the chip crisis still hampering production, 31% of buyers purchased a model that wasn’t their first choice. 30% compromised on the features they wanted, while 30% also bought from a dealer who wasn’t their first choice.

Also Read: Stealerships Strike Again! These 15 Cars Have The Highest Dealership Markups

Getting back to markups, they have a significant impact on how customers feel about a dealership. In particular, 31% of people who paid over MSRP said they will tell others not to go to that dealer and that’s more than double the percentage (14%) of people who paid full MSRP.

Bad word of mouth isn’t the only result as 27% of people who paid over MSRP said they wouldn’t get their vehicle serviced at that dealership. For people who paid MSRP, that number was only 15%.

Worst of all, 25% of people who paid over MSRP said they would not return to that dealership at all. That’s more than twice the percentage (13%) of people who said the same after paying MSRP.

Dealers aren’t the only ones that stand to lose as brands take a pretty significant hit for their shenanigans. 27% of customers paying over MRSP said they would “definitely not buy that brand again,” while 23% said dealer markups negatively impacted their opinion of a brand. At MSRP, those numbers were 10% and 9%, respectively.

GfK AutoMobility noted feelings about markups are souring as the “proportion of above-MSRP buyers who said they will not go to the same dealer for service rose 9 percentage points – from 23% to 32% – in just one month (from May to June).” Likewise, the percent of people saying they would tell others not to go to that dealership rose from 28% to 35%.

GfK AutoMobility senior vice president, Julie Kenar, stated “Manufacturers and dealers need to think beyond today’s troubles to protect their brands for the long term. While paying above MSRP may not seem terribly different than simply paying the list price, our research shows that the negative feelings generated are much stronger – and more threatening to future business.”