These American Companies Are Fighting Against Price Gouging
Ford and General Motors are taking measures to disincentivize price gouging for ultra-popular new models.
Written by Allison Stone
Reviewed by Kathleen Flear
Inflation is soaring, and if you’re
shopping for a new vehicle
, you know this all too well. It's a seller’s market for both new and used cars, but some dealerships are taking price gouging to the next level. Both Ford and
General Motors
(GM) have stepped in to prevent price gouging within their respective dealership networks. Read on with the car ownership experts at Jerry to find out why these automakers are choosing to step in, what measures are being taken, and how to save money on a new car.
Why are Ford and GM trying to intervene?
As demand outpaces supply, some markup is going to be expected, but many consumers feel that both dealerships and car flippers have taken things too far.
Not only are people purchasing vehicles just to flip them for a profit, but some dealerships have been advertising in-demand cars for upwards of $20,000 over the asking price.
Back in June, one Ford dealership was spotted advertising a
$69,000 markup
for a Ford F-150 Lightning, although it was later attributed to a “printing error” following social media backlash. While individual pricing is largely at the whim of the dealership, it is the brand that pays the price in the end. Excessive markups can have a negative impact on a brand’s image, and sour consumers' feelings of satisfaction toward their new vehicles.
In a letter to dealers as reported by
Car and Driver
, Ford said that the recent price gouging was "negatively impacting customer satisfaction and damaging to the Ford Motor Company brand and Dealer Body reputation."Ford implements new rules, GM limits warranty transfers
In spite of several previous interventions, high markups on popular models like the Ford F-150 Lightning are everywhere. The brand warned that dealers caught increasing prices might not even receive cars that customers ordered.
Ford is also attempting to ban immediate resales of the ultra-popular F-150 lightning, as the automaker is allowing dealerships to insert a no-resale provision at the time of purchase.
Ford also said that it would implement a stronger name-match policy for sales, which would prevent people from using a fake name to order a vehicle to flip.
Additionally, Ford’s letter to dealerships warns that any broken caught flipping cars for profit could lose the right to sell the model entirely.
Similarly, GM is limiting the transfer of warranties on high-demand models within the first 12 months of ownership, meaning resellers looking to flip cars would lose the warranty with it.
Models included on the list are The Corvette Z06, the GMC Hummer EV, and the Cadillac Escalade V.
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