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Surprising No One, Subaru Discourages Dealer Markups

Increasing complexity and inflation translate to higher starting prices for new cars. But ever since the coronavirus pandemic reared its ugly head, prices went bananas due to the chip shortage, ADMs, and scalpers.
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Markups obviously stand out in this crowd, which is why automakers like Hyundai and Genesis have warned their U.S. dealerships over this legal yet controversial practice. Both warned their dealers of potential actions that include reductions in future allocations, advertising benefits, and so forth.

Subaru is the latest automaker to shame its U.S. retailers over markups.

A letter signed by the chief executive officer of Subaru of America states that “we strongly discourage from engaging in this practice because of the negative impact this can have on the customer experience and our brand loyalty.” Thomas J. Doll is perfectly right, you know. Markups alienate the most loyal of customers, including those peeps who are likely to buy a new car from the same marque after the warranty expires on their current car.

Sourced by Jalopnik, the letter further states that “the current situation is testing our resolve, commitment, and discipline to the principals of our customer commitment. Please stay committed to our brand philosophy.”

Doll further highlights that he’s looking forward to seeing dealers at the NADA Show on March 10th, where this subject will be further discussed.

Veiled threat or not, it’s heartwarming to see a high-ranking executive taking action. But unfortunately for prospective customers, don’t hold your breath for an improvement because Subaru of America doesn’t set prices.

The automaker is responsible for determining the suggested retail price, yet retailers have the right to charge whatever they want as long as they don’t break the law and the franchise agreements. Given the inflationary trend and the ongoing chip shortage, so-called market adjustments are here to stay.

Tesla’s direct sales model isn’t really a solution either because Tesla has the awful habit of increasing prices more than once in the span of a month.

 
 
 
 
 

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