What Are Dealer Market Adjustments On Cars?

What Are Dealer Market Adjustments On Cars?

When the demand for a new car or truck is bigger than the supply, buyers may find themselves paying over the sticker price. Terms like market adjustment, market adjustment premium, and additional dealer markup (ADM) all indicate that a dealer has added a fee above a vehicle’s MSRP due to current market conditions.

While there can be ways to avoid a dealer markup, the unfortunate fact is that a chip shortage has made it significantly harder to buy a car under MSRP. Unless you can find a dealer willing to sell a car without a markup, market adjustments on cars may continue to present challenges as long as an inventory shortage persists.

There can be ways to spot a dealer markup. One method involves taking a close look at the fine print in a new car listing. Is the sale price over MSRP? Is the advertised price higher than it should be? These can be signs that a dealer markup is involved. Your salesperson may also have insight into availability in your area.

Fortunately, some dealers may have a policy of not selling cars above MSRP. Market adjustments and ADMs can significantly add to the cost of buying a car, truck, or SUV, especially considering the fact that there are fewer manufacturer car deals for both buying and leasing. These can result in double-digit increases in pricing.

For example, the wildly popular Ford Bronco is commanding markups of up to $25,000 over MSRP or more. Even mainstream cars can have market adjustments. In Northern California, one dealer is charging a $4,000 market adjustment premium on the Toyota RAV4 Hybrid. Sometimes, there may be no way to avoid a markup.

Consumers are embracing factory orders to a degree unlike any before. One local Ford dealer here in Southern California says buyers can avoid its $25,000 Bronco markup with a factory order. While the dealer does say orders may entail a 6-month wait, it could be the only way for most buyers to avoid a market adjustment.

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