Breaking a 100-year tradition, most cars now sell for more than the manufacturer’s list price. This is thanks to high demand coupled with production slowdowns due to global parts supply issues.
But the brands with the highest average markup rates may come as the biggest surprise.
Not a luxury or performance brand. It’s Kia, a South Korean car brand usually considered a worthwhile purchase. Data from Edmunds.com shows that, on average, Kia and SUVs sell for about 6% more than list prices.
Honda, Hyundai and luxury SUV brand Land Rover are close to second place, averaging 4% above sticker prices.
In dollars, Land Rover has the highest dealer markup, with customers paying an average of $3,686 more than the sticker price, according to Edmunds.com. However, the average purchase price of a Land Rover SUV in the US is over $94,000.
Even on a simple dollar basis, Kia ranks second among all US car brands, with customers paying $2,183 more than Stickers on average. This is especially notable given that the average purchase price of a Kia was around $36,000.
There are three main reasons why Kia ranks top in dealer price markup. First, it’s a testament to the value customers have long found in Kia and his SUVs. In today’s tight car market, dealers can cash in a portion of that perceived value.
Ivan Drury, Auto Industry Sales Analyst at Edmunds.com, said:
Russell Wager, Kia America’s vice president of marketing, said in a recent interview with CNN Business that Kia is deliberately trying to steer itself away from its image as a brand that people buy at low prices.
“I still think we are, so it doesn’t matter that Kia might not be a good value,” he said. ”
Instead, Kia is now touting the design and attributes of the vehicles themselves, such as sportiness and, in the case of electric and hybrid vehicles, technology, he said.
Like other car brands, Kia dealers are independent businesses that can set their own prices. But their pricing power clearly benefits from Kia America’s marketing and product line decisions.
Even before supply chain problems started slowing car production, some Kia models like the Telluride SUV were already selling regularly at more than list price.
The new Kia Carnival minivan is also popular, especially since it is one of the few models on the market today. According to Edmunds, both Telluride and Carnival sell for about 7% of the retail price on average.
Ben Burton, managing partner of Jackson Kia in Cocoa, Fla., said of Carnival’s minivans, “If you get a car with a premium package, absolutely, people will fight over it. will be,” he said.
Adding to the pressure is that while a manufacturing slowdown is hitting the industry as a whole, Kia’s models are particularly hard to find. According to Zack Krelle, an industry analyst at TrueCar, Kia’s “days of inventory,” a metric that balances dealer inventory levels with vehicle sales velocity, has fallen into the single digits. According to him, the average is about 28 days.
Even the not-hottest models are marked up.John Gruey of Shelby Township, Michigan, said he paid $1,000 more than list price for the base model Kia Soul in July.
“It could have actually been more expensive,” he said, but the car had hundreds of miles on it even though it was being sold as new.
Third factor MeThe reason Kia sells well above its advertised price is because Kia sells a relatively large number of hybrid, plug-in hybrid and fully electric vehicle models.
Edmonds data shows that these types of vehicles have, on average, much higher dealer markups than petrol vehicles, as concerns about fuel prices have grown after the recent surge. Consumers expect to save money on gas, so they are willing to pay more to buy a car.
Models such as the Sportage Hybrid, Sportage Plug-in Hybrid and Sorento Hybrid sell for 8% or more of list price. According to Edmunds, the Kia EV6 all-electric vehicle sells for 6.4% more than list price.
Chris Sutton, vice president of car sales at consulting firm J.D. Power, said that given that Kia’s initial prices are generally lower than those of its competitors, paying a little more might not be too much of an issue. said no.
And because used-car prices are rising, customers’ trade-in vehicles will also be worth more, he said. As such, new-car price increases may end up being easier to swallow.
Ultimately, he said, it all comes down to how dealers communicate with customers about markups. A wise dealer will think not only about easy cash, but also about long-term reputation.
Burton, of Jackson Kia in Florida, said his customers are generally aware that paying for stickers before buying a car has become the norm. It also adds extra features like extended warranty coverage to help justify the higher price.
Higher interest rates are actually more of a shock to customers, he said. He expects the market to return to normal around the end of the year, returning to selling cars based on sticker prices.
The-CNN-Wire
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