With the ongoing rollout of the Cadillac Blackwing super sedans and the upcoming launch highly-anticipated 2023 Cadillac Lyriq on the horizon, Cadillac’s parent company, General Motors, has issued a warning to dealers cautioning against the recent trend of market adjustment fees tacked onto the price of new vehicles.
Cadillac Society obtained a copy of the warning, which was outlined in a letter composed by Steve Carlisle, president of GM North America. Incidentally, Carlisle served as President of Cadillac before being promoted to his current role. Either way, the letter reminds Cadillac dealers that they are “obligated to ethically and lawfully sell [Cadillac] products,” and says that a handful of dealers have engaged in undesirable practices that are detrimental to a positive sales experience for customers.
The letter calls attention to the fact that some Cadillac dealers have “attempted to demand money above and beyond the reservation amounts” outlined by reservation program rules, such as for the Cadillac Lyriq. Carlisle also notes that some dealers have “requested customers to pay sums far in excess of MSRP” in order to purchase or lease a new vehicle. A few months back, we covered an example of this – a CT5-V Blackwing for sale in Ohio had an additional $35,000 added on top of the MSRP to reflect a “fair market value,” according to the dealership.
Carlisle argues that such markups are unethical and are harmful to the reputation of the dealer, to GM, and to Cadillac. The letter threatens that the automaker will take action against dealers that are found to engage in “unethical sales practices” and that it reserves the right to redirect vehicle allocations or take other recourse.
The timing of this letter indicates that executives at Cadillac and its parent company, General Motors, are concerned about dealers potentially using the launch of the Cadillac Lyriq to take advantage of customers by gouging them on new vehicle prices.
It’s worth noting that there currently is no legal way for GM or Cadillac to regulate prices set by dealers, since dealerships are independent businesses that set their own prices. However, there certainly is a way for an automaker to take other measures – like diverting vehicle allocation – to discourage the practice.
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Drewstar
I disagree with Mr. Carlisle about dealer markups being “unethical”. In order for it to be unethical Cadillac would first have to establish what an ethical price is. As Miss Purcell pointed out individual dealers are free to set their own prices. Is one dollar over MSRP unethical? What about a hundred? A thousand? Again as mentioned Cadillac can choose which dealers receive their cars, but that is all. If a dealer wants to gamble that the public will pay more than MSRP that is their choice.
TR
Totally agree, no one is forcing the consumer to pay what the dealer is asking! If you don’t like it take your business/money elsewhere, it’s not that hard to do.
jbbooky
If GM actually made vehicles to meet demand, there would be no markups.
Frank Ricciardi
I think Market adjustments/ Dealer Markups are bad business and I, personally, refuse to pay them. I will gladly take my business to a dealer
that is not attempting to gouge their customers.
Dougyfd
Price gouging is wrong, I don’t care what the reasoning is. It’s bad business practice.
Joe Sesto
I’m a consumer and GM fan. When the C6 was announced I contacted a long time friend and asked how much he would bump it…$10k. Then I called a dealer close to where I live, but did not know, and they just wanted MSRP. I later leased a CTS from that non-friend dealer, bought a 3500 Duramax and leased a CT6 that I bought out off lease as there’s nothing out there that compares to that 3.0L TT V6 for $37k…despite its sometimes clunky trans. Dealers can do whatever they want and so can buyers.
Chris Cummings
Mr. Carlisle’s letter (like a similar one that went out to Ford dealers) is pure PR to make customers think the company is doing something. Practically speaking, neither GM nor Ford is going to come down on a dealer that charges a “market adjustment” or other markup. Those measures are not explicitly forbidden in the dealer agreement, and the lawyer for any dealer who was singled out would likely prevail, alleging selective enforcement, etc. Anyway, it’s called the Manufacturer’s SUGGESTED Retail Price for a reason.
Sean
Went to purchase a Escalade tonight. Sales person says there will be a 20k markup and they will not budge on it so did not buy. Not going to pay over msrp
Rhonda Miller
I have owned 5 Escalades and numerous other GM products. I went to purchase a new Escalade and was advised the markup would be $40,000 over MSRP……Needless to say…..The vehicle is still on the dealer’s lot..
Triller
The mfrg’r “suggested” price assures FAIR profit for the various participants, to include the buyer. Kudos to GM to address short-term greed by REDIRECTION of ITS assets! If dealers can claim they can sell at the price they choose, then by inference they accept GM can sell / consign ITS products to dealers that align with its sales philosophy. Dealer’s don’t get it both ways!
And the situation causing the market environment for short-term gain will eventually be mitigated and addressed by increased production and competitive mfgr’s.
Most importantly, buyer’s REMEMBER!
Dana Gravely
Moore Cadillac Chantilly Va they don’t charge the mark up prices I purchased mine from there and the service is great.
CLC
Yes, GM (and Ford) can’t do much about what a dealer charges, but they can make a case that dealers ripping off customers makes the manufacturers look bad. Ripping off customers hurts GM, Ford, and other brand’s values. But, the dealers are protected by state laws, laws that have been bought and paid for over the years by dealer campaign contributions.
I think GM and Ford and other manufacturers would love to get rid of dealers, and sell direct to consumers. With EV’s requiring much less maintenance than and ICE vehicle, this is doable. I’m thinking that GM and Ford are laying the groundwork to go to state legislatures and make the case that dealers are ripping off the public, hurting major US businesses, and try to get states to allow GM/Ford to sell to consumers directly. Tesla does this, and it is a competitive advantage for Tesla….
Mike
There should be NO selective enforcement. Severe financial penalties should be applied to ALL gougers up to and including cancelling their franchises. Cadillac has a good name and good reputation. Few bad gougers can destroy it.
William
$15,000 markup on price to order new CT5-V ( V6 version ). MSRP = $62,325 with the options I want. Nearly 25% markup at Fort Walton Beach Cadillac Dealership.
Michael
We are looking forward to purchasing a Cadillac Lyriq and ordered one today. Being aware of some dealerships charging above MSRP I had to ask about pricing. Shocked to be told a dealership in Seattle was charging $15,000 above MSRP and my local dealership planned on under cutting by charging “only” $10,000 more. The Lyriq is not really the competitively priced SUV Cadillac and dealerships advertise. I will be taking my business to a dealership that honors the MSRP price if I can find one. Otherwise I’ll purchase from a different car manufacturer entirely. I will not pay above MSRP. Doing so would only encourage this deceptive business practice.
Greg
So fast forward to December 2022 and dealers are still charging over MSRP for Escalades…because “we can keep them in stock”. I’ve been in the market for new one (currently have a 2015 escalade) for almost a a year now. I won’t buy over invoice because the depreciation is going to be horrendous when the supply catches up. Now looking at the Model X, Toyota and Lexus options.
Toomanyplacestotravel
Even after this “bulletin” went out to dealers by Mr. Carlisle/GM I still do not see how anything has changed. I have been looking to buy a new Escalade Sport Jan/23 for my wife and continue to see dealers asking 15k-30k over for the Escalade. Not going to pay it…This is not a limited build like the Escalade V. Just purchased a new 23’ Bronco Raptor and paid MSRP and this is an extremely limited build by Ford.
Dana Gravely
Check with Moore Cadillac in Chantilly Va I purchased mine from there and they do not add the extra cost like other dealerships do and their service is great.
Dana Gravely
I went to buy a Escalade from Waldorf Cadillac and they wanted to charge me a extra 10,000.00 dollars for the dealer market up so I looked around and found that Moore Cadillac in Virginia did NOT do the markup so I would advise you to call around not all dealerships try to rip you off. By the way Moore Cadillac was an excellent dealership to order and purchase your new Caddy if you want one.
Mary Anne Hailer
I was quoted by phone a 5000 charge today. Pretty ticked off as I had already road tested and was ready to pull the trigger. This is my first experience with a U.S. car and am disappointed. Probably going back toLexus.
Mary Anne Hailer
Upcharge