Cadillac, along with many other automakers, is currently suffering through a lack of vehicle inventory at the dealer level due to the ongoing microchip shortage, along with other supplier issues. While the American luxury marque prioritized the production of its most popular vehicle, the Cadillac Escalade, over the rest of its lineup, it’s not making enough units to satisfy customer demand. Some dealers, having seen and understood this situation, have taken advantage of this low-supply, high-demand scenario and are charging well over MSRP for the Escalade.
Referred to by dealers as “market adjustment fees”, “dealer adjustment markups”, “dealer adjustment fees”, or “addendums”, these markups are justified by the seller as being a reflection of a fair market price. In fact, dealers are asking anywhere from $5,000 to $10,000 over MSRP for a new Cadillac Escalade while others have taken it to the extreme.
For example, Brotherton Cadillac in Washington state is asking $154,635 for a 2022 Escalade Sport Platinum – that’s $40,000 over the MSRP of $114,635.
Applying exorbitant upcharges to new Cadillac vehicles certainly isn’t a recent phenomenon, nor is it exclusive to the Cadillac Escalade. Earlier this year, Cadillac’s parent company, General Motors, issued a warning to its dealer body regarding the practice. In a letter from GM North America President Steve Carlisle, dealers were reminded that they are “obligated to ethically and lawfully sell [Cadillac] products” and that charging over MSRP constitutes an “unethical sales practice” that could damage the reputation of Cadillac and GM. It’s worth noting that prior to being promoted to head GM North America, Carlisle served as Global President of Cadillac.
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 (resellers) that set their own prices, having purchased product from the automaker. However, Carlisle threatened to take action against dealers found to be partaking in the practice by diverting vehicle allocation.
The Cadillac Escalade already saw an increase in MSRP for the 2022 model year, as most models in the trim level hierarchy gained the Super Cruise semi-autonomous driving assistant as standard equipment. Prior to the change, the feature was optional.
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