HOUSTON - Market research shows new car dealers continue to markup prices an average of 10% over the manufacturer's suggested retail price, despite warnings from some automakers to curb it. But a new website is helping car buyers turn the tables.
When Charles Ray and his family learned a new baby was on the way, they needed a bigger vehicle.
"It started to become a race for time. Who was going to come first, the baby or the van?" Ray laughed.
Ray says he went to a Kia dealership to look at the Kia Carnival.
"We were like, ‘We’re willing to buy it right now.’ And the salesperson comes up and says, ‘OK, that’s great, but I got to tell you something.’ He says, ‘We’re charging $15,000 over MSRP on this thing,’" Ray recalled the exchange.
He says another dealer quoted him $8,000 over the Manufacturer's Suggested Retail Price on a Kia Sorrento.
"It’s ridiculous," Ray said. "It’s absolutely ridiculous."
Ray didn't buy those vehicles. Instead, he started reporting dealer markups on Markups.org.
"We have seen some insane stories that people are getting $50,000, $60,000, $75,000 markups in financing," said Tiffany Soucie-Howren, Vice President of Markups.org.
Soucie-Howren and her partner launched the site so that consumers can sound off.
"We just want to help bring that transparency, where consumers know before they spend their time, before they get out and go through an awful experience," she said.
Dealers have the right to increase prices over the Manufacturer's Suggested Retail Price.
But the CEOs of Ford and General Motors warned dealers in February to cool the high markups.
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An iSeeCars.com report shows it continues.
"The new side has been pretty consistent above 10% above MSRP for several months.
And unfortunately, with the latest global unrest going on, unfortunately it’s still a way's out before we start to get away from these elevated numbers," said Karl Brauer with iSeeCars.com.
The highest averages?
iSeeCars reports the average price on a Jeep Wrangler is up 26.7%, $8,925 over MSRP, and a Porsche Macan is up 23.3%, $13,254 over MSRP.
Soucie-Howren says they ask consumers to show proof for their posts, and dealers can refute the posts. The aim, she says, is to create transparency in the marketplace.
"Obviously, we’ve ruffled a few feathers. But we hope this can be a tool of use, not just for consumers, but the dealers," said Soucie-Howren.
Ray says they finally bought a Honda Odyssey for $1,000 over MSRP. And just in time. Baby Kaylee has arrived.
We asked six dealerships named on Markups.org and the National Auto Dealers Association and the Texas Auto Dealers Association for comment, but none replied.
To save money buying a new car, experts say be flexible on the make and model, the color and amenities, and be willing to drive to a dealer a few hours away if it saves you a few thousand dollars.