A letter sent to dealers forewarns guilty retailers they will be punished for ridiculous price increases.
Sadly, excessive market adjustments are commonplace. But that doesn't mean dealers partaking in the dishonorable activity should go unpunished. Ford CEO Jim Farley has previously cautioned greedy dealerships that their product allocation will be directly impacted in the future, with hopes of curtailing the practice. The Blue Oval has also noted that market adjustments are not only negatively impacting the customer but damaging the overall brand as well.
According to Automotive News, another carmaker is taking action against US dealers and unsavory pricing strategies. In a letter sent to retailers, Hyundai and Genesis are warning against so-called market adjustments, noting that they are damaging the brand image.
While both acknowledge dealers have full control over the final price, the duo has laid out a series of potential actions they can take against offenders, such as the withdrawal of advertising benefits and a reduction in future allocations.
CarBuzz has previously covered the excessive markups placed upon Hyundai models, with one Reno, Nevada dealership placing a cheeky $20,000 price increase on a Hyundai Ioniq 5. Marketed as one of the more affordable EVs currently on sale, that ethos is thrown out the window with this dealer charging a total of $66,188 for the handsome electric crossover. Its electric sibling has also been the subject of excessive markups, with one California-based Kia dealership charging a whopping $87,231 for an EV6. Clearly, something has to be done.
The letters, signed by Genesis North America COO Claudia Marquez and Hyundai North America's senior vice president of national sales, Randy Parker, state: "We are writing now because with great regularity our customers around the country are voicing displeasure with certain pricing practices which, if left unchecked, will have a negative impact on the health of our brand."
Both brands pointed to particular practices, the letters claiming dealers are "affixing side stickers with price markups to our vehicles" and, advertising a price online and subsequently raising it. "All of these practices result in the sale of vehicles far above-MSRP prices, in some cases way above-MSRP prices, damaging our brands' long-term ability to capture new customers and retain loyal ones."
Of course, shrewd retailers may scoff at this; after all, they have a legal right to set prices as high as they please. While both Hyundai and Genesis respect this, the carmakers have said they will not watch dealers ruin the hard-earned reputations the two have worked hard for. "You are, as an independent business, of course, free to adopt any policies, including pricing policies, that are consistent with law and your contractual obligations. But we cannot stand idly by watching the actions of the aforementioned dealers undo all the efforts we collectively have put into making these brands what they are today."
With the new car market in its current state, desperate car buyers may have no choice but to pay the ridiculous market adjustments some dealers are choosing to apply. However, the Korean brands have said that once inventory stabilizes, customers won't be quick to forget how they were treated.
"Once supply and demand come into greater equilibrium, customers will feel that they were overcharged for their vehicle and thus look to other brands the next time they are shopping. We believe that the risk of losing customers and potential future customers far overweighs any short-term gains to be had from what customers describe as unfair pricing," the letters said.
We applaud Hyundai and Genesis for taking action against money-hungry dealerships, as the unscrupulous tactic has gone on for far too long. But will it be enough to stop unprincipled retailers? Only time will tell.