Car buyers are using a new website to turn the tables on dealer profit margins

Market research shows that new car dealers continue to mark up prices an average of 10% above the manufacturer’s suggested retail price, despite warnings from some automakers to limit this. But a new website is helping car buyers turn things around.

When Charles Ray and his family learned a new baby was on the way, they needed a bigger car.

“It’s starting to turn into a race against time. Who will come first, the baby or the truck?” Ray laughed.

Ray says he went to a Kia dealer to have a look at the Kia Carnival.

“We were like, ‘We’re ready to buy it now.’ The salesperson comes in and says, ‘Okay, that’s great, but I have to tell you something.’ He says, ‘We’re charging over $15,000 MSRP for this thing.’ Ray recalls the stock exchange.

He says another dealer quoted him $8,000 above the manufacturer’s suggested retail price for the Kia Sorento.

“It’s ridiculous,” Ray said. “It’s so absurd.”

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Ray did not buy those vehicles. Instead, he started reporting merchant prices on Markups.org.

“We’ve seen some crazy stories of people getting $50,000, $60,000, $75,000 in funding,” said Tiffany Susi-Horren, Vice President of Markups.org.

Soucie-Howren and its partner launched the site so consumers can express their opinions.

“We just want to help bring that transparency, where consumers know before they take their time, before they go out and have a terrible experience,” she said.

Merchants have the right to overprice the manufacturer’s suggested retail price.

But the chief executives of Ford and General Motors warned dealers in February to cool high profit margins.

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The iSeeCars.com report shows its persistence.

“The new side has been pretty much flat above 10% above MSRP for several months.

And unfortunately, with the recent global turmoil continuing, unfortunately there is still a long way to go before we start moving away from these high numbers,” said Karl Brauer of iSeeCars.com.

The highest rates?

iSeeCars reports that the average Jeep Wrangler price is up 26.7%, $8,925 over MSRP, Porsche Macan up 23.3%, and $13,254 over MSRP.

Soucie-Howren says they require consumers to show proof of their posts, and merchants can refute the posts. The goal, she says, is to create transparency in the marketplace.

“Obviously we’ve hit a few feathers,” Susi-Horen said. “But we hope this is a tool to use, not just for consumers, but for merchants.”

Ray says they finally bought a Honda Odyssey for $1,000 on MSRP. And on time. Baby Kylie has arrived.

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We asked six dealerships on Markups.org, the National Auto Dealers Association, and the Texas Auto Dealers Association for comment, but none responded.

To save money on a new car, experts say, be flexible about make, model, color and amenities, and be willing to drive to a dealer a few hours away if it saves you a few thousand dollars.

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