The long term impact of ADM

eRicRic

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Major disruption in the automotive industry. The capitalistic byproduct of not being able to secure sufficient cars for buyers (supply-demand imbalance) is that more and more dealership are tacking huge fees on top of MSRP. This ADM (additional dealer markup) or “market adjustment” is bad news for dealers and manufacturers alike.

Buyers who pay ADM are twice as likely to avoid that dealership in the future, 3 times as likely to avoid that brand, and 3 times less likely to visit that dealer for lucrative service posts-purchase.

This sentiment isn’t isolated to the “sting” at signing; the bad feelings endure for many months.

There is a huge opportunity for someone to solve supply chain, remove ADM, and crush consumer loyalty. Who will step up??

#adm #additionaldealermarkup #stealership #dealership #supplychain

 

pastorwug

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I would never go back to Paso Robles Ford after they tried to stick me with a $25k ADM. I asked them how they sell anything with that kind of shady dealing, they said they sell them every week. How stupid can people be? Without even a grin he stood by their ADM.
Drove by a week later and sure enough, the Raptor was gone - some shmuck swallowed the pill because they got lazy.
I went on FRF and just asked if there was a dealer that would at least sell at MSRP - within a day a dealer contacted me and sold me a Raptor for $2k UNDER MSRP. Exactly the options and color I wanted.
You just have to be patient and don't be lazy.
 

catinthehat85

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I mean it's pretty obvious right? Start up's like Tesla and Rivian who sell direct to consumer are taking a larger and larger percentage of the overall market share every year. The writing is literally on the wall.

Simple analogy I think most of us can relate to, what happens when your favorite restaurant raises prices and upsets its customers? How does the market correct? Does that restaurant lower prices and restructure how they source their supplies? NEVER. They continue raising prices as less customers come until they go out of business, meanwhile another restaurant with comparable food and cheaper prices begins to thrive and eventually take over.

The fact of electric vehicles, regardless of how you feel about them, is they are significantly easier to assemble and bring to market, making startups in this industry a real possibility again. ADMs are only fast tracking the success of these start ups.
 

smurfslayer

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The market for the Raptor is elastic but obviously on a smaller scale than the peasant F150. Even the peasant trucks are commanding markup from some stealerships right now, but this is not sustainable as a permanent practice.

I certainly punish what I perceive to be out of scope markup to ammunition when something pushes prices up. Some of which I will never purchase from again - talking about you Cheaper Lower than Dirt...

Raptor production will go up again at some point beyond the current scalping ordering process. Even if the entire auto market shifts, manufacturers are trying to make money and they’re not making as much of it as before china virus and not making as much as they could. So they will make more.

Stealerships will get more to the market and the “gotta have the latest toy RIGHT F***ING NOW” buyers will subside.

Prices will then stabilize around MSRP for a few months to a year and begin to drop. What happens to all the trucks owned by the RFN buyers?
That will depend on availability of new Raptors.

If prices stabilize at MSRP or just under in ’24, all the folks campaigning those ADM trucks take the financial hit. However, if the Raptor market doesn’t improve or the model gets cancelled, the ADM buyers will sell at much higher numbers.
 

Noplacelikeloam

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While I don't like to think this, Im suspecting dealers wont care until a measurable effect is seen. But even with that in mind, its a little odd to compare Raptor sales with general car sales. Two different buyers with different objectives and buying behaviors.

Im guessing general car sales will normalize quickly but boutique sales like raptors and other performance vehicles will take a while to settle down. Supercars have been sold like this for decades. No one stopped buying Ferrari because it was invitation only and an ADM.
 

melvimbe

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I mean it's pretty obvious right? Start up's like Tesla and Rivian who sell direct to consumer are taking a larger and larger percentage of the overall market share every year. The writing is literally on the wall.

Literally?

Simple analogy I think most of us can relate to, what happens when your favorite restaurant raises prices and upsets its customers? How does the market correct? Does that restaurant lower prices and restructure how they source their supplies? NEVER. They continue raising prices as less customers come until they go out of business, meanwhile another restaurant with comparable food and cheaper prices begins to thrive and eventually take over.

So if you're thinking about buying into a restaurant franchise, make it a ******* and not Applebees. No body is leaving ******* to go to Applebees

The fact of electric vehicles, regardless of how you feel about them, is they are significantly easier to assemble and bring to market, making startups in this industry a real possibility again. ADMs are only fast tracking the success of these start ups.

I don't think it's that simple. Tesla is making sedans and small SUVs, which is not exactly what people want. They are getting a good reputation, but don't have the longevity that Ford, GM, and others have of being in the business for decades. And despite complaints about dealerships, it's good advertising, and people like that they can go talk to a human about the vehicle they want and maybe even drive it home that night.

I would honestly say that lack of supply is a bigger problem than ADM. Dealerships can only charge ADM when supply is low. Even if there was no inventory on the lot, if any customer can work with any dealer to get his vehicle (no allocations to worry about), then there will be no ADM.

ADM is just the product of supply and demand. Heck there have been guys on here who managed to get a Raptor at MSRP, and turned around and sold it for a 10k profit. There may still be an issue with overpricing if people want to pay to move up in the line or that sort of thing, but that would be a separate issue, and wouldn't impact everyone else's price.
 

melvimbe

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I certainly punish what I perceive to be out of scope markup to ammunition when something pushes prices up. Some of which I will never purchase from again - talking about you Cheaper Lower than Dirt...

Eh, I wouldn't punish a dealer for charging ADM, I'm just not buying at a price I don't want to pay. If they have the better deal on something I want a year from now, I'm not going to punish myself and pay more elsewhere. I would avoid dealers who try and throw in extended warranties, sell me on monthly loan rates, etc. though. And I will lean towards dealerships I've had good relationships with if the deals are close.
 
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