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Some customers were just breaking even with cash-for-clunkers or even worse

While many of the domestic automakers offered steep price cuts on top of "Cash for Clunkers", many buyers chose to purchase vehicles from foreign manufacturers instead.  Leading the pack was Toyota, whose Corolla was the leading vehicle purchased under the program by the first week of August.  Even recently retired Sen. Bill Frist (R-Tenn.) traded in his 1991 Chevrolet Suburban for a brand-new Toyota Prius, joking, "You don't see a lot of Republicans driving a Prius." 

Now it appears that a handful of Toyota dealers raised their prices to offset the government rebate and cash in on the high demand for its vehicles.

DailyTech has an exclusive inside look at some Toyota dealers' so-called "market value adjustments" (MVAs) on popular vehicles such as the 2010 third-generation Prius hybrid.  With the typical sticker price of the Prius coming it at around $26,000, many dealers across the country have been charging $3,000 to $10,000 markups, more than offsetting the "Cash for Clunkers" rebate of $3,000 to $4,500 in some cases.

On the forum PriusChat, one customer reports, "We live in Lake Placid Fl. and could not deal with the dealer here. One charge they wanted was a market adjustment for this area of $3999.99 also dealer fees of $695.00."

A number of others on the same site share similar stories of their own.  States one buyer, "A certain dealer in NJ that I am not at liberty to mention charges 6500 over sticker and calls it fair market value adjustment. luckily I found another one close by with better morals. They are charging sticker price and not a penny more."

Speaking with a trusted source who had recently been shopping for a Prius, DailyTech was able to confirm one such dealer that was spiking prices.  Located in the heart of the U.S. auto industry, Suburban Toyota of Troy, Michigan was charging more than a $2,000 markup on a Prius it had in store. 

States our source, "Suburban Toyota in Troy was one of the ones that wanted a $2,000 additional fee over the MSRP, to the best of my recollection. The other places weren't named, but only referred to by a salesman who was offended by the other dealerships charging what he said was price gouging. I thought it was like ticket scalping. They know they have a hot item and could probably sell all they have, even for $5,000 additional MSRP. The Prius is a great car but they didn't produce enough, especially ones with the amazing solar roof that keeps your car cool when it's parked in the summer."

Hoping to gain further insight into this, DailyTech posed as an eager buyer and called Suburban Toyota.  The following is our conversation:

DailyTech:  "I've been calling all over trying to find a new 2010 Prius and no dealerships have any in stock.  Do you have any?"
Sales Agent:  "We do... it's been sold to Ford but the sale isn't finalized yet."
DailyTech: "But I heard from another dealer that I might have to pay more than the MSRP on it -- something about MVA or something like that -- is that true?"
Sales Agent:  "Yes"
DailyTech "How much more?"
Sales Agent:  "About $4,000 to $5,000."

The sales agent went on to elaborate that we might be able to buy it if we moved fast.  The agent explained, "When one comes in, typically it's sold before it even gets the chance to hit the lot."

DailyTech then proceeded to contact six other Toyota dealerships in lower Michigan.  None of the other dealers had stock in, but when related a slightly altered version of the story of the MSRP markup by Suburban, they all said that they sold their vehicles at MSRP.  A couple expressed shock or surprise at the development, but at least one commented, "I know who you're talking about."

It appears that most dealers are clean, but based on the feedback DailyTech has picked up on in various Prius forums, there are dealerships in at least several states that are similarly price gouging on the 2010 Prius via MVA's. 

Toyota was contacted by DailyTech and we are awaiting their comment.

Markups such as these are really nothing new, but are typically limited to low-production vehicles or vehicles that have been recently introduced.  The Prius itself has also been the victim of occasional price gouging since its introduction in the U.S.  While it's unknown exactly how many people were willing to pay the MVA's on the Prius, the fact that the elevated MSRP erased or even surpassed the Cash for Clunkers rebate was likely a hard pill to swallow for many buyers.

Update 1: One of the dealerships DailyTech contacted earlier this morning received a vehicle this afternoon and offered it to our "buyer" at MSRP.  This essentially invalidates the argument that no vehicles are available on the local market.



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Boggles my mind.
By Brandon Hill (blog) on 8/25/2009 1:51:22 PM , Rating: 5
While I would never pay over MSRP for ANY vehicle -- I don't care who makes it -- I must wonder what is going through the minds of people who fall for it?

$10,000? $6,000? They're practically blowing away their $4,500 credit.

Maybe I'm crazy, but I'd rather continue to drive a "clunker" that is likely already paid for than get gouged on a new car and pickup more payments.




RE: Boggles my mind.
By HotdogIT on 8/25/2009 1:54:33 PM , Rating: 5
They want it and don't feel like they're getting cheated.

Or they're blubbering morons.

Either way, they end up with a Prius, and less one junker.


RE: Boggles my mind.
By bighairycamel on 8/25/2009 2:17:22 PM , Rating: 3
A lot of people are just suckers for gimmicks. If they had done their homework they would realize that the Insight is nearly the same thing at a lower price... but I guess these are the same types of people that keep apple in business.


RE: Boggles my mind.
By randomposter on 8/25/2009 3:19:21 PM , Rating: 5
Everything I've read seems to indicate the Insight is inferior to the Prius in just about every way. Jeremy Clarkson referred to it as "biblically terrible."


RE: Boggles my mind.
By Iaiken on 8/25/2009 4:56:32 PM , Rating: 2
Clarkson with regard to the engine noise:

"Really, to get an idea of how awful it is, you'd have to sit a dog on a ham slicer."


RE: Boggles my mind.
By Noya on 8/25/09, Rating: -1
RE: Boggles my mind.
By 67STANG on 8/25/2009 5:15:01 PM , Rating: 2
The best is when Clarkson calls Americans fat. I've even heard him say we've got bad teeth once.... Really? A fat British guy is going to make fun of fat Americans?

Honestly, Top Gear is my favorite show... but every comment he makes like that makes me hate him more.

Then again, most of the antics they do on that show are anti-American. From unfair racing contests (ie- a Lotus road racing a Mustang GT) to biased reviews of our vehicles, it's all quite laughable. Even with all of this, it's still better than Car and Driver and MotorTrend...


RE: Boggles my mind.
By andrinoaa on 8/25/2009 5:16:47 PM , Rating: 1
are you so insecure he may be right, lol? You guys do have runs on the board!


RE: Boggles my mind.
By Totally on 8/25/2009 9:58:10 PM , Rating: 3
he has some valid points though, like pot meet kettle. Sometimes you have to pause and think "Seriously". Isn't it about times you guys got off the 'lets bash the US train'.


RE: Boggles my mind.
By afkrotch on 8/27/2009 12:32:03 AM , Rating: 2
If you're going for gas mileage, that 10+ mpg difference is well...not what I'd consider "nearly" the same thing.


RE: Boggles my mind.
By on 8/27/09, Rating: -1
RE: Boggles my mind.
By mmntech on 8/25/2009 1:56:10 PM , Rating: 5
Agreed. Anybody who pays over sticker is an idiot. Especially for a Prius which is already overpriced as is compared to other cars in its size class, even from the same manufacturer.


RE: Boggles my mind.
By Mitch101 on 8/25/2009 2:55:49 PM , Rating: 2
What's the price. The sticker says $26K but I would like to pay $30K.

Their Car Salesman. Not exactly known to be high on the trustworthy/humanitarian scale so this is a no brainier that they would mark things up to people dumb enough to pay for it.


RE: Boggles my mind.
By AlexWade on 8/25/2009 4:09:35 PM , Rating: 5
5 years ago this December, I had my eyes on a beautiful white 350Z roadster. I was in love with that car. Fully loaded, 6 speed manual, rear-wheel drive. I know I could get a more powerful sportscar for less, but I loved the look of the car. Plus, Nissan had a special 1.9% interest rate for this car. The dealer had the 2004 model on his lot. I said I would take it at invoice. After 2 hours, the lowest he would go is $3000 above invoice. So I walked out.

A few days later, they called me back. I had my 350Z at invoice and at 1.9% APR.

What people don't realize is that the most powerful negotiating tactic you have are your feet. Just leave. Wait them out. Desperate buyers are more likely to pay a bad price. The greatest trick car dealers play with you is to get you to think you have little power. The fancy gimmicks are there just to distract you. You have all the power.

You can also go to www.beatthecarsalesman.com. A site so effective, that car dealers threaten him. (http://www.beatthecarsalesman.com/speakout.html)


RE: Boggles my mind.
By nugundam93 on 8/31/2009 10:21:30 PM , Rating: 2
...if only a lot of car buyers were like you alex. very good move there.


RE: Boggles my mind.
By andrinoaa on 8/25/09, Rating: 0
RE: Boggles my mind.
By hybridr6 on 8/25/2009 6:25:34 PM , Rating: 5
"Anybody who pays the sticker price is an idiot."

Fixed. :)

Do people really pay MSRP for vehicles? I've only purchased one new vehicle, but I payed well below MSRP for it. Over 2k less in fact.


RE: Boggles my mind.
By deeznuts on 8/26/2009 2:58:30 PM , Rating: 2
My mother is from Vietnam where you bargain for everything, even buying groceries.

I will never ever buy a car without taking her. They tried to charge her for floormats, and other things on an Accord once, she said take them out. Then, they tried to charge her for pinstripes on the car, and, with a straight face, "Take them off."

I've had her with me every car I've bought, since I was 16 about 6 cars ago lol. I just can't bargain.


RE: Boggles my mind.
By knutjb on 8/25/2009 11:32:12 PM , Rating: 2
Supply, demand, and suckers.

Go right ahead and throw money at a car that isn't all that comfortable to ride in. They're buying it to prove they care more than you do, even if they get ripped off doing so.


RE: Boggles my mind.
By seamonkey79 on 8/26/2009 8:26:15 PM , Rating: 2
Plus, to my observance, buying a Prius means you get to drive like a jerkface at 15-20% higher speeds than other people.


RE: Boggles my mind.
By wolfwood on 8/25/2009 2:07:55 PM , Rating: 2
Agree completely; I refuse to get a car I can't pay cash for. Of course, I'm not one for trying to keep up with the neighbors and have the best car on the block.


RE: Boggles my mind.
By therealnickdanger on 8/25/2009 2:17:08 PM , Rating: 2
I asked the same question when the Charger, C6, Camaro, Challenger, *insert hot new car here* each came out. Seeing those hot new cars command a 10K markup seemed ludicrous to me... but a Prius? WTF

Such is the way of the market. There's a sucker born every minute. So be it.


RE: Boggles my mind.
By Lord 666 on 8/25/2009 3:18:52 PM , Rating: 2
Curious if the 2009 Jetta TDI has the same fluxuation in price due to CARS.


RE: Boggles my mind.
By hyvonen on 8/25/2009 10:43:00 PM , Rating: 1
Dumbasses. They should've been buying Pontiac Vibe, getting a toyota at a steeply discounted price.

Supply and demand - sure the CARS will increase the demand, automatically letting car salesmen take their cut. That's life. Quit whining - I'm the one who should be whining, since my 1995 Bonneville wasn't eligible (20mpg my ass)


RE: Boggles my mind.
By SAnderson on 8/25/2009 2:18:08 PM , Rating: 5
I'm not sure what the big deal is here. Its called Supply and Demand and its the foundation of the US economy. People want a product, evidently some people want it enough to pay more than MSRP or are just stupid enough to not look around to find a dealer selling at MSRP. If no one wants it then the cost will be under MSRP. Nothing new here people.


RE: Boggles my mind.
By joemoedee on 8/25/2009 2:39:00 PM , Rating: 5
quote:
I'm not sure what the big deal is here. Its called Supply and Demand and its the foundation of the US economy. People want a product, evidently some people want it enough to pay more than MSRP or are just stupid enough to not look around to find a dealer selling at MSRP.


Exactly. MSRP is just that, the suggested retail price. The dealer is free to charge whatever over or under that amount that they wish to.

Clearly people were paying over the MSRP, or else they wouldn't have been selling it for over MSRP.


RE: Boggles my mind.
By GeorgeH on 8/25/2009 3:15:50 PM , Rating: 2
Thank you both. To summarize:

"Everything is worth what its purchaser will pay for it.”

Now it's time to learn some more advanced concepts. Code of Laws might be a good choice, assuming you've already discovered Construction.


RE: Boggles my mind.
By clovell on 8/25/2009 4:25:00 PM , Rating: 5
Supply and Demand is all right and fine in a free market. This is hardly a free market. The CARS program artificially inflated demand here.


RE: Boggles my mind.
By TomZ on 8/25/09, Rating: 0
RE: Boggles my mind.
By Keeir on 8/25/2009 5:59:56 PM , Rating: 3
Errr..

No, I would call that "intended consquences" since the purpose of Stimulus Money is to give it away


RE: Boggles my mind.
By Regs on 8/31/2009 12:56:43 PM , Rating: 2
We lived in a mixed economy for decades because we figured out free market and controlled markets fail without the help of one another. Supply and demand still act as a pricing mechanism.


RE: Boggles my mind.
By arazok on 8/25/2009 2:40:54 PM , Rating: 3
"A fool and his money are soon parted."


RE: Boggles my mind.
By Keeir on 8/25/2009 2:51:59 PM , Rating: 2
Yeah... this makes absolutely no sense.

Is VW doing a similar thing with its Jetta TDIs?

A Prius is an okay car at 5,000 mark-up compared to a C-class car. But at more than 10,000 mark-up, it gets kinda stupid. Get a PZEV Jetta or Impreza and spend the 5,000 dollar lifetime car savings on more efficient appliances, lightbulbs, etc if you really want to be green.


RE: Boggles my mind.
By Maza13 on 8/25/2009 4:02:48 PM , Rating: 2
I'll probably get rated down, but this has to be said. These people paying $6000-$10000 over MSRP and don't mind paying that are the same fanatics that buy Apple products. In other words, the love overpaying.


RE: Boggles my mind.
By Omega215D on 8/25/2009 11:52:17 PM , Rating: 1
Considering that this is a Prius they are overpaying for they have to be the same Apple fanatics and the smuggness levels will go through the roof.


RE: Boggles my mind.
By mmcdonalataocdotgov on 8/26/2009 11:16:06 AM , Rating: 3
I guess these are the same people paying $30,000 over sticker for a GT-R. Apple fanatics. piffle. </sarcasm>


RE: Boggles my mind.
By Smilin on 8/31/2009 6:12:30 PM , Rating: 2
Considering the GT-R outperforms cars 30k over it's price I'm not sure that's a good example.

The same can't really be said about the performance and price of apple products.


RE: Boggles my mind.
By Byte on 8/25/2009 5:47:33 PM , Rating: 4
You people need to understand that people aren't buying this car to save money/planet. They are buying this car to be able to say "I saved the planet today, WTF did YOU do?" The southpark episode pretty much sums it up. I still want one because it gets girls wet like my old muscle car did before everyone became hippies.


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