The days of selling at or above MSRP are numbered. What once seemed like an industry standard is now as antiquated as dial-up internet. Dealerships banking on extracting top dollar while delivering subpar service are finding their approach increasingly untenable.
Today’s consumers aren’t merely purchasing a vehicle; they’re investing in an entire experience. And they have an abundance of options. While paying full MSRP might be justifiable if the service mirrored the luxury and attentiveness of a five-star hotel, the reality often resembles a fast-food drive-thru. As inventories swell on dealership lots, the pressure intensifies for them to reassess their pricing strategies and customer engagement.
Furthermore, selling vehicles above MSRP may yield immediate profits, but it sets the stage for long-term issues, particularly negative equity. This financial burden becomes glaringly evident when customers return to the market. Shackled by loans exceeding their vehicle’s value, they face daunting obstacles in purchasing anew without carrying over substantial negative equity. Such predicaments not only strain customer finances but also corrode brand loyalty, a cornerstone of the automotive industry. Who would willingly subject themselves to repeated financial disadvantage?
The risks are palpable. A customer embittered by negative equity is a customer lost, potentially for life. The automotive sales landscape is undergoing a seismic shift, and dealerships steadfastly clinging to outdated practices are in for a rude awakening. It’s a rollercoaster ride they won’t enjoy.
Let’s be clear: relying on cash for clunkers is not an option this time around. As inventory levels normalize and consumer expectations for value soar, the days of inflating prices are numbered.
Dealerships must confront a critical question: Is the fleeting allure of sticking to full MSRP worth the enduring peril of forfeiting customer trust and loyalty? And perhaps more crucially, is this the legacy they wish to leave behind in an industry ripe for transformation?
As the COO | Partner of Phone Ninjas, Chris delivers leadership, coaching, and mentorship to 55 team members providing software sales and phone skills coaching. He fosters powerful partnerships and collaborations with leaders across various business sectors, establishing expectations, communicating vision, and escalating performance to maximize productivity and effectiveness.
Chris is an innovation-driven business executive with over 25 years of experience delivering leadership to teams of up to 75 overseeing development, launch, and sale of website lead acquisition, reconditioning process software systems, and technology that support automotive dealerships across the U.S., Canada, and Europe.
