How Australian car lovers are getting ripped off by some car dealers

Dealers are playing sneaky tricks that drive up vehicle prices for popular cars while contributing to lengthy delays. This is how it works.

Opportunistic car dealers are exploiting the global stock shortage by ordering in-demand new vehicles from rival brands — and reselling them at huge profits.

The dealers, who target sought-after performance cars with hefty waiting lists, register the vehicles and sell them as low-mileage demonstrators for thousands of dollars more than the recommended retail price.

Honda’s turbocharged Civic Type R, which launched in Australia this week, is the latest to be affected by the practice.

The new Honda Civic Type R is a sought-after machine.

The brand says there is a two-year waiting list for the machine, but more than a dozen have been listed by dealerships looking to make a quick buck.

Officially on sale for $72,600 drive-away, the Type R’s being advertised online are all above $90,000 and with less than 100 kilometres on the dash.

Watch David McCowen’s video explainer below:

@davemotoring

Rival dealers are charging $20,000 profits for the Honda Covic Thpe R.

♬ original sound - DaveMc_Motoring

Hyundai, VW and Toyota dealers are among those trying to cash in on the Honda’s popularity, by securing the sought-after machine and selling it at a $20,000 mark-up.

George Hitchens, a Honda customer who placed an order for the new Type R in August last year, is frustrated that dealers are “taking cars off legitimate customers”.

George Hitchens ordered a new Honda months ago and has no idea when he will receive it. Picture: David Crosling

“I’m furious,” he said.

“The automotive world is cannibalising itself to make a buck, ensuring customers pay more and become even more aggrieved when buying a new car.”

Chief executive of the Motor Trades Association of Australia Geoff Gwilym said competition for vehicle stock was fierce.

“We have people putting down payment on cars at a dealership and then selling the car on before they even pick it up,” he said.

2023 Honda Civic Type R.

A Honda spokeswoman said it was monitoring the situation carefully, confident that official Honda outlets were not gouging customers.

Staff at a dealership for a rival brand confirmed they had three Type R Civics in stock.

Others admitted their salespeople targeted in-demand machines such as the Ford Ranger Raptor ute, onselling them for profit.

A dealership group that offers cars from Ford, Hyundai and Suzuki has a VW Golf R listed for more than $93,000 drive-away – $20,000 more than its new car price.

Supply of the car is so limited and demand is so strong that VW dealers are not currently able to order new examples.

Toyota asked dealerships to prioritise car club members and amateur racers when choosing who could buy its sought-after GR Corolla performance car.

Toyota GR Corolla, VW Golf R, Cupra Leon VZX hot hatches. Photo: Thomas Wielecki

The model officially costs $62,300 plus on-road costs — about $67,000 drive-away – but some are asking for more than $93,000 for low-mileage examples.

One Toyota dealer, who declined to be named, said they could choose who to sell cars to, but salespeople were unlikely to be looking after mates in the car industry because “if you got caught doing that, [Toyota] would be coming down at a million miles an hour at you”.

“I bet they’re not using the dealer’s name,” he said.

“I don’t know how you stop them.”

Independent broker James Whitbourn of CarHelper.com.au said “there are definitely ways around it”.

“What we’re seeing here is dealers seeing an opportunity to make a profit on a car by securing something that has really strong demand and limited supply,” he said.

“If they can secure a few of those it’s an easier way to make a profit margin with limited supply.

“It’s been very difficult to secure used-car stock, so dealers have struggled to get enough volume.”