Car dealers charging crazy money for near-new cars

Car dealers are cashing in on a shortage of new cars, charging exorbitant prices for near-new demonstrator vehicles. And car makers are powerless to stop them.

CAR dealers are cashing in on a shortage of new cars, charging tens of thousands of dollars above factory prices on popular makes.

A semi-conductor shortage has kept new-car prices high for almost two years and impatient customers are paying big premiums to avoid long queues for new cars.

But there is evidence dealers are now inflating the price of vehicles that aren’t in short supply, marking up low-mileage “demonstrators” by up to 40 per cent.

One dealer ad on a car classifieds website is asking $71,990 for a low-kilometre RAV4 Cruiser Hybrid that retails for roughly $53,400, while another dealer has a Toyota HiLux SR5 for $76,990, almost $11,000 over the new-car price advertised on the brand’s website.

Dealers are asking way above the odds for the in-demand RAV4. Picture: Thomas Wielecki.

Kia and Hyundai dealers are also asking well above the odds for popular models. While some are in short supply, others aren’t.

Hyundai says it now has good supply of the popular Tucson SUV, yet one dealer is asking $63,990 for a low mileage Tucson Highlander, roughly $11,500 more than the maker asks on their website.

Car makers are powerless to act on the rogue dealers because by law they can only recommend a retail price for a new car.

Hyundai spokesman Bill Thomas said the brand didn’t have any influence over used vehicle pricing.

“Dealers buy and sell used cars independently, and make independent decisions about used car pricing, driven in large part by supply and demand. Supply on used cars remains very tight, and this is currently the greatest influence on dealer pricing in the used car marketplace,” he said.

Hyundai says it has good stock of the Tucson SUV. Picture: Mark Bean

Mr Thomas said buyers should compare a dealer’s asking price to the published new-car prices on the company’s website.

A Kia Sorento SUV with more than 2000km on the clock has been advertised online for $96,878, 40 per cent more than the $68,990 drive-away quoted on Kia’s website.

A Sportage GT Line Diesel with 2000km on the clock is advertised at $72,624, roughly $15,000 above official drive-away price.

Kia’s chief operating officer, Damien Meredith, said the company was monitoring the situation.

“While all dealers are independent businesses, Kia Australia does provide recommended retail pricing and will continue its dialogue with the Kia dealer network, endorsing fair pricing for Kia products and its customers,” he said.

Volkswagen’s recently released Polo GTI costs about $47,000 drive-away fully loaded, but one dealer has the car advertised for $54,990 drive-away.

Volkswagen confirmed it had ample stock of the new Polo and spokesman Paul Pottinger said dealers should not be marking prices up.

“This is not acceptable and not necessary. A reasonable dealer delivery charge is baked into pricing as viewable on the (website) configurator. There is ample stock of these cars with more to come and therefore no reason not to seek a better deal”.

Toyota said in a statement it had internal standards for “responsible selling practices by our dealers and we will review any report to the contrary”.

The Kia Sorento is in short supply and dealers are marking them up. Picture: Supplied.

The maker said it couldn’t restrict customers or dealers “from trading based on the market conditions” but it encouraged buyers to order new vehicles at the official price quoted on its website.

Waiting times were are long for some RAV4, Camry and LandCruiser models.

Kia also has long waits for delivery of its Sportage and Sorento SUVs and dealers have pounced on the delays to ramp up prices. One dealer has a GT Line diesel Sorento with more than 2000km on the clock advertised for $96,878, almost $28,000 more than the price on Kia’s website. Another dealer is asking $15,000 more than the advertised new-car price for the smaller Sportage.

Mark-ups are particularly savage on electric vehicles. One Perth dealer has a Hyundai Ioniq 5 advertised for $106,500, almost $30,000 above the drive-away price.

Not all dealers brands are gouging customers, though.

Mazda dealers aren’t marking up the cars from the recommended retail price. Picture: Supplied.

A check of the online classifieds suggests dealers selling Mazda, Ford, Subaru and MG are sticking close to the drive-away prices shown on their websites. Nissan dealers are also resisting the temptation to mark up popular models such as the X-Trail, but used Navara utes are being advertised for almost $10,000 above the advertised new-car price.

Mitsubishi dealers have marked up popular SUVs including the ASX and Outlander by up to $4000 and $8000 respectively.

All carmakers have hiked prices in the past two years after decades where the price of a new car actually decreased.

Australian Bureau of Statistics figures show that the average price of a new car increased by 12.6 per cent between March 2020 and March this year. In the decade to March 2020, prices dropped by 9.6 per cent.

In the past couple of years used car prices have skyrocketed, with some experts estimating an increase of between 20 and 40 per cent.