Beware Car Dealers Price Gouging Chevrolet Volt

August 5, 2010

Car buyers have always had to watch out for car dealers who excessively mark-up the price of new models in the late summer/fall when a new model year rolls around. In this age of Internet sales where pricing cars at invoice is becoming the norm, dealers look forward to the roll out of new models as a time when they can finally charge the Manufacturer’s Suggested Retail Price (MSRP) or higher and make--what is to them--a decent profit.

Unfortunately for Chevrolet Volt buyers, this is not just a new model year, but a brand new concept for a North American vehicle--a range-extended electric vehicle. This is allowing some dealers to charge $5,000, $10,000, and in one case, up to $20,000 above MSRP for the new 2011 Chevrolet Volt due for limited release this fall.

The Short List of Lucky States
The Chevy Volt is set for a limited roll-out in the following states:

- California
-
Texas
- Michigan
- New York
- New Jersey
- Connecticut
- Washington, DC

Dealers will receive a limited supply of the much-heralded battery operated vehicle with a 40 mile electric-only range. Due to a limitation imposed by the manufacturer, dealers will not initially be able to sell to out-of-state buyers. However, there are ample buyers in the above states with deep pockets who want to be the first, and in some cases, the only person in their area to own a new Volt model. Many dealers report that they are already sold out of their initial allotment.

Let the Gouging Begin
The Volt has taken the U.S. by storm. The electric motor directly propels the car. After the first 40 miles, the on-board gasoline generator kicks in to provide electricity for the motor. It’s the concept of just having an electric motor propel the car that is revolutionary in the U.S. Taking into account the limited roll-out and enough buyers who are not that concerned with the price, and the result is some dealers asking significantly more than MSRP for these first battery operated vehicles.

Chevrolet has already been criticized for setting the Manufacturer’s Suggest Retail Price at a level that is out of reach for the average car buyer. MSRP on the base model Volt is about $41,000. Some Chevrolet dealers are asking up to $10,000 to $12,000 above MSRP for the Chevy Volts that are included in their initial allotment. Edmunds.com reports that they contacted a dealer in southern California who shamelessly quoted a price of MSRP + $20,000 for the new Volt, and Edmunds has the email to prove it.

Supply and Demand
Many Chevrolet dealers are only expecting to receive a handful of Volts over the next year. Combine that with the fact that the Volt will probably be a limited production vehicle for the next few years, and it pretty much guarantees that demand will outstrip supply. The result will be an elevated price for the Volt for the foreseeable future.

When the laws of supply and demand favor car dealers, it’s the consumer who pays full price in the end. Or simply does without the newest model for the time being.

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