In a reverse turn of a century-old tradition, many cars sell for more than the sticker price. Due to high demand and slow production caused by global parts supply issues, this is a result of a weak market. The brand with the highest average percentage markups may be the most surprising.
It’s not a luxury brand or a performance brand. Instead, it’s Kia. This South Korean brand is often considered a value buy. Edmunds.com data shows that Kia SUVs and cars sell for an average of 6% more than their sticker price. Honda, Hyundai, and Land Rover, a luxury SUV brand, are tied for second at 4% above their sticker price.
Edmunds.com reports that Land Rover has the highest dealer markups. Customers pay an average of $3686 more than the sticker price. The average price of a Land Rover SUV is $94,000 in the US. Kia is still the second most expensive car brand in America. Customers pay an average of $2,183 more than stickers. This is especially impressive considering that the average Kia purchase cost was $36,000.
Three main reasons Kia is ranked #1 in dealer price markups are: It’s a testimony to the value customers have always found in Kia’s SUVs and cars — a good price for the dollar. Dealers can cash in on this perceived value with today’s tight auto market.
Edmunds.com’s Ivan Drury, an analyst in the auto industry, stated that “You’re still getting a lot for your money, even if it’s more now or more for the competitor,”
Russell Wager (Vice President for Marketing at Kia America), stated that Kia has been working hard to remove its image as a brand people buy because it is low-priced.
He said, “It’s no question that Kia might be less valuable than we think. “We are not marketing ourselves in that way.”
Instead, he stated that Kia now markets its vehicles’ design and attributes, including sportiness and technology, for electric and hybrid cars.
Kia dealers, like other car manufacturers, are independent businesses and can set their prices. However, their pricing power benefits from Kia America’s marketing and product line-up decisions.
Some Kia models like the Telluride SUV were selling regularly for more than their sticker price even before problems with supply chains started to slow down vehicle production. Popularity has been shown for the new Kia Carnival minivan, which is one of very few on the market. Edmunds estimates that both the Carnival and Telluride sell for an average of 7% more than their sticker prices.
“You get one with the Premium Package people are going to fight over it,” Ben Burton, managing partner at Jackson Kia in Cocoa Florida said about the Carnival minivan.
The fact that Kia models are difficult to find is adding to the pressure. Zack Krelle, an industry analyst at TrueCar, stated that Kia’s “days of supply”, which is a measure of how fast the vehicles sell, has fallen to single digits. He said that the average is about 28 days.
Even the most basic models are being marked up. John Gray, Shelby Township, Michigan, stated that he paid $1,000 more than the sticker price for his Kia Soul base model in July.
He said that it could have been more, but the car only had a few hundred kilometers on it, despite being new.
A third reason why Kia cars sell for so much more than the sticker price is that Kia sells an incredibly large number of fully electric, hybrid, and plug-in hybrid car models. Edmunds data shows that these types of vehicles are selling at a higher average dealer markup than gasoline vehicles due to growing concerns about fuel prices. Customers are willing to spend more to save gas. The Sportage Hybrid model, Sportage Plug-in Hybrid, and Sorento Hybrid are more than 88% higher than the sticker price. Edmunds reports that the Kia EV6 all-electric car sells at 6.4% more than its sticker price.
According to Chris Sutton, vice-president for automotive retail at J.D. Consulting, Kia customers might not be too upset about having to pay a little more because of their low starting prices. Power. He also pointed out that used car prices have increased, so a customer’s vehicle to trade in will be more valuable. The price increase on a new vehicle might be less difficult to accept in the end.
He said that ultimately, it all comes down to the way the dealership communicates about the markup with customers. He said that smart dealers will consider their long-term reputation, not just their easy cash.
Burton from Jackson Kia, Florida said that his customers know that they must pay more than the sticker when buying a car. To justify higher prices, his dealership adds additional warranties. Customers are more likely to be shocked by higher interest rates, he explained. He knows that high prices and large sales profits will not last forever. He believes the market will return to normal by the end of the year and that cars will again be sold based on their sticker price.