Rogue Toyota Dealers Price Gouging on 2010 Prius

Article from Daily Tech. PriusChat forums get a mention.

Rogue Toyota Dealers Price Gouging on Scarce 2010 Prius's Wiping Out "Clunkers" Savings
Jason Mick (Blog) - August 25, 2009 1:45 PM

Some customers were just breaking even with cash-for-clunkers or even worse

While many of the domestic automakers offered steep price cuts on top of "Cash for Clunkers", many buyers chose to purchase vehicles from foreign manufacturers instead. Leading the pack was Toyota, whose Corolla was the leading vehicle purchased under the program by the first week of August. Even recently retired Sen. Bill Frist (R-Tenn.) traded in his 1991 Chevrolet Suburban for a brand-new Toyota Prius, joking, "You don't see a lot of Republicans driving a Prius."
Now it appears that a handful of Toyota dealers raised their prices to offset the government rebate and cash in on the high demand for its vehicles.

DailyTech has an exclusive inside look at some Toyota dealers' so-called "market value adjustments" (MVAs) on popular vehicles such as the 2010 third-generation Prius hybrid. With the typical sticker price of the Prius coming it at around $26,000, many dealers across the country have been charging $3,000 to $10,000 markups, more than offsetting the "Cash for Clunkers" rebate of $3,000 to $4,500 in some cases.
On the forum PriusChat, one customer [ame="http://www.google.com/search?hl=en&as_q=toyota+dealers+prius+price+gouging&as_epq=&as_oq=&as_eq=&num=10&lr=&as_filetype=&ft=i&as_sitesearch=&as_qdr=m&as_rights=&as_occt=any&cr=&as_nlo=&as_nhi=&safe=off"]reports[/ame], "We live in Lake Placid Fl. and could not deal with the dealer here. One charge they wanted was a market adjustment for this area of $3999.99 also dealer fees of $695.00."

A number of others on the same site share similar stories of their own. States one buyer, "A certain dealer in NJ that I am not at liberty to mention charges 6500 over sticker and calls it fair market value adjustment. luckily I found another one close by with better morals. They are charging sticker price and not a penny more."
Speaking with a trusted source who had recently been shopping for a Prius, DailyTech was able to confirm one such dealer that was spiking prices. Located in the heart of the U.S. auto industry, Suburban Toyota of Troy, Michigan was charging more than a $2,000 markup on a Prius it had in store.

States our source, "Suburban Toyota in Troy was one of the ones that wanted a $2,000 additional fee over the MSRP, to the best of my recollection. The other places weren't named, but only referred to by a salesman who was offended by the other dealerships charging what he said was price gouging. I thought it was like ticket scalping. They know they have a hot item and could probably sell all they have, even for $5,000 additional MSRP. The Prius is a great car but they didn't produce enough, especially ones with the amazing solar roof that keeps your car cool when it's parked in the summer."

Hoping to gain further insight into this, DailyTech posed as an eager buyer and called Suburban Toyota. The following is our conversation:
DailyTech: "I've been calling all over trying to find a new 2010 Prius and no dealerships have any in stock. Do you have any?"
Sales Agent: "We do... it's been sold to Ford but the sale isn't finalized yet."
DailyTech: "But I heard from another dealer that I might have to pay more than the MSRP on it -- something about MVA or something like that -- is that true?"
Sales Agent: "Yes"
DailyTech: "How much more?"
Sales Agent: "About $4,000 to $5,000."

The sales agent went on to elaborate that we might be able to buy it if we moved fast. The agent explained, "When one comes in, typically it's sold before it even gets the chance to hit the lot."
DailyTech then proceeded to contact six other Toyota dealerships in lower Michigan. None of the other dealers had stock in, but when related a slightly altered version of the story of the MSRP markup by Suburban, they all said that they sold their vehicles at MSRP. A couple expressed shock or surprise at the development, but at least one commented, "I know who you're talking about."

It appears that most dealers are clean, but based on the feedback DailyTech has picked up on in various Prius forums, there are dealerships in at least several states that are similarly price gouging on the 2010 Prius via MVA's.

Toyota was contacted by DailyTech and we are awaiting their comment.

Markups such as these are really nothing new, but are typically limited to low-production vehicles or vehicles that have been recently introduced. The Prius itself has also been the victim of occasional price gouging since its introduction in the U.S. While it's unknown exactly how many people were willing to pay the MVA's on the Prius, the fact that the elevated MSRP erased or even surpassed the Cash for Clunkers rebate was likely a hard pill to swallow for many buyers.

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Everybody try to remember who the thieves are. The tide will turn. Then it will be the time to support the one who were NOT the thieves.

Supply...demand. If the 2010 Prius was the only new car available for purchase with the Cash for Clunkers program it would be "gouging" if dealerships raised the prices on those deals. There were hundreds of thousands of new cars that were available with the program...not just 2010 Prius or a Toyota. AKA Free Market Society...Capitalism.

Now...if we're talking about "price gouging" for gasoline, food, etc that is an entirely different story...and illegal. Price gouging does not pertain to "comfort" items such as houses, vehicles, entertainment, etc. Again...AKA Free Market Society...Capitalism.

If enough people want something and it is not directly related to the sustainability of life...sellers can legally ask whatever price they like...and buyers can purchase their goods or move to the next seller.

many dealers at orange county were selling $2000+ over sticker price

If Lakeland Toyota (in Lakeland Florida) qualifies is up to you to decide.

Went there for the Cash For Clunkers, with a pickup truck and an '05 Prius to trade in. They came back with a value of $12K. Well, that's fair for the '05, and then with the pickup truck it would be $16,500. OH, no, that's not right, that's for BOTH. We were just going to give them the $4500 check from the government, after all, it wasn't ours to begin with. OK, we must have had "Sucker" written on our foreheads.

Because in addition to that, was the "DPA" (Dealer Price Adjustment) or "MVA" (Market Value Adjustment) or whatever it said on the OTHER window sticker. You know, the $2000 for the priviledge of buying a Prius from them. Then don't forget the "Toyoguard" on all their Toyotas. Don't know what "Toyoguard" is? I suppose I don't either, more than some goop labeled as "sound deadener" and etching the windows and the about $700 added to the price. We didn't even get to the $595 or so to help the dealership keep afloat.

There was a couple one step ahead of us looking at the same Prius, and they bought it! I guess it was a real deal. The head salesman told us they wouldn't have another Prius for months, except the next day I read in the paper that they've got 10.

The sad thing is, there are people with more money than sense who buy no matter what. That is what makes me upset. We drove into the dealership in a Prius, and we drove out of the dealership in a Prius, and still had a good sum of money in the bank when we did. I wonder if the same can be said of that couple who bought the Prius.

Legally, yes. Doesn't mean we have to like those sellers though. And certainly doesn't mean we have to patronize them. And personally, I think price gouging is still a fair description - they are taking advantage of an unusual market condition to charge significantly more than they ordinarily would. True, they're not starving grandma or denying water to infants, which probably removes the criminality from it. But they are nonetheless usurious pigs and deserve to be called out for it. In today's world of rapid experience sharing via discussion boards and such, business owners would do well to pay close attention to the impression they leave with their (lost) customers. And manufacturers would do well to think twice about allowing those sorts of agents to represent them.

Sorry you had a bad experience...but your example makes my previous point...supply and demand...capitalism at its best. You didn't buy the Prius...but someone else did at a price you were not willing to pay. There's nothing wrong with a private business selling their goods at a price they think they can receive. It doesn't mean you or anyone else has to buy solely from them...but it means they can make the most money on their goods.

So it is a good thing that the couple got taken advantage of because they hadn't read a site like this to tell them there were other options? Slimy salespeople taking advantage of unknowing couples is capitalism at its best? Ick.

You can buy from whomever you like...but don't expect a private business to sell you goods at a price you want just because you want it. And you can shout out your window about price gauging...but nobody will run to save you because you didn't get your Prius at the price you wanted.

Complaining about prices is like complaining about the weather...it's not going to change no matter how much you talk about it.

I see nothing wrong with someone selling a 2010 Prius for $2000 over MSRP...the success of the private business will be determined by whether or not they are able to move cars off their lots. If they are overpriced (for now) they will lower the price...what's that called??? Supply and demand...and obviously the demand is high thanks to all the people on this site that want a new Prius.

I'm sorry, but I have no sympathy for buyers that don't get the deal they want...plenty of places to buy cars in this country...or others if you want to move there.

It's good for the dealer and the couple that was "willing" to pay for the car at that price...they both seem to be happy. Not good for the person that didn't get what they wanted...which is probably why they are on this site telling their "horrible" story. Far from being "taken advantage of" in my book.

How about this...if the couple that bought the Prius decided to give the person $2000 that didn't get the Prius so they could afford it would you think that is right?

Slimy is a term you use to describe a private business employee doing the best job for his company...sorry you don't support that.

I think a lot of it has to do with how they do it. Slapping a sticker with a 2k market adjustment on a car and saying take it or leave it is fine. Supply and demand rule. The consumer always has a choice to shop elsewhere or buy something else.

On the other hand, a lot of dealers are indeed slimy. They prey on elderly customers and others who are rarely armed with adequate information. They flat out lie and deceive, too. That 2k market adjustment quickly becomes 6k for some customers. Not all of them are fools, either, they just don't match up well with people who sell cars for a living. No, there's nothing illegal or technically wrong with what some salespeople and dealerships do. That doesn't necessarily make it "right", though.

I used to think the same way. The sympathy came when it happened to an elderly relative. It may not be a car, it may not be a relative, but someday there will probably be something sold in this manner to someone you know who just isn't a savvy consumer for one reason or another.

The term "savvy consumer" implies that it is a person who has done their homework and knows how to work a deal...car or otherwise.
Why should anyone have sympathy for someone that is not "savvy" when every person on the planet knows that a car purchase is a negotiation. No different from buying a house or many other situations in life involving money...both parties involved (the seller and buyer) are in a negotiation.

The OP stated in the title of this thread "Rogue Toyota Dealers Price Gouging on 2010 Prius." That's funny...and surprise...the OP didn't get the car they wanted! How exactly is a car dealer "rogue" for operating their private business as they please...and they got the $2k they were looking for from a customer...even if it wasn't the OP. Not slimy...not illegal...capitalism. "Price Gouging" is another term for "little Johnny not getting what he wanted" in this thread.

By the way...thanks for the heads up that one of my elderly relatives or friends will have something happen to them...maybe not a car deal but something...maybe you should dress up as a Magic 8 Ball for Halloween.

Sorry, the original wording didn't come out quite the way I intended it. I'll take the costume idea under consideration, though.

If demand for the Prius is such that you could insist on and get more than you paid originally on a trade in, who among us would turn down the opportunity? Or would we say "that's price gouging" and insist on receiving the lesser NADA or KBB value?

Makes me wonder who the C4C program was supposed to 'help', and the silliness of people who didn't buy before, but buy at a higher price with a discount ... back to the price the car was all along.

Anyway, C4C is like any other subsidized program: the money gets eaten by the middlemen. Or at least a big chunk of it. Now that the pipeline of future buyers has been tapped, and C4C has ended, *real* car discounts will start appearing.

OK, so I live in hurricane country. Should I run down to Home Depot and buy all of the chains saws and generators when the next hurricane heads this way? I could charge four or five times what I paid for them. Free enterprise right?
What's the difference between jacking up the price of car or anything else like gasoline or food?
Anytime you need or want anything, I guess a savvy business person should jack up the price to whatever you will pay? You don't charge what is usual and customary, you charge what you feel you can get?
Sorry, I exercise my right to not be a fool, remember which dealers didn't jack up the price when they could and buy from them in the future. I suggest others do the same.
This happens from time to time. Last time it happened to me it was 1989 and I wanted a Miata. Took a while, but I found a honest dealer, bought from them and gave them all the business I could, recommendations etc.
I am surprised Toyota will allow such business practices. I assume they didn't jack up the price the dealer paid did they?

Chain saws and generators for hurricane ravaged areas is a moral decision...and not a private business that depends on making money to stay in business. Personally, I wouldn't take advantage of desperate people to make money. We're not talking about desperate people when they are considering a $20-30k car.

What's the difference between jacking up the cost of cars vs. gasoline or food? Cars are a luxury item...food is something needed to live...gasoline is a commodity and not controlled by private business...the gas station on your block does not refine, transport and set the price for your gasoline (and don't quote me how terrible the less than 1% of gas stations in your area gouged people during hurricanes...they were few and far between and when they were identified they were corrected).

Anytime you need anything a savvy business person does not "jack up the price." They set the price at the highest point at which they think they can sell it...free enterprise. If you want something for a lower price purchase it when it is in less demand and don't come crying to people on priuschat when you don't get a luxury item at the price you want because someone willing to pay the asking price gets it and you don't...cry me a river!

Congrats on getting your Miata from what you call an "honest dealer." And I hope you give your business and promote it to others forever. Give me his business name and address and I'll promote it for you too!

Why are you surprised Toyota would allow such business practices? It's a couple grand over MSRP...on a $30k car we're talking less than 10% over MSRP. Check out tickets to a Super Bowl Game, World Series, cool concert...300-500% higher than face value...for a luxury item just like a car in high demand! Go to any other cars message boards and you will not see anyone complaining about paying over MSRP...because the supply is higher than the demand and the buyer has more leverage than the seller in the negotiation!

I find it comical when people cry foul about paying over MSRP for a 2010 Prius...consider many people in this country can't even afford bus money to get to their $8/hr job that barely gets them by each month. But you don't want to do that...because it's not your problem...complaining about paying over MSRP is your problem.

I find it ironic that someone would pay thousands of dollars over the MSRP for a Prius. Obviously these people are not buying the car for its fuel efficiency. Heck, the additional money they spent could have been used for fuel. I really think this is an issue where when someone wants something, they really don't mind spending the money on it. This way they can claim bragging rights when their shiny new Prius is in their driveway. Here is a potential conversation:

Neighbor: Wow, Joe I see you were able to get the new 2010 Prius !!!

Gouged Customer: Yeah, I was an idiot but I paid $4,000 over list price for it.

Neighbor: Wow Joe, I guess you have money to burn.

Gouged Customer: Not really, we used our American Express card for the additional cost to get the extra miles.

Neighbor: WOW... I guess you're going to go on a trip with those extra miles

Gouged Customer: No, my wife and I are working extra shifts just to pay of the Amex bill.

Neighbor: Awwww.. Sorry to hear that. Well, I have to go. I have to call Diane at the Toyota dealership in Southern California. She left me a voice mail and told me that my Prius V was in. She was such a nice gal and she even gave me $100 off list price.

Gouged Customer: Who is Diane

........To be continued.................

I've been in sales for my whole life. Most of it was in basic steel sales to huge companies like Ford, GE, Chicago Bridge & Iron and huge distributors who normally made purchases of $500,000 to $2 Million from me on a quarterly basis.

Every one of these sales was 'market driven'. There was no MSRP or list price or anything like that. The process was...hammer out the best deal possible and try to gouge every last $$$ out of the buyer. From the buyer's perspective it was 'steal every dime possible'. All in good fun. This is the way business is done.

However now being in the retail side all that changes....as least as far as N American consumers are concerned. We all have been brought up on what I call the 'Woolworth mentality' of buying things. Everywhere else in the world everything ... no everything... that's purchased is negotiated and settled according the 'market forces'; cars, bread, wine, clothing, vegetables, everything.

We however with all our wealth hate this concept. We love the fact that whatever we want is on the shelves of the local 'Woolworth' ( now WalMart ) with a fixed price that we can buy or not buy. This is the way that we well-to-do N Americans buy things. We allow large corporations to do our negotiating for us ( WalMart ) so they we don't have to lower ourselves to haggling like fish mongers.

But that simply is not the way business is done. I've been escorted out of Chrysler's HQ in Auburn, MI by security when I had to tell them that their price for steel was going up by 30% or else we'd cut them off and shut down their stamping lines. They said NO and we cut them off and they barred me from entering their premises. That's the way business is done in the US.