Ford and General Motors (GM) recently warned car dealerships to stop the practice of price gouging beyond the manufacturer’s suggested retail price (MSRP), with consequences including losing access to new vehicle models.
Such actions could result in customers not converting their reservations into orders and also damaging the company’s brand name, Frick warned. These types of behaviors are not allowed as per Paragraph 6 of the Sales and Service Agreement.
“The dealer shall conduct dealership operations in a manner that will reflect favorably at all times on the reputation of the dealer, other company authorized dealers, the company, company products, and trademarks and trade names used or claimed by the company or any of its subsidiaries. The dealer shall avoid in every way any ‘bait’, deceptive, misleading, confusing, or illegal advertising or business practices,” Paragraph 6(i) states.
If any dealership continues to engage in such practices, Ford might decide to “redirect” the dealership’s allocation of F-150 Lightning, the letter warned, while adding that the company has received information regarding a “limited number of dealerships” still involved in such tactics.
Dealerships also attempted to demand higher reservation amounts from customers. Such actions “puts our collective interests at risk,” generating negative press and ending up poorly reflecting on GM’s brands and its dealerships. The document reminded dealers that they are “ethically and lawfully” obliged to follow Article 5 of the Dealer Sales and Services Agreement.
“Dealer agrees to effectively, ethically, and lawfully sell and promote the purchase, lease, and use of products by customers…. Dealer agrees to advertise and conduct promotional activities that are lawful and enhance the reputation of dealer, General Motors, and its products. Dealer will not advertise or conduct promotional activities in a misleading or unethical manner, or that is harmful to the reputation of dealer, General Motors, or its products,” Article 5 states.
GM issued a warning to the “small minority of bad actors” engaged in damaging conduct and identified in the letter that the company might decide to redirect their vehicle allocations or take other measures as outlined in the agreement.