"When trucks are advertised at $10,000 over MSRP, what does MSRP even mean?
Every year around this time, I update the proprietary “WOLF STREET F-150 XLT and Camry LE Price Index” with the new model-year MSRPs, base version no add-ons and without destination and delivery charges, for a view of the actual price increases of the bestselling truck and car in the US going back to 1990, and I compare that to the CPI for new vehicles, which is very amusing.
... Ford’s production, which was massively hit by the semiconductor shortage, is a huge mess.
Ford is still building the 2021 model year F-150 XLT, with a very large number of models still in the order bank, due to the semiconductor shortage that crushed production during the year.
Ford still hasn’t released final pricing for the 2022 F-150 XLT, though prices have emerged in form of leaks that have not been confirmed. I will use those leaked MSRPs for the time being. If final prices are different, I will update the index.
... MSRP is suddenly no longer the top. It’s the bottom.
In terms of pricing, my index relies on the MSRP per model.
In the past, there were always manufacturers’ incentives and rebates, and dealer discounts, and practically no one ever paid MSRP for these vehicles. Nearly everyone paid a lot less.
Now the opposite is the case.
Automakers have slashed their incentives and rebates.
And dealers, instead of giving discounts, are selling at MSRP, or are adding thousands of dollars as “addendum” or whatever, to MSRP.
Instead of advertising discounts, dealers are advertising these addendums. For example, a Bay Area Ford dealer advertises the 2022 Maverick SuperCrew with an MSRP of $23,775 and an addendum of $3,245, for a total advertised price of $27,020. This is 13.6% over MSRP. And it’s on order, not on the lot.
The same dealer has a 2022 Ford F-150 SuperCrew Cab V-6 on order, with an MSRP of $57,500. The dealer slapped an addendum of $10,595 on this truck, bringing the advertised price of $67,995, or 18% over MSRP. It’s not on the lot yet, and there is not even an image of the truck yet on the dealer’s website.
This is the craziest situation I have ever seen.
That customers are jostling for position to pay those prices is the craziest situation I have ever seen in the car business.
Sales volume in units at dealers and automakers has plunged due to the shortages, but they are making huge per-vehicle gross profits of historic proportions.
... So who knows what customers will finally pay for a 2022 F-150 XLT on average?
MSRP +$5,000 instead of MSRP -$3,000 as they might have in the past?
This would mark a price increase of $8,000!
And it wouldn’t show up in my index!
... The CPI for new vehicles is somewhat absurd, thanks to aggressive hedonic quality adjustments by the BLS.
As a result of these adjustments, the CPI for new vehicles last year was about flat with 1997, and it’s only the 10% spike this year that moved the CPI for new vehicles out of that range ...
Since 1990, the F-150 XLT price has soared by 178% and the Camry LE price 73%, while the CPI for new vehicles has risen just 33%, thanks to these hedonic quality adjustments.
Sales of “trucks” – pickup trucks, SUVs, compact SUVs, and vans – rose to 839,200 units in October.
Sales of “cars” (sedans and muscle cars) dropped to 207,100 units, the lowest in many decades except for the lockdown freeze in April 2020.
... GM, Ford, and FCA thought, possibly in error, that they would be better off bailing out of the sedan market altogether."
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