Dealers say rules could push Stellantis to spend more on factory incentives
Stellantis will prohibit its dealers from advertising vehicles below a minimum price set by the automaker, The Wall Street Journal reported. The change makes the parent of Jeep and Ram the latest automaker to adopt minimum advertised pricing (MAP) — rules proponents describe as a check against the misleadingly low online promotions that change once a customer reaches the dealership.
For automakers, the policy is a push to define transparency as “no bait-and-switch when you arrive at the lot,” the Journal reported. Otts wrote that many dealers told him Carvana — the online used-car retailer — is usually not the lowest price source for a Jeep or Ram, but that the retailer’s sales growth shows “a significant chunk of consumers are willing to pay a premium to avoid negotiations, pressure tactics and surprises.”
Jared Glover, a Jeep-Ram dealer, told the Journal that the lowest advertised price rarely matches a dealer’s best offer. “Typically, the cheapest price that you find on the internet is not going to end up being your best overall deal,” Glover said. “Something is going to change. There’s a reason why that price is so cheap.”
The policy does not affect incentives Stellantis itself funds to support sales — offers such as “$3,000 bonus cash” that dealerships promote alongside advertised prices, the Journal reported. Because Jeep-Ram dealers already sit on more inventory than the industry average, several dealers told the paper they expect the rules could prompt Stellantis to spend more on its own incentives if sales slow.
Otts wrote that “supply and demand will be the ultimate arbiter” of the policy’s outcome. Several dealers told him they were eager to shift the “boundary of competition from absolute price to more subjective factors like customer service and a smooth sales experience,” with some saying the rules would also help keep advertised prices “more consistent and predictable.” Once a consumer is at the dealership, on the phone, or in an email exchange, dealers “can and will compete on price,” Otts reported — the new rules only restrain what they can advertise in advance.
Otts noted that automakers are constantly trying to ensure dealers can move their inventory, so the dealers can pay the automakers for the next round of wholesale vehicles. “Otherwise, the music stops,” he wrote.