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The MSRP is the amount that a car manufacturer suggests car dealers use as the selling point for a vehicle. Normally, dealers have a great deal of flexibility when it comes to pricing, but in the case of Ford’s new electric line up, the brand won’t allow them to be sold for less than the MSRP.
For now, it seems that both the Ford Mustang Mach-E and the soon-to-be-released F-150 Lightning are subject to the strict pricing conditions.
CarsDirect.com is even reporting that Ford is encouraging dealers to snitch on one another for undercutting the agreed price. And any dealer found to have violated the new rules will be deemed ineligible for a major subsidy from the automaker.
Why does Ford not want dealers to sell for below MSRP?
CarsDirect.com suggests that Ford has created this Minimum Allowable Advertised Price (MAAP) rule as part of its transition from “dealer invoice pricing” to “e-invoice pricing.”
Under dealer invoice pricing, the dealer pays significantly less than the MSRP, allowing individual car salespeople to charge less than the advertised price in order to make a sale, while still turning a profit.
With e-invoice pricing, the dealer’s discount is gone, and the price they pay is identical to the MSRP. They can’t offer a reduced price to a customer without losing money on the sale.
This is framed as advantageous to the customer, because there is no need to haggle over the price, or worry about getting the best deal. In theory, everyone pays the same. The car costs what the car costs.
However, unlike Tesla, who were the first major car brand to employ this pricing initiative, Ford has not banned dealers from marking up its cars above and beyond the MSRP.
Customers will end up paying more
Sales of both the Mach-E and the F-150 Lightning have been strong, but Ford’s decision to allow dealers to charge more than the MSRP (and never less), has led to some outrageously high prices.
Proving this point, Jalopnik writer Tom McFarland has found Ford dealers charging $33,000 more for the Mustang Mach-E than the sticker price suggests. That would make it almost three times as expensive as the gas equivalent.
While selling cars has always been a game of supply and demand, Ford’s hardline approach to EV discounts does risk alienating drivers who are used to negotiating prices down. And rubbing salt into the wound, Ford has eliminated the majority of its purchase rebates too.