During inventory shortages, some dealers add thousands in 'market adjustment' or 'additional dealer markup' (ADM) above MSRP. This pure profit padding inflates your out-the-door price significantly. Understanding ADM helps you avoid it—or at least recognize when you're paying it.
ADM is extra profit dealers add to high-demand vehicles beyond MSRP. Unlike doc fees or taxes, ADM has no cost basis—it's pure markup because they can. During chip shortages, ADM of $5,000-$20,000+ became common on popular models.
Supply and demand. When inventory is low and demand is high, dealers can charge more. It's legal (they set their own prices) but frustrating for buyers. Some justify it by adding unwanted accessories; others add it as a pure price increase.
Look for 'addendum stickers' next to the factory window sticker. Check line items like 'market adjustment,' 'dealer adjustment,' 'protection package' (at inflated prices), or vague fees. If the OTD is significantly higher than MSRP + tax + standard fees, investigate.
Shop around—not all dealers charge ADM. Order directly from the factory (wait time, but no markup). Consider less-popular trims or colors. Wait for inventory to normalize. Expand your search radius. Walk away from ADM dealers.
Rarely. Unless you absolutely need a specific car immediately and no alternatives exist, paying ADM is buying at a peak. Inventory eventually normalizes, and you can't recoup the markup at resale.
Yes. Dealers can set their own prices above MSRP. It's frustrating but not illegal. Your recourse is shopping elsewhere.
Sometimes, especially if the car has been on the lot for a while. If the dealer won't budge, find another dealer.
No. Many dealers sell at MSRP or below even during shortages. Shop around and ask directly about markup policies.
Dealers hide markups in 'protection packages,' 'accessories,' or 'market adjustments.' If you don't want it and the price exceeds MSRP + legitimate fees, it's effectively ADM.
Generally yes. As supply improves, market adjustments become harder to justify. The most egregious markups are short-term phenomena.
Often yes. Factory orders typically don't carry ADM (you're guaranteed allocation). The trade-off is wait time of 2-6+ months.
Consider it. If used car premiums are less than new car ADM, buying used may be smarter—especially for 1-2 year old vehicles.
Any ADM on non-exotic vehicles is typically too much. You're paying extra for nothing but dealer profit.