A brand long associated with being a ‘value’ choice now commands the biggest markup over its showroom sticker price.
There are some brands of cars that naturally command a higher sticker price on the showroom floor: think BMW (BMWYY) , Mercedes Benz (DDAIF) , Volkswagen (VLKAF) -owned Audi (AUDVF) and its soon-to-be-made-public Porsche brand, and so on.
And then there are brands that naturally bring to mind something more attuned to “value” — brands like Honda (HMC) – Get Honda Motor Company Ltd. Report, Hyundai (HYMLF) and Toyota (TM) – Get Toyota Motor Corporation Report, and Kia (KIMTF) .
Surprising to many is that that last brand — Kia — has actually moved into the bigger-markup category. In fact, Kia brands ranging from the seven- and eight-seater higher-end Telluride SUV all the way down to the entry level Rio are now among those vehicles with the highest average percentage markups.
On average, Kia cars and SUVs are selling for about 6% over their sticker price, CNN Business reports, citing data from Edmunds.com. Roughly tied for second, at 4% above sticker price on average, are Honda, Hyundai and the luxury SUV brand Land Rover, according to CNN Business.
In dollar terms, Land Rover still commands the highest dealer markups, with customers paying an average of $3,686 over the sticker price, CNN Business reported, citing Edmunds. However, the average purchase price for a Land Rover SUV in the U.S. is over $94,000, making the percentage markup actually smaller than Kia.
Value for Money + Technology = Demand
Even on a straight dollar amount basis, Kia still ranks second of all car brands in the U.S., with customers paying an average $2,183 over sticker price, according to CNN Business. That’s particularly telling given the average Kia purchase price of roughly $36,000 — making the markup in percentage terms much higher.
CNN Business cites value for money as among the top reasons behind Kia’s now-higher markups, which in turn has been fuelled by both a tight car market, and improved perceptions that Kia isn’t necessarily a brand to buy because of the low price.
On the contrary, South Korea-based Kia has been marketing its lineup of cars and SUVs as sportier and more tech enabled than many of its competitors — something that has been aided by the popularity of the company’s electric vehicle offerings.
Even before chip shortages and supply chain woes began impacting vehicle production, some Kia models like the Telluride were already garnering a premium over their sticker price. The Telluride and the new Kia Carnival minivan both sell, on average, for about 7% over sticker price, CNN Business said.
To be sure, Kia’s premium command may not last. Many other carmakers are either prepping to roll out new electric vehicles that consumers are pining for, or have already begun delivering them.
Hard-to-Get EVs Also Commanding Premiums
General Motors (GM) earlier this month kicked off its second attempt to be a mass-market leader in EVs with the launch of the Chevrolet Equinox EV, which is expected to retail at a sticker price of $30,000.
Volkswagen , BMW, Mercedes-Benz, and newer EV makers including Rivian (RIVN), Fisker (FSR), Nio (NIO), Xpeng (XPEV) and others are also working on cranking out battery powered vehicles — all at very different price points but also models that are expected to be in strong demand and command a premium.
Ford (F) stopped taking reservations for its all-electric F-150 Lightning when its order backlog reached 200,000 at the end of 2021. Deliveries of the electric pickup began in May and the company is working to increase production, though as of the end of August only 6,800 vehicles had been delivered.
GM, meantime, has more than 90,000 reservations for the all-electric Hummer – so many that it had to put a pause on adding buyers to the waiting list last week, which of course has made the vehicles even more popular in the resell market.
A white Hummer EV Pickup edition with 100 miles on the odometer and a window sticker price of $114,290 is currently on offer on aftermarket car-selling website Cars & Bids for $150,000.