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2010 Toyota Prius Price-Gouging Pops Up

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2010 Toyota Prius

2010 Toyota Prius

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We've just read some nice investigative reporting by DailyTech's Jason Mick on a well-known but infuriating phenomenon: auto dealer price gouging, in this case on the sought-after 2010 Toyota Prius.

We're far from the only outlet to note that the Cash-For-Clunkers plan boosted sales of the 2010 Prius to the point where the car was pretty much sold out at some dealers.

Economic theory holds

Global demand for the new hybrid, due to limited production of the high voltage battery packs, has led to predictions of worldwide shortages of the 50-mpg 2010 Toyota Prius.

In economic theory, when demand exceeds supply, the price rises.

And that's what happened at some Toyota dealers, where floods of eager clunker buyers sought new 2010 Toyota Priuses to earn the maximum $4,500 credit.

Most car buyers know that the sticker price is just the starting point for a negotiation. Incentives abound, and data on dealer invoice prices--what the dealer really paid for the car--is easy to find.

"Market Value Adjustment"

Until the Clunkers program started in the last week of July, it was a buyer's market for most models. Since then, dealers with hot cars like the new 2010 Prius have been able to set their price. And they have.

It's called a "Market Value Adjustment," or MVA, and dealers have been adding MVAs of $2,000 to as much as $6,500 above the sticker price of new 2010 Toyota Prius models. Which, obviously, more than offsets the Clunker rebate.

It's worth pointing out that not every Toyota dealer adds such markups. And the Prius has seen markups before, most recently when gasoline prices hit $4 a gallon in the fall of 2007.

Even dealers who don't add markups, however, can usually get full sticker price for in-demand cars.

Another traditional avenue for dealers to rake in extra profit is overpriced options (rustproofing, floor-mat kits, extra trim items) added only to the hottest models.

Longstanding tradition

We find it hard to be terribly disturbed at the markups, frankly. When buyers for a hot car exceed the supply, dealers have little incentive to bargain aside from their desire to encourage repeat buying next time.

On the flip side, car buyers have little compunction about bargaining hard when dealers are desperate. And the balance of power between the two evened up somewhat when data on dealer invoice costs became available.

Still, we can't help but agree with Mick's conclusion: The fact that the elevated MSRP erased or even surpassed the Cash for Clunkers rebate was likely a hard pill to swallow for many buyers.

2010 Toyota Prius

2010 Toyota Prius

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2010 toyota prius first drive 002

2010 toyota prius first drive 002

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2010 Toyota Prius two-tone leather interior

2010 Toyota Prius two-tone leather interior

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2010 Toyota Prius

2010 Toyota Prius

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[DailyTech]

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Comments (7)
  1. We ordered a Prius two weeks ago, after negotiating the price with the fleet dept. We were not given any tentative delivery date and since the guy did not ask for a deposit, we're wondering what incentive he has to sell us the car if he can sell it to someone else for more. The positive thing is that we've bought a Prius from him before, so we're hoping he will want to engender some sort of "trust."
     
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  2. Good review and the car looks tops, even better I think than Corolla, also it looks more cohesive than Honda Insight.
    This car will be all the things that you have been saying in this review as to what most people will be doing once they buy their Prius... daily duties, user-friendly access to various controls and other new functions, fuel economy and such, just like a Corolla but in a sort of new idea.
     
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  3. I bought the first 2010 to hit our local Ohio dealer. It was the model and color we wanted. No other dealer in the area had this particular vehicle. Instead of waiting we paid the markup. They wanted 3000. I negotiated down to about 1600 over MSRP. We could have shopped in other cities or ordered from a dealer that did not add the MVA, but driving the right vehicle off the lot the same day was worth the xtra bucks.
     
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  4. Agree with most of comments here. Overall, is an impressive car, minus interior finishing.Dashboard display even tells you when the batt are being charged. Now, the damage. Priced at Camry range in some countries, one need to be prepared.
     
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  5. i just left a toyota dealership in southern california. the sticker price said $26,000.... i filled out some paperwork...they ran my credit ... they came and congratulated me, and said i'd only pay $1,000 over sticker. what?! no one had mentioned that before. i called my husband, who encouraged my disaffection with that idea, since it hadn't been mentioned before (and i hadn't gone to any other dealerships yet). first they offered to provide extra services, then they dropped it to $800, and then $500, and when i gathered up all my stuff and headed for the door, explaining that i hadn't been anywhere else yet and if tomorrow the other dealers asked me for $3,000 over sticker i'd feel silly.... well, the $1,000 went away and i paid the sticker price.
    so, the basic tenet of bargaining remains intact: walk away! interesting things happen.
     
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  6. It takes awhile to get used to the dash, but it's a really neat car. If you want to go green this is a good start.
    Toyota Parts
     
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  7. Yerterday I started looking for a prius in the se part of Fla. To my surprise who is it that they can mark up a vehicle?????? Well beyond the original price. To me that is like a ponzy scheme. The cars and the prices should not reflect the mishaps and unexpected goings on with the availability. No matter what year yesterday the were all 27,000 dollars no matter what shape--even with high milage for a 2010. If you go to a hospital to get surgery they don't mark up the price on day it is 20,00 the next day because of staffing the price goes to 30,000 dollars. This is an injustice to pay the local dealers for the economy disaster. I feel that the gov. should interfere with this kind of pricing. Reguardless of the situtation.
     
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