A market adjustment on a new car is simply added profit. The dealership believes demand for the vehicle supports a price higher than the manufacturer-suggested retail price on the government-mandated Monroney window sticker.
The practice goes by several other names:
Added dealer markup, or ADM.
Added dealer profit, or ADP.
You’ll find market adjustments on the vehicle’s “second sticker” along with any extras the dealer has installed. Unlike straightforward market adjustments, these extras purport to add value to the car.
Window etching that costs $1,000 or nitrogen-filled tires at $500 are a different form of market adjustment, but they’re a market adjustment all the same.
You don’t have to pay a market adjustment or buy these extras, but the dealer can refuse to sell you a car.
Most people shopping for a new car wind up paying more than the MSRP. Analyst Kelley Blue Book says transaction prices on new cars have been over sticker throughout 2022, averaging about $1,000 in June for non-luxury brands.
The good news is that the car you trade in is worth more, too. The average trade-in equity topped $10,000 in June, up nearly 50% over the previous year, according to industry forecaster J.D. Power.
When will the auto market return to normal?
Pandemic- and supply chain-related issues have severely crimped the ability to build and ship new cars. In June, manufacturers had about 33 days of supply. That’s about half the inventory they held in 2019 — when consumers were paying more than $3,000 under sticker.
Waiting out the market in a reliable car is worthwhile if that’s an option for you. Few experts believe that inventory will reach pre-pandemic levels anytime soon; you may be waiting until 2025 or 2026.
If you have a lease ending, plan ahead. You may be able to buy out your lease and continue driving the car, or trade for a new car using the equity created by the current market.
Ordering a car is also something to consider if you can wait anywhere from a few weeks to a year. You’re more likely to find a dealer willing to accept MSRP.
Those with cars that were stolen, totaled or have reached the end of their life, you’re in a pinch. If you can’t swing a new or newer car, consider using what cash you have to find a cheap, drivable used car.