The incredible 2021 Ram 1500 TRX is reaching dealerships and owners around the United States and Canada right now. Many of these supercharged pickups are being built with buyers waiting, but others are ordered for dealer stock. This means that someone who wants to buy a Hellcat Hemi-powered TRX can walk into a dealership and drive out in the 702-horsepower half-ton, but in many cases, those buyers are going to be expected to pay more than the sticker price. Many Ram 1500 TRX models in dealer inventory are saddled with the dreaded additional dealer markup or ADM, with the extra cost ranging from $5,000 to $20,000.
Additional dealer markups tend to enrage people on social media and many of those angry posters question why Stellantis doesn’t step in and prevent dealerships from adding onto the MSRP. The simple answer is that it is against federal trade regulations for Dodge, Ram, Jeep and every other automaker in the United States to mandate pricing. That is why manufacturer pricing is stated in MSRP – Manufacturer Suggested Retail Pricing. All the automaker can do is suggest a retail price and the dealerships – as the retailer – is free to charge whatever they want.
To simplify the situation, think of Stellantis as the toymaker Mattel and the Ram brand is Hot Wheels. Dealerships for Hot Wheels are places like Walmart, Target or your local grocery story. Mattel sends Hot Wheels to those stores for an agreed-upon price and those stores are free to sell those toy cars for any price. This is why Hot Wheels cost 99 cents at most stores, but they cost a bit more or a bit less at other stores. Along the same lines, Stellantis sends Ram trucks like the TRX to dealerships for an agreed-upon price and dealerships are free to sell those trucks for whatever price they want. Some dealerships sell them for MSRP, some charge less and some charge more. There is nothing that the manufacturer – either Mattel or Stellantis – can do about what the retail outlets charge for the products.
This is also why dealerships are able to sell vehicles in normal circumstances for less than MSRP. The dealership invoice pricing is less than MSRP, building-in some profit for dealers that sell at MSRP. Dealers can drop below MSRP and cut into that built-in profit, but they can also add to the MSRP for larger profits on hard-to-get vehicles. It is all part of the retail process and the relationship between manufacturers and retail businesses, with those retail businesses adjusting pricing relative to MSRP based on supply and demand.
- Patrick Rall is a professional writer and photographer with a passion for all things automotive. Having grown up in his father’s performance shop, he spent extensive time at the oval track and drag strip – both driving and wrenching on various types of vehicles. In addition to working as a writer, Patrick previously worked as an automotive technician before moving on to a business office position with a chain of dealerships, and this broad spectrum of experience in the industry allows him to offer a unique look on the automotive world. Follow Patrick on Twitter, Facebook and on Youtube. Contact him at (973) 925-6058.