Car Buying

What Is a Market Adjustment on a Car?

Dealer fees can skyrocket a car's purchase price and put you way over budget. Learn the truth about market adjustment on a car and how you might avoid it.

Read time

8 minutes

Date

12.20.2023

Share

Car buyers nationwide have encountered market-adjusted pricing more often within the last few years than previously, mainly due to the pandemic’s undeniable impact on the automotive industry. Market adjustments have skyrocketed prices, inducing sticker shock among consumers across vehicle segments. A cooling used car market and recovering new car supply chains could signal the slow retreat of market adjustment pricing, but many prospective buyers fear it’s here to stay. 


Dealer fees like market adjustment can quickly put any car purchase out of financial reach, but with a FINN car subscription, you can expect transparent pricing. In addition to no hidden fees, FINN incorporates insurance, registration, depreciation, and maintenance into your monthly subscription fee so you can focus on what matters most. Avoid rising car prices with a FINN car subscription with flexible and convenient terms. 

What is a market adjustment?

A market adjustment on a car represents a sticker price increase based on current or perceived market conditions that elevate a particular make or model as more desirable. For example, a market adjustment on a Cadillac CT4 premium sedan may increase the price by a few hundred to several thousand dollars if dealerships believe the market supports paying a premium. You can quickly determine the market adjustment on a car by looking at the difference between the Manufacturer’s Suggested Retail Pricing (MSRP) and the dealership’s advertised price.  


Traditionally, market adjustments occurred on highly anticipated newer vehicles or those that accrued a long waitlist of buyers. However, changing market conditions can artificially increase prices based on supply and demand. Market adjustment on a car is also referred to as “adjustment market value,” “additional dealer markup,” and “additional dealer profit.”  

How is the market adjustment amount determined by dealers?

Understanding how car dealers work can be challenging, from knowing if car dealerships are open on Sundays (spoiler alert: some actually are) to figuring out how and why they incorporate various fees into a vehicle’s retail price. While a diagnostic fee at a dealership represents a service-related charge you actively seek out, market adjustment fees are involuntary and, in some cases, essentially non-negotiable. Market adjustment can fluctuate vehicle pricing—increasing it by up to 50% in some cases—and depends on several factors, including:

  • Dealership ownership costs
  • Popularity of a particular model
  • Local market conditions
  • Brand reputation
  • Dealer sales strategies
  • Global automotive supply chains and trends


From a fundamental economic standpoint, market adjustment represents the impact of supply and demand on the automotive market. Value can significantly increase if there’s less of a specific commodity. Dealerships possessing a hot commodity can charge more for it due to the inherent exclusivity. 

Why do dealerships charge market adjustments?

Market adjustment already exists on a smaller scale, but the rate at which it increases car prices has ballooned in recent years. For example, all-wheel drive vehicles tend to fetch higher prices in snowier climates because they’re in higher demand than in temperate locations. In the end, dealerships push market adjustment pricing because it increases profits. 


A market adjustment and dealer holdback are similar in many ways. Both represent a dealership's additional profit after paying the manufacturer for a vehicle. While dealerships are hesitant to dip into these profits, many savvy car buyers leverage their knowledge of market adjustments to negotiate and reduce the purchase price. This tactic also helps buyers avoid excessive depreciation.

How to beat market adjustments

The following methods can help you beat market adjustments to pay less for your next car:  

  • Know the market: One of the first steps in preparing to negotiate for market adjustment is reviewing the lay of the land. Learn what markets are hot in the automotive world and where dealerships are leaning into those prices to stack profits. Researching a particular vehicle can also help you identify competitors and round out your perspective on which vehicle(s) you want to pursue. 
  • Investigate dealer incentives, discounts, and rebatesLocal dealers often advertise their discounts and incentives online, on the radio, via email, and through flyers mailed directly to potential customers. Use these resources to find the best price for your chosen make and model.  
  • Comparison shop: As you review dealers, determine which ones have positive reviews and which may be less willing to work with you on pricing. Glancing at the Better Business Bureau’s website can help you review past customer experiences to understand how a dealership operates. Compare pricing on your chosen model to determine what’s fair for the market. 
  • Order your car directly from the factory: If you’re looking for a brand-new vehicle, sometimes ordering directly from the factory helps you avoid market adjustment pricing. You can also custom order features you want, though the final price tag will reflect your selections. 
  • Wait until market demand subsides: As the adage goes, “Good things come to those who wait,” which can be true for the automotive market. Sometimes, waiting until demand cools can help you find a better deal and avoid a market adjustment.


Your success rate of beating market adjustments will vary depending on your location, the dealership you work with, and your chosen model, among several other factors. 

Other ways to get the best price for your car

Avoiding the tricks car salesmen use to make a hefty commission often requires knowing more about the market and particular vehicle you want to purchase than they do. Spend a few hours researching the model you’re eyeing to see how pricing and resale values have recently changed, what specific trim levels or packages you’re looking for, and what local inventory exists to view and test drive. Avoiding add-ons and accessories can also help you get a better price. If you’re financing your purchase, consider alternate lenders to maximize your savings regarding interest rates and loan terms. 

Will the auto market return to normal?

Forecasting if and when the automotive market will return to normal is anyone’s guess. In the current market, passenger car sales are up 8.6% year-over-year from 2022 to 2023, with total vehicle sales up 12.2%. Thus far, monthly 2023 sales figures surpass their 2022 counterparts, with sales exceeding figures seen in 2021 since June 2023. The booming market hardly supports a reduction in pricing for most models, though there may be a handful of exceptions. 


Finding favorable financing terms (like impressive truck deals) remains challenging for most potential buyers. In addition, the rising cost of living due to inflation and a continued chip shortage portend a slow return to pre-pandemic levels. However, there’s no telling what other economic conditions may affect the automotive market in the future. 

What is a market adjustment on a car FAQs

Pinning down exact market adjustment values can be as challenging as determining the profit a dealership receives on any given vehicle on their lot. 

However, Markups offers a valuable resource for potential buyers looking to estimate market adjustments on popular models from local dealers. Local buyers report these adjustments, so it’s important to verify any information before making any purchasing decisions. 

At the height of the pandemic, market adjustment pricing was practically non-negotiable. However, with the balance returning to customer demand and dealership supply networks, market adjustment negotiations may be more successful. Knowing which vehicles are subject to a market adjustment can help avoid paying well over MSRP

A typical market adjustment could be a small percentage of a vehicle’s purchase price (from 1% to 5%), depending on various factors. States where a particular car is more popular may exhibit a higher market adjustment than those where demand is less. 

Dealers charge above MSRP to increase profits. Many have responded to conditions within the automotive industry as influenced by the pandemic to increase market adjustments compared to previous years. Limited supply and excessive demand also support pricing well above typical window sticker value. 

Most new cars have a market adjustment simply due to the advanced features and capabilities they offer compared to older models and competitors. However, new cars delivered within the last few years have seen an increased market adjustment based on high demand. If and until automotive supply chains catch up, a market adjustment will likely appear on many dealer invoices. 

Final thoughts

A market adjustment can eat into your car-buying budget and increase depreciation on your chosen vehicle. However, some dealerships allow you to negotiate market adjustment pricing to make the sale, even if it means eating into their profits. While market adjustments have declined recently compared to peak pandemic levels, any return to historic trends remains tentative at best. 


FINN car subscriptions take the guesswork out of vehicle ownership with transparent pricing and no hidden fees. Subscribe to FINN vehicle to view your inclusive monthly payment, including mileage and subscription duration terms that fit your lifestyle. FINN also offers a variety of vehicles to choose from, delivered straight to your front doorstep. 

What Is a Market Adjustment on a Car
What Is a Market Adjustment on a Car

Final thoughts

A market adjustment can eat into your car-buying budget and increase depreciation on your chosen vehicle. However, some dealerships allow you to negotiate market adjustment pricing to make the sale, even if it means eating into their profits. While market adjustments have declined recently compared to peak pandemic levels, any return to historic trends remains tentative at best. 


FINN car subscriptions take the guesswork out of vehicle ownership with transparent pricing and no hidden fees. Subscribe to FINN vehicle to view your inclusive monthly payment, including mileage and subscription duration terms that fit your lifestyle. FINN also offers a variety of vehicles to choose from, delivered straight to your front doorstep. 

You may also like

Best Cars for Tall People

Best Cars for Tall People

If you duck through doorways or dodge hanging objects, finding a car for your height can seem nearly impossible. Here are the best cars for tall drivers.

Read more
Should You Lease vs. Finance a Car?

Should You Lease vs. Finance a Car?

Can't decide to lease or finance your next car? The pros and cons are weighed here so you can discover the best option for your needs.

Read more
How Much Does a Car Inspection Cost?

How Much Does a Car Inspection Cost?

You received notice that your car must undergo an inspection, but how much does a car inspection cost? Check out all the details below to help you budget.

Read more