Ford Motor Co. (Ford) and General Motors Co. (GM) are clamping down on dealerships that are trying to charge more than the sticker price, a tactic that has proliferated amid the car shortage.
Ford Chief Executive Jim Farley said Thursday that dealers who engage in this practice will face consequences, including losing supplies of future models. Auto makers set a manufacturers suggested retail price, or MSRP, when they ship cars to dealerships. Dealers [are not] required to adhere to them, but under business norms that has been the general practice and expectation.
Ford has determined that about 10% of the roughly 3,000 dealerships in its U.S. network are charging above the sticker price, Mr. Farley said. If they dont stop, Ford plans to take punitive action by shipping them fewer sought-after models, he added.
In a letter to its dealers last month, GM also said it could take action against a small minority of bad actors who were selling or leasing vehicles at rates far in excess of sticker prices set by the auto company. It said GM could decide to withhold some vehicle shipments to those dealerships.
Traditional car companies operate through networks of franchise dealerships, which are independent businesses that purchase cars from the factory. While the auto maker controls supply and offers promotional programs, dealers generally have autonomy over the final transaction with the customer.
Historically, car companies have said they disapprove of their dealers charging above MSRP, saying it can reflect poorly on the brand and alienate customers. The practice has been relatively rare in the past, occasionally surfacing when hot new models first hit showrooms and are in high demand.
Eckert, N. & Colias, M. (2022). Ford, GM Warn Dealers on Pricing. Wall Street Journal, X, page #. https://www.wsj.com/articles/ford-gm-warn-dealers-charge-above-sticker-price-and-face-repercussions-11644323580
In 500 – 750 words in the body of your essay respond to the following:
1. Determine if the Sherman Act and/or the Clayton Act apply to the Ford and GM scenario. Identify the applicable statute(s), and explain, and discuss either one or both applicable statutes. Identify the US regulatory agency that would investigate the actions of Ford and General Motors (GM) in the scenario
2. Apply the statute(s) to the scenario and support your analysis of whether Ford and GM have violated either the Sherman Act and/or the Clayton Act. What is the result?
3. Discuss the ethics of imposing consistent MSRPs, in different communities, regardless of the cost of living and other socio-economic differences – support your discussion by selecting between and contrasting Immanuel Kant’s deontological ethical theories and the Justice theories of John Rawls.
You must include at least two academic references to support your ideas for each of the three parts of the assignment.
Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center.
This assignment uses a rubric. Please review the rubric:
TOPIC 4 RUBRIC – TOTAL 110 POINTS
PART 1 EXPLANATION OF THE APPLICABLE LAWS 22 POINTS
PART 2 DISCUSSION OF THE LEGALITY OF FORD/GM ACTIONS 27.5 POINTS
PART 3 ETHICAL IMPLICATIONS 22 POINTS
THESIS DEVELOPMENT AND PURPOSE 7.7 POINTS
ARGUMENT LOGIC AND CONSTRUCTION 14.3 POINTS
MECHANICS OF WRITING 5.5 POINTS
PAPER FORMAT 5.5 POINTS
DOCUMENTATION OF SOURCES 5.5 POINTS
