![]() ![]() auto sales of around 14.7 million in 2022, down from 15.1 million in 2021. “It’s going to get better, but it’s not going to be gone for the next two years,” Wakefield said in a webinar on June 22. These supply-chain issues are supposed to improve beginning this year, but probably not enough to start to re-balance supply and demand until at least 2024, said Mark Wakefield, the Detroit-based global co-leader for the Automotive and Industrial Practice for AlixPartners. Covid-19 continues to disrupt automotive supply chains as does the war in Ukraine. Since January 2021, the chip shortage has cost North American factories more than 2.5 million cars and trucks that couldn’t be produced, and potentially more than 4 million, if volume can’t be made up with increased production going forward, according to AutoForecast Solutions. With car production suspended during WW2, the end of hostilities saw limited supply and soaring prices. If there’s a historical precedent for today’s high prices, it’s the years from 1946 to 1948. The culprit is low inventory, and for that you can blame the ongoing chip shortage. In December 2019, before the COVID-19 pandemic and before the ongoing computer chip shortage took hold, the average transaction price was around $3,000 below sticker price. The average transaction price has been above suggested retail price since August 2021, Edmunds said. The average new-vehicle transaction price, a measure for what consumers actually paid, taking incentives into account, is $46,634 in May 2022, an average of $721 above manufacturer’s suggested retail price, according to. With car production stopped during the war, pent-up demand saw prices soar. The new vehicle market hasn’t been quite like this since the late 1940s. ![]() The supply chain issues causing the shortage aren’t likely to end soon, so the question is, should you pay over sticker price? And if you can’t avoid it, how can you minimize the damage?Īs it turns out, there are some ways to ease the pain and even some deals to be had that don’t involve markups, though they might mean compromises. Where dealers used to sell cars below MSRP, in 2022 it’s normal to walk into a dealership to buy a popular SUV and find a $3,000 markup over the suggested retail price. Ongoing inventory shortages have resulted in skyrocketing vehicle markups. Some dealerships have marked up Toyota 4Runners by anywhere from $5,000 to $21,000 this year. In 2022, markups are normal, and hot SUVs are the most heavily marked up of all. ![]()
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