Monday, November 14, 2022






        Walk into a car dealership of virtually any brand and you will find price markups unheard of in almost any past era.


        At Toyota, a new Prius Prime plug-in model, carrying a manufacturer’s suggested retail price (MSRP) in the low $30,000s, often sports an asking price these days about $10,000 higher, a markup of about 33 percent.


        It is not alone. Nationally, markups more than 20 percent over MSRP are common. One high average markup percentage belongs to the non-luxury Jeep Wrangler, generally priced about $8,500 above MSRP, closely followed by the Porsche Macan at $14,200 over MSRP. Both represent dealer markups of about 25 percent.


        In most cases, barring special sales that reduce the markup a bit, this means hugely higher dealer profits.


        This is pure price gouging, based on the age-old law of supply and demand.


        “As demand continues to exceed supply for popular vehicles, dealers are adding market adjustments generally ranging from $2,000 (for low-end gasoline-powered models) to $10,000,” reports the automotive research firm, whose fall survey included 1.9 million new car listings.


“Markups are highest for cars that hold their value best after they leave the dealerships.” Translation: hybrids or electric vehicles.


        In California’s biggest market area of Los Angeles, some of the highest markups belong to the Genesis GV70 luxury sport utility vehicle, generally priced slightly more than 25 percent over its MSRP. The same Genesis model also tops markups in San Diego, where dealers commonly ask 27 percent above MSRP. In the San Francisco Bay area, the biggest markups belong to the Ford Maverick pickup, at 36 percent ($8,600) over MSRP. Both the Genesis and Maverick models offer hybrid engines as options.


        The Maverick also tops all the markup averages around the nation, especially in the Philadelphia and Jacksonville areas.


        The high-tech four-door Maverick, introduced in the 2022 model year, is especially popular as a hybrid, its success partly driven by today’s high gasoline prices.


        Most dealers don’t deny taking advantage of low new-car inventories caused by supply chain shortages that often cause buyers to wait months before their car or truck of choice arrives. Overall, new car sales in California were down 16 percent in the first nine months of this year.


        But even as state legislators get set for a special session on gasoline price gouging by oil refiners, there’s not much they can do to prevent the unprecedented car price hikes.


        This is trickling down to used cars, too. The study showed huge price increases from last year to this among many used car models, the leader being the Nissan Leaf electric car, which saw an average price increase of $6,501, or 48 percent, between June 2021 and June 2022.


        The same for Chevrolet Camaros, whose used-car price rose 45 percent in one year, or $11,200. And the popular Dodge Ram 1500 rose 42 percent used, or about $12,000.


        The reason for all this: New ones are hard to find.


        The best deals, those with the smallest increases, included late-model Subaru Crosstreks, which increased $3,300, or 15 percent, in a year and the Mazda CX-3, up $3,100 or 18 percent.


        Dealers say their markups are a way to maintain profits while overall auto sales are down.


        “They have responded to market conditions by pricing cars above MSRP and making a higher profit on specific models to help offset restricted new car production,” analyst Karl Brauer told a reporter. “In this market, consumers are willing to pay well above sticker price.”


        Which means the best bottom line strategy for car buyers seeking both new and used models may be to wait. Current gasoline car owners can still find plenty of service stations for fuel. Cars built up to 15 years ago are more durable than previous versions, so waiting until conditions improve might pay off, even with gasoline at near record prices.


        There’s no likelihood of a windfall profit tax on car dealers, even if one is imposed on oil companies. That leaves any penalties for price gouging car dealers strictly up to individual consumers.

    Email Thomas Elias at His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It" is now available in a soft cover fourth edition. For more Elias columns, visit


Suggested pullout quote: “Consumers are willing to pay well above sticker price.”

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