Workers are turning back into commuters, and many of those workers are going out to buy a new car. But there aren’t a lot of new cars out there, which means the wheels on the lot aren’t cheap. There are shortages related to pandemic shutdowns—a global chip shortage, and shortages of other auto parts like tires, CNN Business reports. And so dealers aren’t letting customers talk them down. Quite the opposite. The shortage means they need to sell what they have for more to stay afloat. "There's no room to budge when you don’t know what is coming in," Sam Pack, a dealer in Texas, tells the Wall Street Journal. It reports that's translating into dealers demanding more than the manufacturer’s suggested retail price (MSRP) that appears on a new model's window. According to numbers from JD Power, pre-pandemic about one-third of cars sold for the MSRP or higher; in mid-June the figure was around 75%.
Dealers are eking out profits by selling options and add-ons—the Journal says in some cases they're "requiring" customers to buy the add-ons—and buyers are paying because they know if they don’t, someone else will. To wit, one customer in Boca Raton, Fla., says his offer to pay $48,000 for a Kia Telluride with an MSRP of $45,000 was denied; the dealership wanted $55,000 and said others were willing to pay that. Some buyers are backfilling a need they’ve been living with for a while. Car sales plunged at the beginning of the lockdowns and are just now rebounding. Sales are up more than 34% compared to last year when everything was closed, and up about 10% compared to May 2019. The average new car price in May was $41,263, which is 5.4% higher than last year, MarketWatch reports. (And why buy a used car when it costs as much as a new one?)