Study: Dealer Markups Helped to Raise Inflation

April 25, 2023
A recent study from the U.S. Bureau of Labor Statistics shows that car dealer markups have played a large role in rising inflation.

A recent study shows that car dealer markups have played a large role in rising inflation, the Drive reports.

According to the Wall Street Journal, a study done by economist Michael Havlin for the U.S. Bureau of Labor Statistics showed dealer markups on new car prices dramatically increasing during the COVID-19 pandemic, and have only continued to do so.

Dealerships saw their average new vehicle profit margins rise from 4.9% in 2019 to 11.5% in 2022 as a result of markups. This increase was “almost a full percentage point of the 16% increase in the consumer-price index— the average change in consumer prices over time—between 2019 and 2022.”

Additionally, the study also found an increased disparity between the consumer-price index and the producer-price index, again as a result of markups, rising “to 17.7% at its peak in September 2022.”

A spokesperson for the National Automobile Dealerships Association rejected the notion of an increase in markups raising inflation.

“By that logic, every consumer who sold or traded in a used vehicle for more than its Kelley Blue Book value profiteered off that sale and thus bears responsibility for contributing to consumer inflation,” they stated.

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