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.