New-vehicle inflation contributed nearly 1 percentage point to the rise in inflation over those three years. “What we saw with the supply-chain crisis is that dealerships were able to reassert their position as an inventory management system,” Mr. Havlin said. Mr. Havlin studied markups by analyzing the differences between how new-car prices are measured in official government data. Mr. Havlin cross-checked the analysis against the financial disclosures of some of the large publicly traded auto dealerships. Such products aren’t constrained by supply, but Mr. Havlin concluded that the demand allowed dealerships to tease even more profit from that part of the business.

Source: Wall Street Journal April 23, 2023 11:33 UTC