Car Prices and Inflation Soar Due to Dealer Markups and Repossessions

Markups on new cars were a significant contributor to the recent rise in inflation, accounting for between 0.3 and 0.7 percentage points of the nearly 16% increase in the consumer-price index between the end of 2019 and the end of 2022, according to a study published in a U.S. Bureau of Labor Statistics journal. The supply-demand imbalance for new vehicles during the pandemic allowed dealerships to charge more for each car, resulting in extra dealer profits.