10 Cars Selling for the Highest Markups

Sean Tucker 07/16/2021 12:00pm

Americans are paying more for cars than they’re used to. A rare combination of factors has driven prices to new highs in 2021.

The average sticker price for a new car crested the $41,000 mark for the first time in June. And sticker price is just part of the story. The average buyer paid more than the asking price for 84 models of car in May, Kelley Blue Book data show.

Low Supply

The average new car contains more than 100 microchips. The tiny processing units control everything from valve timing to cabin temperature. But the COVID-19 pandemic triggered a worldwide shortage of microchips that has hit the auto industry hard.

That has left auto factories idle or producing slowly. Dealerships have found themselves short of many popular models. At the beginning of July, America’s inventory of new cars for sale hit the lowest number since record-keeping began in 1976.

Some models faced more severe inventory problems than others – Kia dealers were down to a single day’s supply of the popular Telluride SUV at the beginning of July.

High Demand

Americans, meanwhile, have gone back to car dealerships in droves. Travel restrictions have been lifted. Government incentives put cash in the hands of consumers and helped spur an economic recovery. And many people decided to buy cars rather than crowd into public transit during a pandemic.

That has meant record sales. The seasonally adjusted sales rate – a figure that removes normal seasonal fluctuations to make it easier to compare one month’s data to another’s – hit a record in April and has stayed high ever since.

The Result: Paying Over Sticker

When low supply meets high demand, prices rise.

The listed price on the new car’s window sticker is rarely the final price it sells for. Americans have always treated new car prices as negotiable.

Usually, that means new cars sell for less than their listed price. Manufacturers routinely add incentives to bring the cost down. Dealers do the same. Car shoppers go into most deals expecting to talk the price down. Dealers go in expecting to make money off the financing process, dealer options added to cars before sale, service contracts, and other items that keep cash flowing in even when the car sells for less than the posted price.

But this market is unusual. Manufacturer incentives are rare. Dealer incentives are rare. And many buyers are entering the negotiation process expecting to pay more than the listed price.