If there’s anything harder to buy right now than a new PlayStation 5 or a graphics card, it’s probably a new car, truck, or SUV. As we’ve reported, chip shortages, COVID shutdowns, shipping congestion, and now Russia’s invasion of Ukraine have all wreaked havoc on supply chains and supplies of new vehicles.
In the US, the vast majority of car buyers are not accustomed to ordering vehicles from an OEM through a dealership, instead preferring the convenience of taking a car home “from the lot” that day. But as inventory has evaporated, US dealerships have reacted by adding additional dealer markups, or ADMs, to their stock, often to the tune of many thousands of dollars. One estimate of the value of the markups came to $3.6 billion.
Some in the industry have defended the practice, whether due to simple supply and demand or the fact that no one ever complained during the years when dealerships lost money selling cars. But for those of us who don’t financially benefit from a $10,000 ADM, it’s hard to sympathize.