In the world of economics, there’s this little factor referred to as provide and demand. It states that, as provide drops for a given merchandise of constant demand, costs ought to go up. The reverse, too, ought to occur — a rise in provide with out a rise in demand ought to result in decrease costs. Yet, as automaker provide chains recuperate from COVID-19, the chip scarcity, and different numerous plagues and poxes, new automobile costs nonetheless aren’t dropping. Why?
Car dealerships will inform you: The automakers are in charge. Dealers now not have the barebones inventories of 2021, their tons are flush with new product, however carmakers nonetheless have a shortage mindset in direction of incentives. Having gotten hooked on incentive-free income, they’re loath to renew throwing money on the hood.
Dealers, to their uncommon credit score, are simply as annoyed as patrons. They’re caught sitting on stock for months, unable to maneuver models at such inflated costs, and paying curiosity the entire time. For as soon as, they’re aligned with automobile patrons: Both need extra incentives from automakers.
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Of course, car prices are a big part of the “inflation” everyone keeps talking about. Cars factor heavily into the Consumer Price Index report, meant to show how the value of the dollar — and the cost of living — is changing. But if car prices are no longer based on supply and demand, rather a pure desire for profit from carmakers, the value of the dollar isn’t really changing. The people taking those dollars from you have just gotten greedier.
If gross sales stagnate, it’s seemingly carmakers will resume their incentive applications and start discounting automobiles as soon as extra. But when producers have grown fats and complacent on low-production income, they’ll seemingly maintain out so long as they’ll earlier than reductions resume.
Source: jalopnik.com