Quote:
Originally Posted by mjr24
I don't think it matters how long the shortage will last. Car companies now see customers will pay more for less and are going to gouge customers for awhile.
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For a car company, the first thing they (probably) want to do is ramp up production to match demand. They need to sell cars to continue posting profits for share holders as their bottom line - no one wants to invest in a car company with declining sales #s. Selling 2 cars = way more profit than selling one with a mark up (can’t imagine one car’s mark up to be worth 2 car sales). The cars are sold to dealers at an invoice, so regardless of what the car is sold to the customer for, the companies are interested in pushing volume of most models.
Car dealerships on the other hand, have something to gain with increased demand and shorter supply. They can charge arm and a leg above MSRP to make that little bit more above MSRP to increase profits of whatever they have to sell. Perhaps your point can be applied in this scenario where dealerships continue to feign low availability to add “market adjustment.”