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Car discounts won’t return post-pandemic, AutoNation says

Biggest car dealer chain in the US said discount on new car could be a thing of the past as the auto industry seeks to lock in prices higher due to output cuts caused by the pandemic.

Tighter inventories have allowed automakers and authorized dealer put fat profit AutoNation executives told investors during an earnings call Thursday by selling more vehicles at or above their list price, and that no discount would persist even if production The number of vehicles increases sharply in the second half of 2022.

“We won’t go back to inventory levels that are so high that they reduce margins on new vehicles,” said AutoNation CEO Mike Manley. “Significant discounts and high incentives can also damage brands, which is another reason for our industry to balance supply and demand properly.”

Vehicle prices skyrocketed and sales increased by old car helped AutoNation post record profits in its latest quarter earnings, announced the previous Thursday. Rising new and used car prices are contributing to the highest annual inflation in four decades.

Managing Director at General Motors Co. and Ford Motor Co. signaled that they would speed up production even if the computer lack of chips that has forced them to cut production to start easier. The two companies, which have long dealt with large inventories on dealer lots that force them to discount, are eager to maintain their higher margins.

At the same time, they called Car dealer charge more than the suggested retail price. Ford CEO Jim Farley tells investors in the first day of this month that about 10% of their dealers are charging more than the retail price and that the company will keep the cars from them to address the root of this behavior.

According to researcher Edmunds, car buyers paid more than the manufacturer’s sticker price on more than 80% of new car purchases last month. Manley just said 2% belong to new car AutoNation goes on sale in 2021 above the sticker price.

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