The average price of a new vehicle has spiked about 25% since the start of the pandemic, from about $35,000 to a whopping $44,000, according to auto data firm J.D. Power. Shortages of key materials, such as semiconductors, have not only limited the number of vehicles being produced, but also incentivized automakers to build only the most expensive, highest-trim versions of their vehicles.
The result: automakers and dealers are making enormous amounts of gross profits per vehicle sold in their showrooms in a "take or leave it" scenario. In October, dealers made on average $5,129 per unit in gross profit, including contributions from finance and insurance (F&I) sales, smashing the prior record and up an amazing 75% from the same time last year.