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Inflation tax: Dealers add 'market adjustment' markups on new car sales amid supply crunch

The surcharges come as pandemic supply chain issues continue to plague auto industry.

Updated: October 7, 2021 - 11:03am

The Facts Inside Our Reporter’s Notebook

Some car dealerships are charging thousands of dollars in "market adjustment" fees on top of the "manufacturer's suggested retail price" for new vehicles.

Supply chain issues continue to plague the auto industry during the COVID-19 pandemic, resulting in vehicle shortages on dealers' new car lots.

There is currently a shortage of computer chips that the auto industry relies on for the production of new vehicles. 

U.S. auto sales are reportedly down by 14% in the third quarter compared to same time last year. 

A representative for Edmunds, a leading vehicle information resource for consumers, told Just the News that many dealerships across the nation are likely adding these market adjustment fees to new vehicles based on the data their analysts are collecting on monthly vehicle sales.

"Our analysts are saying that almost every automaker's dealer base is likely doing this," said the spokesperson, who provided Just the News with data on "MSRP vs. new Average Transaction Price from 2020 onward" and average premiums/discounts on new vehicle sales from top vehicle manufacturers. 

Some Kia and Toyota dealers are adding market adjustment fees to the MSRP for certain model vehicles. The fees can go as high as $12,000 on some new models. 

According to Edmunds, the average premium on new Kia vehicle sales was $1,561 in September and $838 for Toyota. 

Just the News reached out to Kia corporate media relations about the market adjustment fee issue. A spokesperson said each dealer is in charge of deciding to add market adjustment fees to new vehicles given that they are individually owned franchises.

He said Kia's corporate office had no comment on dealers marking up their vehicles during the ongoing coronavirus pandemic. 

The National Automobile Dealers Association did not return a request for comment before publication.

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