Last year wasn’t good for new car sales. Factory shutdowns, lockdowns, and consumer hesitancy caused car sales to crater in the Spring of 2020; stronger sales in the latter months of the year couldn’t erase the early drop. Overall, sales were down 14.6 percent in 2020, which sounds like bad news for dealers. That’s hardly the case: Automotive News reports that overall dealer profits soared by 48 percent last year, leading to record-setting profits despite sluggish sales.
That begs the question: How did dealers manage to make so much more money selling fewer cars? The first answer appears to be simple: They put the squeeze on us. Shuttered factories drastically reduced supply, but demand stayed strong. That led to a rush on dealers for in-demand models, with a line of customers ready to pay. Dealers could charge what