Low inventories at dealers have made new cars more expensive. As supply-chains recover, new car prices could stay high. Car companies and dealers want to keep the supply of cars low. Big discounts from auto dealers may never come back if you are waiting to buy a new car. Thanks to a computer chip shortage that has squeezed the supply of vehicles and pushed carmakers to focus on building pricier models, new cars have grown more expensive. Car shoppers can expect the tight inventories and high prices to stick around for a long time because car companies and dealers are loving it. They have used the strong pricing power and fat profit margins that the supply crunch has afforded them and have little incentive to return to the way things were before the epidemic, when dealership lots were flush and manufacturers had to offer aggressive discounts to move cars to customers. Kevin Tynan said that the industry would have to go a long way to get back to the oversupply model. The automakers could build back up their production volumes and lose their hold on pricing. Many people are determined to maintain the new paradigm or at least something close to it. In an interview with Insider, Volkswagen of America CEO Scott Keogh said he sees greatly reduced supply as the new normal. US dealers had 1.13 million new cars on hand at the beginning of May, 2.2 million fewer than in 2020, according to Cox automotive. The amount dealers are able to charge has gone up. In April, the average new car sold for over half a million dollars more than the manufacturer's suggested retail price. Three years prior, the average spend was $37,000, with a $2,500 discount to MSRP. The Jeep Wrangler SUV, which is a sought-after model, now costs nearly $9,000 more than the sticker price. It is obvious that the way things are going is good for the automotive industry. Despite selling half a million fewer vehicles in the previous year, General GM profits jumped 47% to $14.3 billion. The dealers want to keep the party going. Mike Manley, CEO of AutoNation, the country's biggest auto dealer, said that the Pandemic has pushed a reset button for car sales, and that they will sell for the retail price. Pete DeLongchamps, senior vice president at Group 1 automotive, a large dealer group, told Insider he hopes dwindling inventories bounce back to an "equilibrium" that is easier for buyers but maintains the company's strong margins. Don't stop haggling just yet. According to Tyson Jominy, the vice president of data and analytics atJD Power, the automotive industry has wasted opportunities to shift to a lower-volume, more profitable way of doing business. If the market starts to flood with cheaper cars, the whole house of cards could come tumbling down, he said. Despite a lot of proclamations in the past and the industry enjoying more profitable times when volumes are a bit lower, eventually the pricing discipline breaks down and we go back to the old ways. 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