I am ashamed to admit that I thought I sent this Substack out more than a month ago and I apparently forgot to press ‘send.’ But the good news is that I was on NPR’s The Indicator podcast yesterday as a co-host, talking about the story I meant to promote, so now there’s a reason to send it out again. Here’s the link to the podcast: Economists hate car dealerships too.
Here is the original story: I Paid $3,000 Above Sticker Price for My New Car. You Probably Will Too
Since Twitter may or may not be a functional website the next time I have a story I want to share, I may try to update this Substack more frequently, but that, of course, requires me to remember to press send.
Here are some stories recent stories I have written:
—A Year After Striketober, Employers Push Back
(Steaks branded VOTE NO! and all the other crazy ways employers are trying to discourage workers from unionizing)
—Foreign Governments Are Taking on the U.S. Gun Industry
(Did you know you basically can’t buy a gun in Mexico? Or Jamaica? But they still have lots of guns. Why? They blame U.S. dealers)
—Fact Checking Politicians’ Inflation Claims
(There was an election recently! People were apparently concerned about inflation! Or maybe they weren’t! Don’t worry, the media will debate that for the rest of the year)
—The Cure for Inflation Means More Pain for Renters
(Rent growth is driving inflation, which is driving the Fed to increase interest rates, which is making homebuying unaffordable, which is crowding the rental market, which is . . . driving up rents.)
And here is the original email I meant to send about my story:
Even if you like shopping, you probably don’t like shopping for a car. You have to go to a dealership (ick) and they’re closed on Sundays (sigh) and they try to upsell you on pretty much everything (“Undercoating? we don’t even know what that is.”) It’s no secret that dealerships are no fun, but what I did not know is that I was looking for a car at pretty much the worst time ever to buy a car. I wrote about my experience here:
This is partly a supply and demand thing: automakers paused order of their chips at the beginning of the pandemic. Then, when they realized that lots of people wanted to buy cars, they tried to place new orders for chips. But chips for cars are not particularly lucrative, and chipmakers had moved on to bigger, better things, leaving automakers like Ford with tens of thousands of cars they couldn’t complete because of a lack of parts. (Here is a crazy video of thousands of Ford trucks waiting for chips at the Kentucky Speedway, where they can apparently be seen from space.)
But, as I write in the story, it’s the dealers, not the automakers, who seem to have benefited from this. The average selling price for a new car hit an all-time high in August, topping $48,000, and dealer profit per vehicle, at $6,273, is three times what it usually is.
When we started shopping for a car, I didn’t think I was going to write a story about it. But the process was just so mind-blowingly bad that I couldn’t help it. Our salesman would not answer simple questions like “what are the extra features that have been added on to this car and how much do they cost?” The dealership then sprung a bunch of fees on us at the end. I kept thinking about one of those fees, VIN etching, because it seemed like the “undercoating” of modern times. After I did a little digging, I found out that we were charged for it but the dealership never actually did it.
I now know a lot more about car buying and why you can’t really buy a car online in America. Read my story to find out more: https://time.com/6218046/new-car-prices-over-msrp/
By the way, if you’re going to buy a car soon, I’d recommend finding a dealership that pledges to never charge over MSRP. (yes, they do exist.) I’d also recommend asking upfront for all the fees that will be added on, though one of my sources did that and the dealership still wouldn’t give it. In some places, you can ask to take the paperwork home to look it over. Many of the dealer fees are negotiable, and, as one professor told me, “Even when someone is objectively in a low-power position, they don't always need to feel that way.”
I also did a story about why the railroads are in trouble, even though they averted a strike. You can find it here: America’s Railroads Are in Trouble—With or Without a Strike
It made me rethink my opinion on Warren Buffett, who owns the railroad BNSF. Fun fact: I wrote about him buying the railroad in 2010 when I was at the LA Times, which I think means I have officially become an old-timer? If only that rank came with a gold watch and a pension like it used to!