Why do car dealerships sometimes charge more than the MSRP for popular models?

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  1. Car dealerships sometimes charge more than the MSRP (Manufacturer’s Suggested Retail Price) for popular models because:

    High Demand, Low Supply: When a model is in short supply but very popular, dealerships know buyers are willing to pay extra to get one quickly.

    Market Pricing Strategy: Dealers adjust prices based on what the market will bear, often adding a “market adjustment” or “dealer markup” on hot models.

    Limited Editions & New Releases: Special trims, limited editions, or newly released cars can command premiums due to exclusivity.

    Profit Motive: Dealerships aim to maximize profit, especially when factory incentives or discounts are low or absent.

    Third-Party Influence: Sometimes brokers or third-party sellers buy cars to resell at higher prices, influencing dealer pricing.

    This practice can frustrate buyers but reflects basic supply-and-demand economics in the car market.

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