Economics of the auto market, testing the price elasticity of cars
In February 2022, AutoNation Inc. reported it will not be offering the discounts and purchase incentives of previous years at car dealerships. The semiconductor supply chain squeeze brought on by COVID-19 (coronavirus) manufacturing disruptions also reduced the supply of cars, sending prices to historic levels. With huge amounts of excess demand, auto-dealers are relying on consumers’ high price inelasticity in the face of few car purchasing options. Many consumers have turned to used cars, but those determined to purchase new vehicles will likely pay the higher prices. This contributed to AutoNation's revenue increasing 14% by 2022.
ESG|Structural|M&A|Discontinued ActivityIn response to volatile demand in the wake of the first COVID-19 surge, the company undertook a comprehensive cost reduction program, aimed at shoring up labor and supply costs.
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