DETROIT, Michigan: The average price of a new car in the U.S. has hit a record high, with major automakers placing the blame on dealerships that sell their vehicles.

According to the analytics firm JD Power, the average prices of Ford’s vehicle are rising faster than the revenue it earns on car sales, meaning dealers are receiving a significant share of the company’s profits.

On 3rd February, Ford CEO James Farley said some ten percent of Ford dealers charged more than the suggested retail price last year, warning that if this continues, the dealers might receive fewer new models to sell in the future.

General Motors has issued a similar warning to its dealers.

Car manufacturers typically recommend a retail price to dealers when they sell their vehicles, but dealers are not obligated to adhere to them.

Automakers have struggled to manufacture enough cars over the past year to meet customer demand due to the microchip shortage and other supply chain issues, causing prices of both used and new vehicles to rise to record highs.

According to Kelley Blue Book, the average new U.S. car sold for more than $47,000 in December, more than $6,000 higher than last year.

Whereas it was once rare for dealers to sell cars above their sticker prices, that trend started to reverse itself last year, as 80.3 percent of car sales in the U.S. were listed for more than their suggested retail price this past January, compared to just 0.2 percent of car sales in 2019.

As the U.S. car market is transitioning more rapidly to electric vehicles, both GM and Ford face competition from rival automakers, such as Tesla, which sell directly to customers, rather than through dealers.

The popularity of new cars introduced by traditional automakers to better compete in the EV market is also encouraging some dealers to increase prices. Last month, following reports that new vehicles were being advertised as high as $30,000 above retail price, Ford warned dealers against raising the prices of its electric F-150 truck.