America’s Consumer Price Index (CPI) climbed to a 13-year high in May, with prices up 5% compared to a year earlier. But about one third of that increase was due solely to the price of used cars.
Used car prices shot up 30% in the 12 months leading up to May, just below the record one-year increase for used car prices reported in 1975.
According to Edmunds, a go-to resource for car information, the average used car price hit $26,500 in June 2021, up 27% from a year ago, while the average new car transaction price is $41,000, up 5%, which is almost the same as the average sticker price of $41,500.
Record high prices for both used and new cars is just too much: It’s an economic problem that weighs heavily on household budgets. About 40% of US households make a car purchase of some sort every year, and this year there could be even more due to pent-up demand from purchases delayed in 2020.
As at now, vehicle costs are fast ascending in America because of an assortment of reasons. Be that as it may, they all reduce to two elements: High Demand And Limited Supplies.
Used car prices are particularly hard hit because rental car companies, facing a near halt in demand last year, sold off about a third of their fleets to raise enough cash to survive the pandemic.
That rush of sales last spring pushed used car prices slightly lower, which accounts for the large percentage increases in the 12-month comparison.
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But with the current rebound in travel, rental car companies are suddenly facing a shortage of cars to rent and aren’t selling what they have even as demand for cars has soared.
Millions have gotten jobs this year, and millions more who were working from home are returning to the office, feeding the need for vehicles.
And many buyers are making purchases that they planned to make last year but delayed because of uncertainty about the pandemic. New car sales to American consumers set a record by topping 7 million vehicles in the first half of the year, according to JD Power.
Record exorbitant prices for new vehicle are additionally a factor pushing a few purchasers who might incline toward new vehicles to take a gander at utilized vehicles all things considered.
Additionally, new vehicle prices are also up in view of a significant lack of micro processors. Seller stock has tumbled to verifiably low levels.
But with the current rebound in travel, rental car companies are suddenly facing a shortage of cars to rent and aren’t selling what they have even as demand for cars has soared.
Millions have gotten jobs this year, and millions more who were working from home are returning to the office, feeding the need for vehicles.
And many buyers are making purchases that they planned to make last year but delayed because of uncertainty about the pandemic. New car sales to American consumers set a record by topping 7 million vehicles in the first half of the year, according to JD Power.
Used car prices ordinarily ascend about 1% yearly, and it’s unquestionably contributing undeniably more to Inflation in America now. The rising cost of new and pre-owned vehicles is a significant part of the inflation reading, given the amount Americans go through consistently on vehicles – more than $600 billion yearly.
Credit: CNN
