Car prices are soaring, and they're not going to stop
June 11, 2021. Summarized by summa-bot.
Compression ratio: 19%. 1 min read.
A price tag is displayed on the window shield of a used car at Hamilton Avenue Auto Sales, a used car dealership in the Brooklyn borough of New York, the United States, on May 12, 2021. U.S. consumer prices rose 0.8 percent in April, with a 12-month increase of 4.2 percent, the U.S. Labor Department reported Wednesday. This marked the largest 12-month growth since a 4.9-percent increase for the period ending September 2008, according to the report. (Photo by Michael Nagle/Xinhua via Getty Images)
Car dealer lots have only a fraction of the vehicles — both new and used — that they typically have. That's helping send prices to record levels and lifting the nation's overall inflation rate.
The average new car price hit a record $38,255 in May, according to JD Power, up 12% from the same period a year ago.
Wholesale prices for used cars sold at auction are up 39% since the start of this year, according to other data from JD Power.
Retail used car prices are up a more modest 20% in the same period.
The US economic rebound has pushed consumer prices up at the fastest rate in nearly 13 years, and used car prices alone were responsible for a third of of the 5% overall jump in May.
It's a 180-degree turnaround in the market from a year ago, when many car dealerships were closed by the pandemic or limited to providing service and maintenance.
Now sales are booming, with May's seasonally adjusted sales rate for new car sales to consumers rising 34% compared with a year ago, and up 10. 6% compared with the more normal sales month of May of 2019.
New car production in North America was down about 3. 4 million vehicles in the first three months of this year, according to Cox Automotive.
The chip shortage also means that automakers don't have an excess supply of new cars they can sell to rental companies at a discount.
"The [rental car companies] typically buy 2 million vehicles a year, and that's how many cars they typically sell into the market," said Ivan Drury, senior manager of insights for Edmunds. com.
Part of what's driving up new car prices is what consumers want to buy now.