The ongoing COVID-19 pandemic had a marked effect on the new car market, as we’ve reported many times throughout the past few months. Another area it’s hit, understandably, is the public transportation sector. As time went on, riders because buyers as they looked to the used car market for a solution. That move, in turn, has accelerated the cost of used cars and trucks at a higher rate than any point in the past half century, according to a U.S. Department of Labor report.
The Consumer Price Index — a measure of average change in prices paid by consumers over time — has risen from the initial shock during the onset of the coronavirus pandemic as supply chains were severely disrupted. In a Reuters report (reposted by Autoblog), the CPI increased 1.3 percent over the past 12 months through August 2020. “Consumer prices are rebounding from the pandemic shock, but as supply shortages are resolved, upward price increases should moderate,” said chief U.S. financial economist at New York-based Oxford Economics Kathy Bostjancic.
The lion’s share of that increase, as it happens, is from the used car market. Used car and truck prices jumped 5.4 percent in August, the largest jump since March 1969. During the same period, new car prices were unchanged. As manufacturers are no longer offering the generous incentives they were as the pandemic started to take hold, buyers are clearly looking toward the used market for more affordable options.
Economists note the increase will stabilize over time, as the Labor Department report showed underlying inflation, suggesting consumers are still making purchases. For the time being, however, increased market demand means purchasing a used car will be a more expensive prospect than at the beginning of the year.