Used-Car Prices Hit New Record Highs Amid Snarled Supply Chains
Anyone shopping for a used car has been sticker shocked by soaring prices since the virus pandemic began. There’s a global shortage of semiconductor components which has shuttered auto plants and crimped new car output. Lower inventories at dealerships forced many people onto secondary markets (used car market), searching for the next best option, pushing prices to record highs.
The Manheim U.S. Used Vehicle Value Index jumped 9.2% month-over-month in October. This brought the index to 223.7 (a new record high). From a year ago, the index is up a whopping 38.1% from a year ago.
“Some of the monthly increase is a result of the seasonal adjustment, as October typically sees above-average vehicle depreciation and therefore used price declines,” Manheim wrote in the report.
However, it added, “this October was the first October in the history of the Manheim Index data, which dates to 1997, to see a non-seasonally adjusted price increase in October. The non-adjusted price increase in October was 5.4%.”
The used car market continues to march higher after the index stalled over the summer. Ford’s CFO John Lawler warned earlier this month that supply constraints could continue into 2022 and said, “we’ll be dealing with [supply chain issues] for a while.” This means used car prices might rise even further through year-end.
Manheim data reveals the lag between high-frequency data and traditional data at the BLS. We noted after September’s CPI print that “used cars will turn higher in coming months as Manheim wholesale prices rebounded.”
Ahead of Wednesday’s CPI print, we suspect the used car component of the index will rise due in part to Manheim’s latest data. As we’ve noted before, soaring prices have weighed on consumer sentiment.
There are no immediate indications that would suggest used car prices have reached a peak. However, a top US warehouse operator has just called the peak in the supply chain crisis.
Mon, 11/08/2021 – 22:20
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