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May - June 2021
8 Factors Pushing Up the Price of Used Cars in United States
Values increased 21 percent from April 2020 through April 2021, with 10 percent occurring in April 2021 alone. As of April, the U.S. 12-month annual infla on rate was 4.2 percent. In the same period ending in April 2020, infla on increased 2.6 percent, according to the U.S. Labor Department. A closer look at the data shows used-car prices increased 21 percent from April 2020 through April 2021, with 10 percent occurring in April 2021 alone. New-car prices increased 2 percent in the same me frame. While dealers’ new- and used-vehicle inventories are greatly depleted, consumer demand is growing. The primary factors influencing U.S. infla on over the past year have been the funding and early spending of mul ple trillions of dollars on COVID-19-related federal government programs and roughly $2 trillion in Federal Reserve expansionary monetary policy since early in 2020. In addi on to tradi onal infla on causes, the following factors have fueled the boom in used-car prices, especially in the past four months.
1. Computer chip shortage. The global crisis is primarily due to disrup ons in the manufacturing and supply chain. It has delayed the produc on and sale of new vehicles, forcing otherwise new-car consumers into the used-car market and therefore driving up prices due to increased demand.
2. Growth in GDP. A er one of the worst first-half performances in U.S. history, the second half of 2020 registered one of the best back-to-back quarter performances in gross domes c product, with the economy growing 33 percent in the third quarter and 4.3 percent in the fourth. Continued on Page 33
Mopar Masters Guild Magazine
