These days, it may feel as though everything is getting more expensive. New data from the U.S. Bureau of labor statistics details just how much new and used car prices have risen over the years.
In fact, new and used car prices have surged at the fastest rate since the 1980’s.
Taking a look at the used car market, multiple factors led to the historic increase witnessed in the past few years since the pandemic. First of all, a chip shortage led to a major spike in demand for used cars, after many buyers were unable to afford the price hikes on new vehicles. New cars also became far more scarce, forcing consumers to look elsewhere.
From mid-2021 to the end of 2022, data shows the consumer price index (CPI) of used cars rose over 30%.
Another factor leading to the surge in used car costs, surrounds competition for these vehicles between consumers and rental car agencies. In particular, demand for three-to-five year old cars skyrocketed over the last few years.
While recent data from March suggests prices are coming back down to earth for used cars, economists are gearing up for higher prices in the coming months, as the spring marks the busy season for purchasing new
and
used vehicles.
Looking at the new car market, data suggests the chip shortage and constraints in the economy over the past few years have led to a much slower increase in costs over time. However, while used car index prices witnessed a sharp decline over the past few months, new car costs have continued to tick up.
When it comes to crunching the numbers, a Kelly Blue Book report determined the average new car price has surged over $12,000 dollars, from 2019 to 2023. Meanwhile, the website Car Guru, analyzes the costs of used cars over time. During the same 4-year period, average used car costs have climbed nearly $9,000 dollars.
Another factor for the rise in new car costs, comes due to a growing trend of consumers fitting out their vehicles with additional features and modifications.