Inflation made every American’s life a little bit harder last year, but those who were in the market for a new or used vehicle may have noticed the biggest price increases.
According to a new report from The Guardian, various costs related to purchasing, renting, maintaining and insuring vehicles saw the biggest price increases last year as inflation rates rose. The average cost of a used car rose 31.4 percent from November 2020 to November 2021, while car and truck rental costs rose by 37.2 percent year-over-year. This was nothing compared to motor fuel, though, which was 58 percent more expensive in November 2021 than during the same time period in 2020.
The report also found that the average cost of a new vehicle rose 11.1 percent year-over-year, while vehicle repair parts rose by 10.2 percent. Vehicle insurance costs rose by 5.7 percent, as well, while other related motor vehicle fees rose by an average of 1.5 percent. The inflation observed in these various vehicle-related costs, particularly used vehicle prices, outpaces that of other critical sectors. While used car prices rose by more than 30 percent, the prices of meats, poultry, fish and eggs rose by just 12.8 percent. Other food-related costs, such as cereals, baked goods and fruits and veggies, saw inflation rates of less than five percent.
Christopher Wimer, co-director of the Center on Poverty and Social Policy at Columbia University, told The Guardian that these rising inflation rates are making it harder for Americans “to stretch that dollar to get what people need.”
According to Kelley Blue Book, the average transaction price for a used vehicle in the U.S. in November of 2021 stood at $27,569 – a 27 percent increase year-over-year. The semiconductor chip shortage has been the biggest contributor to rising used vehicle costs. With the chip shortage slowing new car production down to a crawl at certain points this year, dealers received fewer shipments of new vehicles, forcing many consumers to shop second-hand. This made used vehicles harder to come by, driving up demand and transaction prices rapidly.
Most experts believe used car prices will remain elevated this year as automakers continue to grapple with a shortage of semiconductor chips.