Used cars are the poster child of the pandemic economy — and prices are on the way up again.
Driving the news: After two months of cooling wholesale used vehicle prices (what dealers pay), costs increased 5.3% in September from their August levels.
- They're 27% higher on average than a year ago, according to the Manheim Used Vehicle Value Index released Thursday.
Why it matters: Inflation trends are under the microscope as the Federal Reserve weighs taking its foot off the economic gas pedal to prevent markets from overheating.
- Soaring car prices are one of the biggest drivers of inflation indexes this year. But the cost increases are almost completely a result of global supply chain problems, as opposed to loose monetary policy.
Catch up quick: A chip crisis that originated in Asia manufacturing facilities last year and is now a full-blown supply chain nightmare has led to a shortage of new cars.
- As an alternative, customers sought used cars in droves, sapping supply and sending prices through the (sun)roof.
Eye-popping stat: The individual model that's seen the biggest jump this year is the 2020 Toyota Corolla four-door sedan, with an average value of $19,450 on Oct. 1, compared to $13,600 a year ago (43% increase).
What's next: Used cars will continue to defy history and behave like appreciating assets — in the short term, anyway.
- Manheim anticipates that by December, average vehicle values will be up 30% for the year.