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Illustration: Brendan Lynch/Axios

Inflation is at its highest level since 2008, thanks in very large part to a single item whose price has been going through the roof: Cars.

Why it matters: What goes up must generally come down, and there are strong indications — like data last week from prominent used car marketplace Manheim — that the unprecedented rise in auto prices is peaking. In the second half of this year, cars might well be a force making inflation numbers look artificially low.

By the numbers: Used car and truck rental prices rose 12% in June, and 88% from a year previously. Used car prices were up 11% in June and 45% from a year ago, while new car prices were up 2% and 5% respectively.

How it works: The rise and rise of car prices has been one of the dominant inflation narratives of 2021. The cause has been a shortage of new cars, which in turn has been caused by a shortage of the computer chips needed to make any modern car run.

  • Cars need as many as 1,400 different computer chips, each of which has to go through a rigorous quality-control process that ensures it will keep on working for at least 20 years.
  • Lead times for such chips can be as long as 180 days

What they're saying: "These chips are not fungible assets," Tirias Research analyst Kevin Krewell tells Axios. "You can’t just move them to another fabrication facility with spare capacity."

Flashback: Fire and ice have both closed chip plants unexpectedly this year, making it harder for them to reconfigure their production lines to go back to making the auto chips that manufacturers desperately need.

  • Automakers slashed chip orders when the pandemic hit in March 2020, causing chip makers to pivot to making components for uses that were booming, such as webcams.
  • More recently, automakers around the world have been forced to cut production in the face of the shortages. AutoForecast Solutions says the industry faces a loss of 6.2 million vehicles globally because of the chip supply line disruption, while AlixPartners sees a drop of 4.9 million vehicles just in the first half of this year.
  • Volkswagen has warned that the chip shortage could get even worse in the second half of this year.

The big picture: While new-car prices haven't risen enormously (sticker prices are sticky, it turns out), the new-car shortage has meant that car-rental companies, faced with booming demand, have become buyers rather than sellers of second-hand vehicles, upending the market's normal delicate balance.

What's next: Wholesale auto prices seem to have peaked, which means that retail prices are likely to follow them down. Manheim chief economist Jonathan Smoke says that retail prices have been lagging wholesale prices by about 4 weeks this year — and that the decline in wholesale prices started 5 weeks ago.

Expand chart
Data: Cox Automotive; Chart: Axios Visuals

The bottom line: If you're in the market for a car, and you're able to wait a few months, you should probably do that.

Go deeper

Sep 15, 2021 - Technology

Safety advocates push tech to save kids trapped in hot cars

Photo: SolStock via Getty Images

All vehicles could soon be equipped with warning systems aimed at preventing children from dying in hot cars, but safety advocates say a law working its way through Congress won't do enough to save lives.

Why it matters: Nearly 40 children die every year of heatstroke because they were left in the back seat by a parent or caregiver — or climbed inside a car on their own. Since 1990, approximately 1,000 kids have died nationwide, according to KidsAndCars.org.

  • Four have died this month to date, including a baby who suffocated in a car after her mother was shot and killed in Orlando, Florida, and twin toddlers who died in a hot car in South Carolina.

Driving the news: The bipartisan infrastructure bill that passed the Senate last month would require new motor vehicles to have an alert system that would remind people to check the back seat upon exiting the car.

  • The House expects to take up the bill this month.
  • The law would replace a voluntary commitment by automakers to equip virtually every new car with a rear-seat reminder system by the 2025 model year.

Where it stands: Many new models now come with such reminders via a text message in the instrument cluster, typically accompanied by a chime, when the engine is turned off.

  • I drove a 2022 Nissan Pathfinder recently that annoyingly honked six times at me whenever I walked away from the vehicle; I finally realized it was the rear-seat reminder.
  • I repeatedly dismissed the warning on the steering wheel, but to permanently shut it off, I would have had to tinker with the car's settings.

How it works: Most rear-seat reminders are triggered by "door logic" — that is, the system recognizes that the driver opened a rear door at the beginning of the trip.

Yes, but: that technology doesn't know whether the driver opened the door to put groceries or a purse in the back seat — or to buckle in a child.

  • And it doesn't address the issue of unattended children climbing into a car by themselves — about 25% of all hot car deaths.

What's needed: Cars need more than just a dashboard reminder that can be easily ignored or dismissed by the driver, says Emily A. Thomas, automotive safety engineer at Consumer Reports.

  • They need technology that can actually detect the presence of a car occupant.
  • So far, only Korean models sold under the Hyundai, Kia and Genesis brands have ultrasonic sensors that can detect movement inside the vehicle — but they are not standard on all models.
  • The new Genesis GV70 SUV goes a step further with a more sensitive radar sensor that is able to detect a baby's breath.

What they're saying: Carmakers can — and should — do more, said Janette E. Fennell, president of KidsAndCars.org.

  • "You can't purchase a vehicle today that doesn't automatically turn off your headlights when you get out of the car. Who decided it's more important not to have a dead car battery than a dead baby?"

What to watch: The occupant detection systems that could prevent children from dying in hot cars operate on the same technology that autonomous vehicles will need in the future to detect and monitor passengers, she noted.

Bryan Walsh, author of Future
Sep 15, 2021 - World

The global food price crisis isn't going away

Data: Food and Agriculture Organization of the United Nations; Chart: Axios Visuals

Global food prices have continued to rise throughout the pandemic, and they're now at close to the highest level they've been in decades.

Why it matters: Beyond the hunger and suffering that comes with costlier food, high prices are driving serious political discontent around the world — and there's little relief in sight.

Updated 1 hour ago - Politics & Policy

Pentagon approves request for 100 National Guard troops for "Justice for J6" rally

Security fencing has been reinstalled around the Capitol. Photo: Drew Angerer/Getty Images

Defense Secretary Lloyd Austin has approved a request from Capitol Police to provide 100 D.C. National Guard troops in case law enforcement requires additional support at Saturday's "Justice for J6" rally at the Capitol.

Why it matters: Security preparations have ramped up ahead of the pro-Trump demonstration, where hundreds of protesters sympathetic to the Jan. 6 Capitol attack are expected to gather.

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