The Biden administration and Federal Reserve members have been insisting inflation is transitory. But new, used car data shows prices continue to soar, suggesting inflation is anything but transitory.
Anyone shopping for a used car since the virus pandemic began has been hit with extraordinarily high prices as snarled supply chains and chip shortages crimp new car output, pushing consumers onto secondary markets.
The Manheim Index, the most recognized wholesale used-vehicle price index by financial and economic analysts, shows that used car prices rose 4.9% in the first 15 days of November compared to October. The overall index has jumped 44.9% from November 2020.
"As was the case in October, some of the monthly increase is a result of the seasonal adjustment, as November typically sees above-average vehicle depreciation and therefore used price declines. The non-adjusted price increase through mid-November was 2.6%," the report said.
The report suggests that used car prices will remain high while automakers continue to work through supply chain woes into next year. There are rising probabilities of price fluctuations up and down.
Ford's CFO John Lawler warned earlier this month that supply constraints could continue into 2022 and said, "we'll be dealing with [supply chain issues] for a while." This means used car prices might rise even further through year-end.
Consumers will have to get used to paying a very high sticker price for a used car. Shown below is the average used car price surges as the available supply sinks.