You’ve heard the saying before: your car depreciates in value the moment you drive it off the lot.
But, while that is still true in general, the pandemic has challenged that notion in recent years.
According to the Used Cars and Trucks component of the US Consumer Price Index, shown in the chart above, used cars are the new appreciating asset!
I’m joking. But seriously, after staying relatively steady for the past three decades or so, used car and truck prices have gone vertical, increasing by more than 50% since the start of the pandemic.
Widespread semiconductor chip shortages and a prolonged inventory crunch at car dealerships have really turned the used-car market upside down. This is primarily due to the pandemic and its disastrous effects on global supply chains.
At some point, these pressures will (hopefully!) subside. But, until then, large price increases in things like used cars will continue to boost the overall inflation rate in the economy.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.