This is why automotive costs are so excessive, and why that issues
CPI climbed to a 13-year high in May, with prices up 5% compared to a year earlier. But about one third of that increase was due solely to the price of used cars.
Used car prices shot up 30% in the 12 months leading up to May, just below the record one-year increase for used car prices reported in 1975.
According to Edmunds, a go-to resource for car information, the average used car price hit $26,500 in June, up 27% from a year ago, while the average new car transaction price is $41,000, up 5%, virtually the same as the average sticker price of $41,500.
Record high prices for both used and new cars is more than an annoyance: It’s an economic problem that weighs heavily on household budgets. About 40% of US households make a car purchase of some sort every year, and this year there could be even more due to pent-up demand from purchases delayed in 2020.
Why used car prices are rising
Car prices have risen for a variety of reasons, but they all boil down to two factors: high demand and…
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