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Will car prices ever return to pre-pandemic levels?
If you’ve shopped for a new or used car lately, you know what to expect: high prices and a lack of inventory. The U.S. auto industry has yet to recover from the impacts of the COVID-19 pandemic, which created a labor shortage and a chip shortage that drove up car prices. However, some car prices are starting to decrease, which is good news if you’re shopping for a used car.
As of January 2023, the average new car transaction is worth 6 percent more year over year and 30 percent more than in January 2020, right before national stay-at-home orders commenced. Below are some average new car prices, according to Kelley Blue Book and its parent company Cox Automotive.
Despite the high average price of electric vehicles, EV costs decreased by 5 percent from December 2022 to January 2023 due to price cuts from Tesla.
The Consumer Price Index from the Bureau of Labor Statistics shows that for urban consumers, there was a 3 percent increase in the cost of cars from 2022 to 2023, although the largest increase occurred from 2021 to 2022 — 10 percent year over year. See below for weighted representations of price changes. The higher the number, the more the price changed, on a scale of 140 to 180.1
Month of year | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
---|---|---|---|---|---|---|---|---|---|---|---|
January | 145.9 | 145.9 | 146.6 | 147.5 | 148.8 | 147.0 | 147.1 | 147.3 | 149.4 | 167.6 | 177.3 |
February | 145.9 | 146.4 | 147.3 | 148.3 | 149.0 | 146.8 | 147.2 | 147.8 | 149.5 | 168.0 | n/a |
March | 146.0 | 146.3 | 147.6 | 148.2 | 148.5 | 146.7 | 147.8 | 147.1 | 149.3 | 168.1 | n/a |
April | 146.2 | 146.7 | 147.8 | 147.9 | 148.5 | 146.1 | 147.8 | 147.0 | 149.9 | 169.7 | n/a |
May | 146.0 | 146.7 | 147.9 | 147.6 | 148.0 | 146.3 | 147.7 | 147.2 | 152.1 | 171.4 | n/a |
June | 146.1 | 146.1 | 147.8 | 147.2 | 147.3 | 146.6 | 147.4 | 147.1 | 154.8 | 172.5 | n/a |
July | 145.7 | 146.1 | 147.2 | 147.1 | 146.2 | 146.5 | 147.0 | 147.8 | 157.2 | 173.6 | n/a |
August | 145.3 | 145.9 | 146.7 | 146.7 | 145.7 | 146.1 | 146.5 | 147.4 | 158.7 | 174.6 | n/a |
September | 145.5 | 145.9 | 146.6 | 146.5 | 145.0 | 145.7 | 145.9 | 147.4 | 160.2 | 175.3 | n/a |
October | 145.5 | 146.3 | 146.5 | 146.9 | 144.9 | 145.6 | 145.7 | 148.0 | 162.5 | 176.2 | n/a |
November | 145.6 | 146.5 | 146.8 | 147.0 | 145.4 | 145.8 | 145.7 | 148.1 | 164.5 | 176.4 | n/a |
December | 145.8 | 146.5 | 146.8 | 147.3 | 146.5 | 146.1 | 146.2 | 149.1 | 166.7 | 176.5 | n/a |
Annual average | 145.8 | 146.3 | 147.1 | 147.4 | 147.0 | 146.3 | 146.8 | 147.6 | 156.2 | 172.5 | 177.3 |
Year over year change | n/a | Less than 1% | 1% | Less than 1% | Less than -1% | Less than -1% | Less than 1% | 1% | 6% | 10% | 3% |
As of February 2023, average used-car prices are about 30 percent higher than pre-pandemic costs, but experts believe this is the peak and that prices will decline by 10 percent in 2023.2
Month | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
January | 108.8 | 131.8 | 139.7 | 137.8 | 134.4 | 132.7 | 136.7 | 136.6 | 136.2 | 142.9 | 147.7 | 154.5 | 177.9 | 257.7 | 224.8 |
February | 113.6 | 131.6 | 138.8 | 137.3 | 133.0 | 134.0 | 136.5 | 134.4 | 136.0 | 142.9 | 147.5 | 156.6 | 184.6 | 252.3 | 234.0 |
March | 114.6 | 133.7 | 138.2 | 137.3 | 130.8 | 135.3 | 135.9 | 133.5 | 135.3 | 142.7 | 148.3 | 154.8 | 195.4 | 243.9 | n/a |
April | 116.3 | 134.7 | 138.9 | 736.5 | 129.0 | 135.9 | 735.5 | 733.9 | 136.0 | 144.6 | 151.0 | 137.2 | 211.7 | 241.3 | n/a |
May | 119.9 | 136.1 | 139.1 | 134.8 | 129.1 | 135.7 | 135.1 | 135.7 | 139.5 | 146.4 | 152.3 | 149.5 | 221.5 | 243.0 | n/a |
June | 125.0 | 134.9 | 138.3 | 132.7 | 130.3 | 135.1 | 135.1 | 137.6 | 141.1 | 147.2 | 153.2 | 162.8 | 218.6 | 239.9 | n/a |
July | 127.4 | 133.7 | 137.3 | 131.1 | 131.8 | 133.7 | 735.4 | 138.5 | 142.1 | 149.4 | 153.2 | 172.4 | 213.0 | 239.6 | n/a |
August | 129.2 | 133.8 | 136.2 | 130.7 | 133.4 | 132.7 | 135.7 | 138.5 | 143.2 | 152.4 | 154.2 | 178.6 | 212.1 | 230.0 | n/a |
September | 132.2 | 132.9 | 135.0 | 130.9 | 133.3 | 132.4 | 136.2 | 138.5 | 147.2 | 752.6 | 152.6 | 175.8 | 223.4 | 223.1 | n/a |
October | 732.3 | 135.2 | 135.3 | 732.6 | 132.7 | 132.8 | 136.7 | 137.6 | 148.7 | 753.7 | 153.0 | 176.6 | 244.0 | 218.2 | n/a |
November | 132.0 | 138.1 | 136.6 | 133.3 | 132.8 | 134.4 | 136.5 | 136.1 | 146.7 | 151.7 | 151.5 | 176.8 | 253.6 | 217.6 | n/a |
December | 131.9 | 139.5 | 137.8 | 134.8 | 132.1 | 135.2 | 137.1 | 136.3 | 143.9 | 750.1 | 153.9 | 175.7 | 257.7 | 219.3 | n/a |
Annual average | 123.6 | 134.7 | 137.6 | 134.1 | 131.9 | 134.2 | 136.0 | 136.4 | 141.3 | 148.0 | 151.5 | 164.3 | 217.8 | 235.5 | 229.4 |
Year over year change | n/a | 9% | 2% | -3% | -2% | 2% | 1% | Less than 1% | 4% | 5% | 2% | 8% | 33% | 8% | -3% |
The highest jump in price was from 2020 to 2021, which saw a 33 percent increase in the average price of used cars. As new car prices go up, more people want to buy used cars, leading to an increased demand and, thus, higher prices for buying the latter.
There are a few reasons why car prices are so high:
While used-car prices have already started to decrease, new car prices may stay the same for the foreseeable future, according to Kelley Blue Book.
How many cars are sold in the U.S. per year and how does the number relate to inflation?
The number of cars sold decreased by 28 percent from 2019 to 2020, probably due to stay-at-home orders and the number of people working from home. There was also a decline from 2020 to 2021, but only by 7 percent, meaning people started buying cars more often. 2022 data is not yet available, but we expect less of a decline as supply chains begin to return to normal.4
Year | Number of passenger motor vehicles sold in the U.S. in thousands of units | Year-over-year difference |
---|---|---|
2010 | 3,791 | 7% |
2011 | 4,146 | 9% |
2012 | 5,120 | 23% |
2013 | 5,433 | 6% |
2014 | 5,610 | 3% |
2015 | 5,595 | 0% |
2016 | 5,146 | -8% |
2017 | 4,593 | -11% |
2018 | 4,087 | -11% |
2019 | 3,544 | -13% |
2020 | 2,560 | -28% |
2021 | 2,376 | -7% |
Auto inventory hit a 10-year low in November of 2021, with only 72,900 units in the U.S. However, there has been increased inventory since November 2022, a sign that prices may decrease for used cars in particular.5
Month and year | Domestic auto inventories in thousands of units, seasonally adjusted | Month-over-month difference |
---|---|---|
January 2010 | 743.0 | n/a |
February 2010 | 784.9 | 6% |
March 2010 | 779.5 | -1% |
April 2010 | 784.5 | 1% |
May 2010 | 805.3 | 3% |
June 2010 | 808.8 | 0% |
July 2010 | 814.6 | 1% |
August 2010 | 830.1 | 2% |
September 2010 | 842.1 | 1% |
October 2010 | 841.6 | 0% |
November 2010 | 843.9 | 0% |
December 2010 | 796.7 | -6% |
January 2011 | 794.6 | 0% |
February 2011 | 766.7 | -4% |
March 2011 | 737.5 | -4% |
April 2011 | 699.6 | -5% |
May 2011 | 695.0 | -1% |
June 2011 | 710.8 | 2% |
July 2011 | 721.3 | 1% |
August 2011 | 739.2 | 2% |
September 2011 | 733.5 | -1% |
October 2011 | 750.8 | 2% |
November 2011 | 775.6 | 3% |
December 2011 | 806.7 | 4% |
January 2012 | 859.6 | 7% |
February 2012 | 852.7 | -1% |
March 2012 | 852.2 | 0% |
April 2012 | 877.3 | 3% |
May 2012 | 905.7 | 3% |
June 2012 | 931.5 | 3% |
July 2012 | 999.3 | 7% |
August 2012 | 1014.7 | 2% |
September 2012 | 1020.6 | 1% |
October 2012 | 1040.9 | 2% |
November 2012 | 1056.8 | 2% |
December 2012 | 1067.8 | 1% |
January 2013 | 1074.6 | 1% |
February 2013 | 1077.1 | 0% |
March 2013 | 1105.5 | 3% |
April 2013 | 1125.9 | 2% |
May 2013 | 1149.2 | 2% |
June 2013 | 1163.4 | 1% |
July 2013 | 1119.5 | -4% |
August 2013 | 1147.1 | 2% |
September 2013 | 1166.8 | 2% |
October 2013 | 1198.1 | 3% |
November 2013 | 1211.2 | 1% |
December 2013 | 1231.0 | 2% |
January 2014 | 1248.2 | 1% |
February 2014 | 1281.4 | 3% |
March 2014 | 1277.3 | 0% |
April 2014 | 1250.1 | -2% |
May 2014 | 1227.0 | -2% |
June 2014 | 1223.3 | 0% |
July 2014 | 1263.7 | 3% |
August 2014 | 1242.5 | -2% |
September 2014 | 1230.3 | -1% |
October 2014 | 1222.3 | -1% |
November 2014 | 1230.2 | 1% |
December 2014 | 1218.0 | -1% |
January 2015 | 1222.9 | 0% |
February 2015 | 1244.2 | 2% |
March 2015 | 1232.7 | -1% |
April 2015 | 1241.0 | 1% |
May 2015 | 1250.3 | 1% |
June 2015 | 1232.0 | -1% |
July 2015 | 1248.6 | 1% |
August 2015 | 1245.2 | 0% |
September 2015 | 1230.8 | -1% |
October 2015 | 1185.8 | -4% |
November 2015 | 1167.0 | -2% |
December 2015 | 1156.0 | -1% |
January 2016 | 1131.5 | -2% |
February 2016 | 1118.1 | -1% |
March 2016 | 1120.9 | 0% |
April 2016 | 1120.5 | 0% |
May 2016 | 1104.7 | -1% |
June 2016 | 1119.0 | 1% |
July 2016 | 1142.9 | 2% |
August 2016 | 1152.2 | 1% |
September 2016 | 1162.0 | 1% |
October 2016 | 1157.2 | 0% |
November 2016 | 1177.3 | 2% |
December 2016 | 1156.8 | -2% |
January 2017 | 1150.8 | -1% |
February 2017 | 1134.6 | -1% |
March 2017 | 1147.2 | 1% |
April 2017 | 1158.6 | 1% |
May 2017 | 1170.6 | 1% |
June 2017 | 1158.6 | -1% |
July 2017 | 1109.0 | -4% |
August 2017 | 1073.0 | -3% |
September 2017 | 1016.0 | -5% |
October 2017 | 962.0 | -5% |
November 2017 | 941.4 | -2% |
December 2017 | 923.8 | -2% |
January 2018 | 900.3 | -3% |
February 2018 | 890.0 | -1% |
March 2018 | 896.7 | 1% |
April 2018 | 903.8 | 1% |
May 2018 | 906.2 | 0% |
June 2018 | 871.4 | -4% |
July 2018 | 845.8 | -3% |
August 2018 | 810.3 | -4% |
September 2018 | 775.1 | -4% |
October 2018 | 759.9 | -2% |
November 2018 | 756.2 | 0% |
December 2018 | 762.4 | 1% |
January 2019 | 747.1 | -2% |
February 2019 | 729.5 | -2% |
March 2019 | 708.1 | -3% |
April 2019 | 699.3 | -1% |
May 2019 | 691.7 | -1% |
June 2019 | 691.2 | 0% |
July 2019 | 670.9 | -3% |
August 2019 | 650.9 | -3% |
September 2019 | 644.6 | -1% |
October 2019 | 602.3 | -7% |
November 2019 | 569.6 | -5% |
December 2019 | 533.0 | -6% |
January 2020 | 525.7 | -1% |
February 2020 | 513.7 | -2% |
March 2020 | 584.7 | 14% |
April 2020 | 537.8 | -8% |
May 2020 | 457.0 | -15% |
June 2020 | 452.2 | -1% |
July 2020 | 500.9 | 11% |
August 2020 | 513.3 | 2% |
September 2020 | 506.5 | -1% |
October 2020 | 506.6 | 0% |
November 2020 | 487.0 | -4% |
December 2020 | 469.5 | -4% |
January 2021 | 441.9 | -6% |
February 2021 | 402.7 | -9% |
March 2021 | 355.3 | -12% |
April 2021 | 310.5 | -13% |
May 2021 | 251.1 | -19% |
June 2021 | 196.6 | -22% |
July 2021 | 143.0 | -27% |
August 2021 | 125.5 | -12% |
September 2021 | 82.8 | -34% |
October 2021 | 83.9 | 1% |
November 2021 | 72.9 | -13% |
December 2021 | 81.4 | 12% |
January 2022 | 69.9 | -14% |
February 2022 | 64.5 | -8% |
March 2022 | 77.4 | 20% |
April 2022 | 80.3 | 4% |
May 2022 | 83.3 | 4% |
June 2022 | 94.5 | 13% |
July 2022 | 83.4 | -12% |
August 2022 | 109.1 | 31% |
September 2022 | 115.2 | 6% |
October 2022 | 108.0 | -6% |
November 2022 | 110.4 | 2% |
December 2022 | 118.5 | 7% |
What’s the relationship between inflation and car sales? For most of the past decade, it’s been an inverse relationship: As inflation increased, the number of cars sold decreased. However, since 2020, both inflation rates and the number of cars sold have increased, which means that more people are buying cars despite rising inflation.6
Year | Annual average inflation rate | New vehicle sales in the U.S. in thousands of vehicles | Used vehicle sales in the U.S. in thousands of vehicles |
---|---|---|---|
2013 | 1.8% | 12,364 | 35,776 |
2014 | 1.8% | 12,944 | 36,242 |
2015 | 1.8% | 13,473 | 37,255 |
2016 | 2.2% | 13,251 | 38,602 |
2017 | 1.9% | 13,048 | 39,204 |
2018 | 2.1% | 13,077 | 40,233 |
2019 | 2.2% | 12,817 | 40,807 |
2020 | 1.7% | 11,014 | n/a |
2021 | 3.6% | 11,741 | n/a |
2022 | 6.2% | n/a | n/a |
2023 | 5.6% | n/a | n/a |
Most of us can’t afford to buy cars out of pocket, which is why many people turn to car loans. The APR, or annual percentage rate, is one of the most important factors when choosing an auto loan for a new car. After reaching a low in 2016, higher interest rates are more commonplace nowadays, with a 26 percent increase from the third to the fourth quarter of 2022.6
Month and year | Finance rate on consumer installment loans at commercial banks, new autos 48 month loan | Quarterly difference |
---|---|---|
February 2010 | 6.45% | n/a |
May 2010 | 6.26% | -3% |
August 2010 | 6.24% | 0% |
November 2010 | 5.87% | -6% |
February 2011 | 5.85% | 0% |
May 2011 | 5.79% | -1% |
August 2011 | 5.89% | 2% |
November 2011 | 5.40% | -8% |
February 2012 | 5.07% | -6% |
May 2012 | 4.88% | -4% |
August 2012 | 4.88% | 0% |
November 2012 | 4.82% | -1% |
February 2013 | 4.69% | -3% |
May 2013 | 4.13% | -12% |
August 2013 | 4.46% | 8% |
November 2013 | 4.42% | -1% |
February 2014 | 4.23% | -4% |
May 2014 | 4.50% | 6% |
August 2014 | 4.16% | -8% |
November 2014 | 4.06% | -2% |
February 2015 | 4.53% | 12% |
May 2015 | 4.15% | -8% |
August 2015 | 4.09% | -1% |
November 2015 | 4.00% | -2% |
February 2016 | 4.17% | 4% |
May 2016 | 4.33% | 4% |
August 2016 | 4.25% | -2% |
November 2016 | 4.45% | 5% |
February 2017 | 4.52% | 2% |
May 2017 | 4.67% | 3% |
August 2017 | 4.42% | -5% |
November 2017 | 4.81% | 9% |
February 2018 | 4.74% | -1% |
May 2018 | 5.05% | 7% |
August 2018 | 5.05% | 0% |
November 2018 | 5.29% | 5% |
February 2019 | 5.50% | 4% |
May 2019 | 5.35% | -3% |
August 2019 | 5.27% | -1% |
November 2019 | 5.45% | 3% |
February 2020 | 5.29% | -3% |
May 2020 | 5.13% | -3% |
August 2020 | 4.98% | -3% |
November 2020 | 4.95% | -1% |
February 2021 | 5.21% | 5% |
May 2021 | 5.28% | 1% |
August 2021 | 5.14% | -3% |
November 2021 | 4.58% | -11% |
February 2022 | 4.87% | 6% |
May 2022 | 5.15% | 6% |
August 2022 | 5.52% | 7% |
November 2022 | 6.94% | 26% |
In November 2022, car loan rates reached a record high of nearly 7 percent.
Insurance providers use a number of factors to determine car insurance rates, and one is the value of the car itself. More expensive cars tend to cost more to insure, as they have higher repair and parts costs. However, insurance providers also consider vehicle safety ratings, i.e., how susceptible the car is to theft, occupant injury, and damages, along with how well it protects drivers and passengers in car crashes.
Whether you’re buying a new car or a used car, it’s important to know what you can expect to pay. But if you want to spend less, you may want to wait until prices are down. In the meantime, use your current car or rely on rideshares or public transit. If you wait, you could save thousands on the sticker price and potentially find lower auto loan rates for new cars.
We analyzed data from the following third parties:
The car market will go back to normal once car inventory returns to pre-pandemic levels. However, as long as inventory remains low, prices will remain elevated.
The best time of year to buy a car is December, as most dealerships have holiday sales. Other good times include any three-day weekend, like Presidents Day weekend, and Black Friday. If you can’t wait for the next holiday, go toward the end of the month or year, as salespeople will be more motivated to sell vehicles at lower prices to make their sales quotas.
As of February 2023, the car chip shortage is not over, and car production is down for some manufacturers. Ford, for example, blamed low 2022 fourth-quarter sales on a lack of chips. Its Chief Financial Officer, John Lawler, said there will continue to be volatility in the availability of chips in 2023.
Auto Forecast Solution predicts this shortage will affect nearly 18 million vehicles in 2023. With a lack of inventory due to the chip shortage, new car prices are not expected to reach pre-pandemic levels this year.
The following 2021 cars are not affected by the chip shortage, according to ACV Auctions:
Databases, Tables & Calculators by Subject. U.S. Bureau of Labor Statistics. (2023).
https://data.bls.gov/timeseries/CUUR0000SETA01?output_view=data
Manheim Used Vehicle Value Index. Cox Automotive and Manhiem (2023, Feb).
https://publish.manheim.com/content/dam/consulting/ManheimUsedVehicleValueIndex-WebTable.png
When Will New Car Prices Drop? Kelley Blue Book. (2023, Feb 16).
https://www.kbb.com/car-advice/when-will-car-prices-drop/
Annual U.S. Motor Vehicle Production and Domestic Sales. Bureau of Transportation Statistics. (2023).
https://www.bts.gov/content/annual-us-motor-vehicle-production-and-factory-wholesale-sales-thousands-units
U.S. International Trade in Goods and Services, January 2023. Bureau of Economic Analysis. (2023, Mar 8).
https://www.bea.gov/
Finance Rate on Consumer Installment Loans at Commercial Banks, New Autos 48 Month Loan. Federal Reserve Bank of St. Louis. (2023, Jan 9).
https://fred.stlouisfed.org/series/TERMCBAUTO48NS
Databases, Tables & Calculators by Subject – 12 Months. U.S. Bureau of Labor Statistics. (2023).
https://data.bls.gov/timeseries/CUUR0000SA0L1E?output_view=pct_12mths