The Middletown Press (Middletown, CT)
Falling used car prices offer some relief
With fuel prices remaining high in Connecticut and nationally, a small subset of drivers may be getting a break from runaway inflation — those scouting for a used car.
Used car prices dropped 3.8 percent on average in March, according to a Bureau of Labor Statistics assessment of prices released Tuesday spanning major components of the consumer economy like housing, energy, food and medical services.
It marked the second straight month BLS has estimated a decline nationally in used car prices, which remained 35 percent above the average of March 2021.
BLS estimated New England consumers saw prices overall rise 1.4 percent between February and March across all products and services it tracks. Prices in the region are up 7.4 percent from last year, below the overall U.S. increase of 8.5 percent.
Only gasoline and heating oil have seen bigger increases, with warmer temperatures in April easing the strain for homeowners, and Connecticut electing to suspend its gas tax through June to help drivers.
The COVID-19 pandemic forced many people and businesses who needed a car to opt for used models, as cargo ships idled that contained computer chips and other needed parts for vehicles manufactured in the United States. That triggered a spike in prices, as dealer inventories shrank and they were forced to pay more for replacement vehicles.
“Perhaps the biggest gift for all the pain we’re going through now in semiconductors is that we have very painfully learned the lesson that we cannot manage the supply chain for these key components as we have,” Ford CEO Jim Farley said during a February conference call.
This spring, there are plenty of used vehicles available. Edmunds.com listed more than 147,000 for sale this week in Connecticut and bordering towns in New York, Massachusetts and Rhode Island.
But of that stock, fewer than 800 cars were being marketed for below $10,000. Of that smaller group, Edmunds’ algorithms identified less than 250 vehicles as
representing a “good” or “great” value based on comparisons to similar models factoring in mileage and other criteria.
On Tuesday, CarMax reported it closed out the final three months of 2021 with prices up 40 percent from a year earlier — or $8,300 for each car sold — due to limited inventories for used vehicles. Speaking Tuesday on a conference call, CEO Bill Nash said it is difficult to predict when the industry will see prices ebb to normal levels.
“From a retail standpoint, we did see a shift to a little bit older car, which obviously is a little bit cheaper,” Nash said. “From an affordability standpoint, you’ve got interest rates going up, inflation, you’ve got the Ukraine-Russia war. There’s just a lot weighing on the consumer right now.”