What’s Behind the Stunning Spike in Used Vehicle Auction Prices? That Consumers Aren’t on Buyers Strike Shows Something Big about Inflation Has Changed

Need a used pickup truck? Forget it, or pay out of your nose for it. But even spurned mid-sized cars are seeing stunning price increases.

By Wolf Richter for WOLF STREET.

Prices of used cars and trucks of up to eight years old that were sold at wholesale auctions during the week ended March 21 jumped by 3.1% from the prior week, according to data by J.D. Power on Friday. Over the past four weeks, prices have spiked by 8.3%. Compared to early March 2020, just before the end of the Good Times, prices have spiked by 19.5%:

When you talk to dealers that came back from auctions to buy vehicles to replenish their inventories, they tell you with an exasperated voice about prices being bid up to ridiculous levels, particularly on trucks. But they’re in the business of buying and selling vehicles, and they have to replenish their inventory, and so they’re buying, and in order to buy, they have to bid up prices, and they’re planning to pass those ridiculous prices plus adequate profits on to their customers.

And in a big change with past practice, the astute American consumer that haggled and shopped to get the best deal has not been resisting the price increases that started last year — but has been paying them.

Manheim, the largest wholesale auto auction operator and a unit of Cox Automotive, reported in its mid-month update that wholesale vehicle prices mid-March had jumped by 3.75% from February, based on its Used Vehicle Value Index (adjusted for mix, mileage, and seasonal factors).

The index is now 22.3% higher than in February 2020, before all heck broke loose, the largest 13-month increase in the data going back to 1998, beating the 13-month surge of 20% in 2010, following the cash-for-clunkers program that had taken a whole generation of serviceable older used vehicles off the market:

Need a used pickup truck? Forget it. Or pay out of your nose for it. Prices across the major categories have exploded – but amid these price spikes, pickup truck prices stand out with a stunning bang-your-head-against-the-wall price spike of 43%.

Maybe buy a new truck instead? Well, in theory. In reality, inventories of new pickups are tight and are now also tangled up in semiconductor shortages that have caused assembly plants to cut production.

But even in categories that Americans have long pooh-poohed and spurned, auction prices soared, up 15.9% for mid-sized cars up by 10.5% for compact cars:

I’m wondering how the Bureau of Labor Statistics, which puts together the CPI, will adjust away in its retail used vehicle CPI those price spikes when they filter into retail sales. Its infamous hedonic quality adjustments will have to be whipped into frenzy. Its used vehicle CPI for February had nevertheless surged 9.3% year-over-year.

Sales volume at auctions around the country has been running below the levels before the Pandemic, with sales in the range of 90,000 vehicles per week, compared to about 110,000 vehicles per week early last year during the Good Times. But they’re ticking up. Last week, auction sales exceeded 94,000 for the first time since August, according to J.D. Power:

Manheim reported in its mid-month update that used vehicle inventories are somewhat tighter than normal. Wholesale supply at auctions stood at 19 days of sales, when 23 days’ is normal. Used vehicle retail supply on dealer lots stood at 34 days of sales, also below normal levels.

A supply issue has crept into the used vehicle market via new vehicle sales. Fleets, largely rental fleets, represented about 20% of new vehicle sales in 2019. Over 3 million vehicles went to fleets.

But in 2020, sales to rental fleets collapsed, as rental car companies slashed their orders. Rental fleets shed some of their older units. But the way they brought down their fleets was by slashing the flow of new units coming into their fleets.

Because the vehicles in their fleets were driven less and accumulated fewer miles, given the plunge in demand from airport rentals, they didn’t need to replace them as quickly with new vehicles as they would normally. The slower pace at which they’re offloading their vehicles is now lowering supply on the wholesale market.

But the wholesale market is still fairly well supplied. It’s not like there is a shortage of wholesale units. It’s just that prices have gone nuts.

Dealers are not awash in inventory by any means. And as always, the hottest models are hard to come by. But retail sales of used vehicles since last summer have been running below 2019 levels. So it’s not a tsunami of demand for used vehicles that is causing these blistering price spikes.

But there is the fact that consumers are now going along with price surges on dealer lots – rather than going on a buyers’ strike as they have done in the past. And the fact that they’re paying those prices indicates that something big has changed at the consumer level, that consumers are now willing to eat those price increases, which makes those price increases at all levels possible.

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  206 comments for “What’s Behind the Stunning Spike in Used Vehicle Auction Prices? That Consumers Aren’t on Buyers Strike Shows Something Big about Inflation Has Changed

  1. Augusto says:

    It seems logical…if the country is going to open back up and people have to go back to work they will need a vehicle. The “rich” have indulged themselves during the pandemic by buying new vehicles, while the poor have put off replacing or buying a car (maybe one of the reasons for high used car inventory?). The working class can afford and generally drive used cars, so as I said, it seems logical that prices have taken off given where we are now. No doubt the sales people know buyers are at a point where they have to buy, and can squeeze them.

    • Wolf Richter says:

      People drove a lot less during lockdown and work from home, and put fewer miles on their vehicles. So the demand for used vehicles should be down (and it is).

      • Anthony says:

        Different country, same stuff. Here in the UK, I took my car for its yearly MOT (to make it legal) and it had done 889 miles since last year.(yes we still use miles in the UK not French Kilomètres)
        Talking to my garage, we laughed that people were turning up with 100 miles on the clock for one years driving.

        • marc says:

          Kilometers are metric, not French, and as such are used in 99% of the world.
          The outliers feel weird and they should.
          Soon to be the first totalitarian health dictatorship.

        • CRV says:

          @Marc

          Totally off-topic of course:

          Anthony was right, calling the mètre French. The Metre was introduced by the French in 1795 during Napoleons reign.
          Because the French conquered almost all of Europe, every mainland country adopted the metre as unit of length. He never managed to conquer Great Britain, so that kept the mile/yard/foot.
          As a side note for fun. Napoleon also introduced that everybody should be registered in a county base administration with a surname. That was round 1800. A few people thought it would be abolished after Napoleon would leave and came up with funny names. In my country, the Netherlands there still exist surnames like: ‘naaktgeboren’ (means ‘born naked’) or ‘poepjes’ (means ‘little farts’). Haha.

        • Paulo says:

          Looking at my fingers typing this, it’s just a wee bit easier doing metric calcs in base 10, than inches and feet, pounds, stone, yards….whatever.

          My Irish buddy on his trip to Greece years ago, “3 weeks and I gained 2 stone”. Righhhhhht. You mean you got fat?

          Economic link: How many cents in a dollar? How many pence in a pound? 100, both. There used to be 240 pence in a pound because 240 silver pennies weighed one pound of silver.

          If we go back to the gold standard watch out!

        • Ross says:

          Of course it is the singular French alleged contribution to the world. And French fries… ;0

        • SwissBrit says:

          Ross,
          ‘French Fries’ are Belgian in origin, and in French are simply called frites, or fries. The Belgian version is generally thicker cut however, much like English chips (what those in the US call chips, we call crisps, but that’s a whole other topic of conversation), and the Belgians traditionally serve their frites with mayonnaise.

          The metric measurement system clearly makes far more sense than the old imperial measurements (even though I grew up using both).
          A change to decimal time was proposed at least once but thank goodness that never caught on.

        • Dangerous Dave says:

          Anthony,

          I’m also in the UK – London area, within the M25. Small and medium sized second hand cars (hatch backs etc) have been selling for over the odds. It would appear that this is because people that would normally use public transport have been bothered about the virus, so they feel safer in a car right now; the restrictions on buses aren’t helping either.

        • NBay says:

          SwissBrit, et al.

          Just to add my 2 cents to this interesting totally off topic thread, our present time measurements date back to Sumeria/Babylon, where they used base 60. Anthro guys have oldest clay writing tablets known, showing it in Cuniform (reed end based writing).

          Anyway, they figure it came out of merchants using thumb to count fast to 12 on one hand (use thumb to touch finger bones) and sets of 12 on other hand. (5×12=60).

          Dozen, degrees in a circle, time (60 sec=hr), etc, all came out of this…..around 4000 years ago.

          Some things take a long time to change.

      • DanS86 says:

        So the dealers are flipping among themselves. Thank the Fed once again.

        • El Katz says:

          @DanS86:

          No, they’re not “flipping” among themselves. Certain brand dealerships have a certain clientele. A GMC dealer doesn’t likely do well with a Mercedes SUV and the Mercedes dealer doesn’t likely do well with a Kia.

          It’s a normal part of the business…. Most dealerships keep used vehicles @45-60 days and then sell it to a gypper or run it through the auction. A miled up worn out car will go to a pot lot.

          Nothing new there.

      • rich says:

        It’s a new mindset. People are also paying all the money for used houses, new appliances, building materials, and Wall Street securities. Raising interest rates, shortening amortization periods and ending the Government stimulus money giveaways would bring these high flying prices back to earth. But that ain’t going to happen. Welcome to the wonderful world of massive inflation, where FOMO is a driving force.

      • Obvious says:

        One used car dealer has recently sold 58 used cars. All sold for $8,000 or less. Why? People of modest means recieve stimilus checks, tax refunds and/or Earned Income Credit (EIC), about the same time this year.

      • Bart says:

        Wolf, I know you have industry experience. If demand is down, why are the auction prices jumping? Not enough inventory? I would think demand for used and new is down since people drive a lot less except I guess for people who left cities and now need a car or two. A few years ago, a BOA auto analyst said the used vehicle market would crash by an exorbitant amount due to record off lease vehicles flooding the market but it never happened. I think this whole chip shortage will be history by July.

        • Wolf Richter says:

          Bart,

          Prices are in part psychological. That’s why you have manias. Rationality gets left behind. Yes, inventories nationally are not huge, but there is no shortage either. And there is no huge surge in demand to justify these price increases. Overall used vehicle retail sales have been tracking lower compared to 2019 since last summer. I have seen tighter inventories and more demand before, but I have never seen these types of price increases.

    • Depth Charge says:

      A 45% increase in a used vehicle price seems “logical” to you? Pretzel logic?

      • Augusto says:

        No pretzel logic, just a different perspective. A lot of people talk about about Supply and Demand, but in truth a lot of deals are about Need and Want. Like, You Need this Car and I Want This Amount for it (because I can get it}.

    • intosh says:

      “people have to go back to work they will need a vehicle”

      So you mean all the vehicle people own before the pandemic just vanished?

      • El Katz says:

        @intosh:

        “So you mean all the vehicle people own before the pandemic just vanished?”

        They may have let their leases mature and turned the car in as there was no need for it any longer…..

        • intosh says:

          which would mean those “turned in” cars would add to the used-car-for-sale inventory.

          So why is it “logical” that used vehicle prices spiked again?

          My point stand: did those vehicle owned pre-pandemic vanish?

    • fajensen says:

      Could also be that people are expecting to be fired and they want to get their financing done now, while they still can?

      With zero and negative interest rates “for ever”, it doesn’t matter what their debt is.

    • K says:

      True. However, in expectation that inflation will take off, whether hyperinflation or merely regular but high inflation, I have been purchasing necessary things, like new computer parts. Those will rise in price particularly as what happened in 2019 to 2020 is assessed in hindsight.

      It is much cheaper to take steps to weaken, boycott, and stop a growing threat than to later have to fight a major war. It will occur to our leaders eventually that this is a clear truism.

      Remember the shortages and inflation that occurred during the world wars. Read what was the financial cost of world war 2 in money wise and how the dollar’s purchasing power diminished due to it.

  2. cas127 says:

    Wolf,

    Excellent, useful charts (and with data that shows up quickly – very helpful as an indicator).

    I have little idea what might be behind these goofy numbers.

    Unneeded PPP giving usually very careful dealers a nitrous high?

    Saved unemployment premia for now working individuals coming out of savings?

    With 10 million fewer working yr over yr, it is hard to see where the demand is coming from.

    As you pt out, the volumes are down, which can really distort the sold product mix (see…housing) and therefore the median sale price.

    That might make the most sense.

    • cas127 says:

      The product mix price distortion effect is the precise reason why the Case Shiller Housing Index uses “matched sales” of the exact same properties over time.

    • WyleeEconomist says:

      A couple of guesses…

      Everyone knows interest rates are only going to go up from here, so get in while you can afford more.

      Second, flexible financing, as Wolf has mentioned in previous posts you can now finance a vehicle for up to 84 months…

      So rush in now get your vehicle with creative financing at the lowest price you can… Worst case beg for forbearance and hold on to the vehicle as long as you can.

      There are vast swaths of this country that HAVE to question their masculinity if they do not own a pickup truck… preferably the tallest one they can afford… So they will finance the biggest truck they can to secure their fragile masculinity…

      Mine is the 2020 Energi (fully loaded) I bought for cash at the worst of the new car sales dip for $15k… with an MSRP of $36k… Sure it’s not cool… but I have over $600 a month more in disposable income to console myself with… or rent a truck on the rare occasion most people actually need a 15mpg vehicle…

      • Hernando says:

        Mine is a 2019 4 door gray tacoma – I had to have one after watching the ending to Back to the Future with my kids. My wife said okay. Love my taco and my “masculinity” especially when I park it next to my prius… kids love my taco too and the moon roof and the heated leather seats…. and the ability to toss all of our gear into the back including bikes.

        • Anthony A. says:

          That’s the best buy in a pickup. You can’t hardly find good used ones around here.

        • Joe Saba says:

          I bet I can fit YOUR PRIUS in back of my F350

        • SwissBrit says:

          Joe Saba,
          A Prius is apparently 14’11” long and 5’9″ wide and a F350 long bed is 8’2″ long and 5’4″ wide, so I wouldn’t make that bet if I were you.

      • Eastwind says:

        I’m with you on the psychology. Saw an article that worries about inflation are widespread, especially among younger people. The expectations and worries are running ahead of the actual reported inflation (if you believe the CPI). So it becomes pay more now or pay even more later. Just the sort of thinking the Fed has been looking for.

        If it’s not due to inflation expectations then the used car salesmen are spinning some BS about covid to justify the higher prices and people are swallowing it.

        • Hernando says:

          I’m not sure how there can be inflation if salaries and minimum wage also do not go up to meet the price on supply.

          It seems like inflation is temporary. Basic econ says, decreased output increased price- this is what is happening in housing.

          With trucks? Stimulus money and forbearance cash… I figure. A 50,000 dollar truck that is overvalued, is much easier to get than a 1million dollar home.

          Everyone feels rich who doesn’t have to pay a mortgage or rent.

          I was wondering today if a person could buy a house and immediately go in forbearance for the heck of it.

    • Wolf Richter says:

      cas127,

      Used vehicle price indices are based on same model, same year, similar package, similar condition (miles, etc.). This is not an average of all cars going through auctions. That would be nuts.

      They’re comparing 2018 Fusions similar same package over time, and F150s same package over time, etc. And then they form an average based on each model and model year. There are millions of vehicles going through auction every year. Everything is documented, down to the conditions and miles. The market is very liquid and the sample size is huge.

      Dealers have had access to this data by model, model year, mileage, package, etc. for many decades. So it’s not hard to make a solid index out of this data.

      The National Association of Automobile Dealers (NADA) used to provide these pricing guides. J.D. Power purchased the NADA pricing guide a couple of years ago. So now it’s JD Power that provides the data.

      • VintageVNvet says:

        Thanks for this clear update of the used vehicle situation Wolf, great reporting once again, and interesting to see why NADA no longer is the go to source.
        Very tempted to sell my 19 Ram after reading this and then going to a couple CL locals and seeing tons of used trucks priced at up to $75,000.00 USED for God’s sake.
        As mentioned above, put less than a K on it last year, and not sure we are going to be able to go across USA as we love to do to see family and friends and our great countryside, due to the now strong possibility of another ”wave” of the covid and its variations.
        While it is clear another wave is happening some places at this time, we will be watching closely to see if it is going to stop our peregrinations again.

    • c smith says:

      “I have little idea what might be behind these goofy numbers.”

      $3 trillion in new cash flowing into the economy via “stimmy” (with no concomitant increase in production) might have something to do with it.

  3. David Hall says:

    Chip shortages have shutdown auto assembly lines. Last year Hertz was selling its cars cheap to pay bills after air traffic was brought to a near standstill.

    In Florida most of the airports were sold out of rental cars for spring break. A rental car in Hawaii was rented for $500 a day.

    At DCA business travelers used to fly in on Mondays, picked up keys to their rental cars, then returned their cars on Friday and flew home. I suppose they may have switched to Zoom to cut corporate travel costs.

  4. interesting says:

    Not socking at all IMHO. I know a guy that drives for an auction and he’s been slammed. Seems all the drug addict’s are cashing in their $15K free money for never working checks on new used cars.

    AND I know for a fact that many have……don’t ask me how I know this.

    I know way to many part timers that are still earning double thanks to all this “stimulus”……….in the first round many were earning triple.

    A buddy and I were just talking about this over billiards….and he said “everyone is driving new (used) cars”….

    • Depth Charge says:

      Exactly. This whole situation is one of the most disgusting ripoffs of the American taxpayer and future generations in history. Paying people up to 4x their previous income, AND allowing them to stiff the landlord on top of it has led to an absolute orgy of consumption. It’s the most sickening thing I’ve ever seen, and politicians and central bankers need to be stopped at whatever cost. They are destroying the country so people can go shopping.

      • Wisoot says:

        Greed feeds greed

      • Anthony says:

        Depth Charge…

        it was the economist Keynes who came up with the idea you could borrow your way out of debt. When asked around 1921, how future generations could afford to pay all the interest, he just laughed and said he didn’t care because we will all be dead….

        • cas127 says:

          Yeah, I’ve always hated that “In the long run, we will all be dead” quote…not least of which because it is inaccurate.

          Children (or their children) won’t be dead…just shamelessly indentured.

          That particular Keynesian sneer was an early indicator of a psychopathic self centeredness that came to permeate the “leadership” classes of the West.

          Telling governments that they could deficit spend their way to Paradise was like telling cocaine addicts that crack would make them smarter and more sexy.

          You weren’t gonna get a lot of pushback from congenital degenerates.

          And we haven’t.

        • VintageVNvet says:

          Good one c10, especially re ”That particular Keynesian sneer was an early indicator of a psychopathic self centeredness that came to permeate the “leadership” classes of the West.”
          Had not realized it was he who had started and / or exacerbated that trend,,, always thought it was Fraud and his generation of entitled and entitling apologists blaming/excusing all the troubles/bad behaviours of the upper and upper middle classes on their parents, etc. LOL

        • Depth Charge says:

          “Telling governments that they could deficit spend their way to Paradise was like telling cocaine addicts that crack would make them smarter and more sexy.”

          Follow the money. Look who got fantastically wealthy off of these lies. They swindled the country and its people.

        • Nat says:

          Debt is *NOT* what Keynes said his famous “in the long run …” to. He said that about economic theories that themselves claimed they would fix problems only “in the long run.”

        • Tom Pfotzer says:

          Thank you Nat for setting the record a little straighter.

          Keynes wasn’t a bad guy; he said “debt-financed gov spending is for getting the economy going when all other spenders (biz and consumer) are not spending (scared to spend). When the economy gets going again, pay down that debt”

          It’s a perfectly reasonable solution, and it works. The problem is that the debt never gets repaid. Why? because we the peeps don’t insist that is repaid.

          We prefer to get more free stuff. Perfectly understandable, but maybe not a great long-term idea.

      • Scott says:

        I’ve heard from more than a few people that the shortage of Uber drivers in my neck of the woods is because drivers are receiving more on unemployment than by working which certainly seems counterproductive.

        • David G LA says:

          @scott
          Not hard to believe considering many Uber drivers actually lose money when they drive.

        • Kurtismayfield says:

          Or maybe the company has run out of marks to prey on. A lot of Uber/Lyft drivers never take their costs into account until they do their taxes

      • cas127 says:

        Depth,

        You’ll have to step me through how people get to 4x previous income (I might buy 1.5 times, maybe), but I did forget about the rent suspension’s effect on personal income (I wonder if the gvt stats cover that particular goosing of personal income…my guess is that they don’t since the G itself isn’t out money).

        So, with a 30k income that went to 45k with the unemployment premium and maybe an extra 10k in forgone rent for a yr bringing the total to 55k, the bizarro world expansion in time of pandemic starts to make some more sense.

        A 40k pre C19 income would generate a 70k pandemic income…but these bumps are mostly contingent on the unemployment premiums.

        Does anybody have the aggregate figures for the past yr’s increased G outlays for unemployment?

        • RightNYer says:

          I’d also add in the no strings attached “stimulus,” which can be another $10k for a family of four.

        • Depth Charge says:

          “You’ll have to step me through how people get to 4x previous income (I might buy 1.5 times, maybe)”

          They’re not my numbers, it was from a study I read in the past month. I will look for it. The 4x was the extreme, of course, but it found that nearly 65% of people were earning more than their previous salary. IN NO SITUATION, should somebody get more for being unemployed that when they were working. This was a garbage job by politicians not putting a rider in there that said “up to but not to exceed previous salary.” Why should a Walmart worker risking COVID every day at work be paid less than their laid off counterpart sitting on the couch getting high all day?

        • joe2 says:

          I think you can get to 4X if a family collects all the Government benefits for not working and then works under the table for cash, max your family stimmy payments, defer your rent and then skip out. And then calculate “after tax”.

          Politicians can not complain about average people following their lead in a lax attitude to law.

      • Kaleberg says:

        The other great rip off was the American Revolution. We still owe the French. (I’d use the World War II debt as an example, but a lot of people these days think we fought on the wrong side being anti-fa and all that.)

    • Depth Charge says:

      By the way, this has nothing to do with the “1,400 stimmy” as people like to call it. It is the PUA nonsense. People can actually qualify for it even if they’re still working. Worse, I have heard from contractors that the laborers and such are claiming regular UE, the PUA, AND still working under the table. This country is finished.

      • MonkeyBusiness says:

        Land of the Free.

        Not sure why people are complaining. The ultimate freedom is freedom from responsibilities even moral ones.

        Look, if people don’t spend, we can’t build that “Shiny city on the hill”

        ROFL.

        Btw, looks like I am leaving this country later this year. I will be glad to watch the Titanic from a place far away.

      • interesting says:

        “are claiming regular UE, the PUA, AND still working under the table”

        Spot on. The level of grift in all this is off the charts….to some this virus has made them……in their words…….rich.

        • Jon says:

          In Southern California most of the people in handyman cleaning or low paying jobs.. all get cash and then get lot of government benefits aka $$ as well.

          Not complaining.. government has helped billionaires amassed trillions.. these are hard working lower middle class people

          Sad thing is.. all is partially paid by people like me and borrowed from the future

      • rhodium says:

        That’s the problem with any sort of welfare (although that doesn’t mean the intention of welfare is wrong). If it’s designed in a way that’s ignorant of malincentives you better believe people will respond to them regardless of what’s right or wrong. Most people, regardless of what they say, have a tendency towards hedonism when comes down to it. That goes for the rich and the poor. Get politicians throwing out money in a time of crisis and off course this is what you get, but now the crisis is ending, so this is their chance to try and clean it all up and make it fair. If they don’t, people will get pissed and vote them out, which probably will happen given the track record.

    • nodecentrepublicansleft says:

      1) ‘Drug addicts’ are saving $15K and buying used cars.

      2) You know some of these “drug addicts”.

      3) Your buddy said “everyone is driving new (used) cars”…

      Man, I gotta get out more often….

    • Eugene says:

      Part timers are not allowered to get unimployment by law in NYS,(20hours and less)

    • Kaleberg says:

      How did he get $15K in stimulus money to spend on a car? Did he stop paying rent? Most of the people I know got $2-$3K total. Those I know that got enhanced unemployment insurance had to piss it off on rent and other living expenses. If he was a drug addict, you’d think he’d spend the money on more and/or better drugs, not a vehicle.

      P.S. Are there still worth-while cars out there for $15K?

  5. Anthony A. says:

    I went to the largest Hyundai dealer here in the Houston area (Ron Carter) last weekend to look at leftover 2021 SUV’s. The dealership was absolutely swamped with people looking to buy cars. I’ll bet they have 25 floor salesmen and all were with “marks”. The place was nuts.

    I had to wait for an hour for one salesman to free up so I could be waited on. I looked at a few SUVs and didn’t see what we were looking for. New inventory was thin. Well, while waiting I was fed free BBQ and “fixins” so it was worth the wait (they had a roach coach at the location).

    It was like Saturday morning at Costco at this dealership.

    • Chase Metz says:

      Free money. With an age of mid to late 60’s I was adjusting to the concept of finding a path to economic sustainability outside the comun by the early ‘70’s and when Saudis realized we were giving them non redeemable scrip, all heck broke loose. Just watch what happens when this happens with both energy AND goods.

  6. VV says:

    Wolf

    Was shopping around for the new Chevy Tahoe Highcountry. Driving in with my 2015 Chevy Silverado LTZ with 48k
    miles.
    The one serious dealer was supposedly offering me the Tahoe @100 over invoice..yea right! if I traded in the PU. Don’t want to.. Tis mint condition. I do Autobody seminars. The finish even in the box is perfect.
    Me thinks I’m going to wait till the car market gets back to something normal ie supply side.
    Kind of a head scratcher though. Built our 3800 sq ft house on 10 acres in 76 for 68k, interest was @9.25% with 20% down. 704.65 month included property taxes.
    Now a vehicle at or more than that.
    Eeeks!
    Am kinda wondering too how the auction buyer at the dealership you were at, bought vehicles at auction? You put together what was needed or you just trust the buyer to do whats right?
    Thanks much for all you do to keep us all informed!
    Good thoughts to all!

  7. Depth Charge says:

    I am self employed and I am raising my rates to account for all of this inflation. I have more clients than I can service anyway. There’s too much work out there. I will be charging 50% more this year for the same work, and I’ll get it.

    • MiTurn says:

      Yup, we are hearing the first hoofbeats of rampant inflation.

    • Swamp Creature says:

      My favorite Locksmith company announced he is implementing a 20% surcharge for any jobs in the Swamp. Sited high crime, bad roads, no parking, corrupt police, etc. My landscaper won’t take any work there anymore. Had all his tools ripped off while he was doing a job in broad daylight.. I think we should do the same with our business, but we can’t. We are under “Wage Controls” . I can see Jerome P and Biden instituting wage and price controls when inflation gets out of control.

      • Depth Charge says:

        My increase is “hidden,” so to speak. They don’t know my rate has increased drastically. And materials are lalaland now, too. But there is too much work so I don’t mind losing jobs. They’re usually the people who want to nickel and dime on price anyway.

        I am so busy that I had to turn down massive amounts of work last summer. I will make more this year than ever, I think. The money is just sloshing around. I save, they spend. We’ll see who comes out on top at the end.

      • Depth Charge says:

        “My landscaper won’t take any work there anymore. Had all his tools ripped off while he was doing a job in broad daylight.”

        This reminds me of a story years ago, during the last housing bubble and near the peak. Landscapers were doing huge commercial development installs – new trees, shrubs, etc. – only to get a call from the client shortly thereafter that all of the plant material was gone. Other landscapers were showing up and taking everything but the largest of trees because they weren’t rooted in. They could easily swipe $5,000+ of new plants, using them for their own jobs.

        • Swamp Creature says:

          There’s a lot of houses being torn down in my neighborhood to make way for monster homes. It is common practice to loot the lot for all the healthy plants that are still remaining. I went by one yesterday and didn’t see anything worth doing such a seedy thing. I think all the good ones were already taken. Anyway I have enough plants.

  8. Depth Charge says:

    When reached for comment, Jerome Weimar Boy Powell replied that he could see no sign of inflation anywhere, and that he remains at the ready with a new program called QE to the QE. “It’s like a factoring thing, you know, ten to the tenth power. We are nowhere near out of bullets.”

    • MiTurn says:

      Depth Charge, I love that: “Jerome Weimar Boy Powell.”

    • Heinz says:

      You can tell when JayJayPooh is lying– when his lips are moving in public.

      Same goes for other Fed members, although rarely and inexplicably one of them shoots off their mouth with a truth bomb gaffe.

      Fed’s 900 PhD economists must burn midnight oil during their ongoing data Inquisition in bowels of Eccles building (to torture economic statistics to support Fed’s and BLS et. al. narratives).

  9. Avraam Jack Dectis says:

    .
    I would wait a year to buy a vehicle, unless I had no choice.

    On the other hand, after the stimulus, we might get three trillion is infrastructure.

    Factories might not get a breather.

    Which, forget the inflation, would be great for the average marginalized American worker.

    We want productivity gains to be shared with the citizens. They have not been which is why we have so many issues.

    Greater demand should be the new normal. Everyone will be better off. We just need to wait a bit for the factories to spin up.
    .

    • David Hall says:

      Warren Buffett kept his car for ten years. Late career he kept a car seven years. There are taxes, title and destination fees added on to the sticker price. People who needed a car loan paid loan origination fees on top of the other fees. They may try to sell other add ons. I remember I kept saying no and insisted I should get the advertised sale price. I had to show him the advertised price on a printout from the Internet as he did not believe the price was that low. It was 2015 late in the year. I got a good deal.

      The Mannheim used car index is up double digits from March of last year.

      • El Katz says:

        I was in the automobile business in the U.S. for several decades and I’ve never heard of an “origination fee” on an auto loan…. that’s usually handled by credit tiers – the “credit criminals” pay higher rates or have the amount financed capped, which requires more cash down.

        Maybe at a “tote the note” lot?

  10. Dan Romig says:

    There are two Porshce dealerships in the Twin Cities. Between them, the only used Porsche coupes on offer via their web pages is one Cayman at the Minneapolis dealership.

    Anecdotal yes, but a couple of weeks ago the ‘pre-owned’ 911and Cayman coupes started to disappear until, lo and behold, they’re gone. Typically, the Minneapolis location has nearly 10 or so coupes for sale. A newer 911 often runs over a hundred grand – so not quite as liquid as the market for three-year old Honda Civics.

    Yes, it’s spring in Minnesota again and people think about driving a sports car this time of year, but it feels like there’s something else going on.

    FWIW: There’s a Honda powered car on the pole for tomorrow’s Formula 1 Grand Prix. Mercedes is second and third. Adrian Newey is at the track watching his masterpieces of aerodynamic design get the most down force with the least drag!

  11. Hobagg says:

    Will paste my comment from last night below and read article shortly—

    Just heard news report …. vehicles flying off the lots…. stimulus helping says car man…. creditors willing to increase risk due to stimulus coming folks’ way (please don’t say “stimmies”—look how dependent the dipsheets already are on these STIMULI). WHERE MY STIMMY

    inventory down 33%; vehicles waiting for service sitting days waiting for parts (chineze computers stuck at sea?). chevy leaving some systems off new pickup trucks—–will be more reliable, 4 sure.

    relative bought Chevy this week. i haven’t told him it’s made in K0REA. “like a rock” – lmfao. (3 cylinders).
    friend wants another honda. honda made in alabama. ‘MERICA. GET THE FKN HONDA.

    • David Hall says:

      My Chevy was assembled in the Midwest.

    • c smith says:

      Mercedes GLE made in Ala-BAMA!!!

    • Paulo says:

      Are there no private sales to be had? Have they disappeared? We bought a Yaris in 2009 off a lot, but for most of my life bought privately for cash. In fact, I just sold a MC privately. My kids just bought two vehicles the last past 2 years….. privately, for cash. We do have repair disclosure laws here, though.

  12. Swamp Creature says:

    One thing I noticed today and over the past week when I was out and about in the suburbs of the Swamp. Traffic jams have returned. Light traffic was one of the only quality of life positives during the pandemic and now that is over with. Its back to the rat race.

    • DanS86 says:

      P1 variant is raging.

    • c smith says:

      41 in SW. Fla is a zoo again…

      • VintageVNvet says:

        You can blame that on Mr. Carrier cs!
        Time was, back in the day, that ALL, and I do mean ALL of our SWFL ”seasonal visitors” went home before Easter.
        Dad used to be able to walk to work right down the middle of The Tamiami Trail in the morning and not see a single vehicle.
        And if a vehicle did come along, the driver would usually stop and chat a minute, or offer a ride even if needing to turn around to do so.
        It was dad’s daily exercise, similar to his grand father walking from the southside to his office in the Loop!
        I have heard times have changed a bit.LOL

  13. Depth Charge says:

    Just yesterday, Zero Hedge had this headline:

    “Americans’ Income Collpsed By Most On Record In February”

    Buckle up. This is not going to end well.

    • Wolf Richter says:

      Income fell 7% from the all-time record high in January because there were no stimmies in February. But it was still up 4.3% from February 2020. For ZH, that’s a “collapse” :-]

      https://wolfstreet.com/2021/03/26/waiting-for-the-1400-stimmie-powered-wtf-spike-in-march/

    • fajensen says:

      Zero Hedge has been wrapping the needle around the “imminent collapse” end stop since 2008 at least.

      Their “collaps-o-meter” needs checking!

      • Old school says:

        They underestimated the amount of time central bankers can buy by sleight of hand money magic. For me they have eliminated $1500 of monthly interest income and allowed Congress to throw me stimulus checks totaling two months income. If central bankers go to digital currency they can stay stealing principal not just the income.

        • Lisa_Hooker says:

          Yes, post-GFC interest rate policies have cost us well over $100,000. Money I would have spent back into the economy by starting a business.

  14. Jdog says:

    Luckily, I do not have to worry about this nonsense. Prior to retiring a few years back, I purchased 6 low mileage used luxury vehicles in pristine condition, and they will probably last me the rest of my life.
    I did it over a few years spending hundreds of hours shopping internet sites to find rare deals. They are now all garaged, on battery chargers, and I doubt if I put a couple thousand miles a year on each one. I am able to keep them detailed like show cars with minimal effort. To replace them at today’s prices would cost about $500K.
    My investment was about 40K

    • Bobber says:

      That’s one helluva carbon footprint.

    • nodecentrepublicansleft says:

      You bought six (6) low-mileage luxury cars for about $7K each? Good job!

      • cas127 says:

        Dear Penthouse,

        You aren’t going to believe this, but when the sexy Swedish luxury used car saleswoman huskily said, “I can take it all off…and offer you everything for $7k…”…

      • Anthony A. says:

        Sure hope they weren’t all BMW’s. Each time you bring one in for maintenance around here, they find enough *wrong* to work a bill up to $5 K.

    • mm says:

      What kind of cars were they.

    • Lisa_Hooker says:

      I’m renting out each slot in my 6 car garage for currency. I rather have the money. It’s nice to have a continuous positive cash flow.

  15. MiTurn says:

    “I’m wondering how the Bureau of Labor Statistics, which puts together the CPI, will adjust away in its retail used vehicle CPI those price spikes when they filter into retail sales.”

    They will lie.

    Inflation? There ain’t no inflation. Nope, not anywhere to be seen, hedonically speaking of course.

  16. SocalJim says:

    Its all inflation. Well located real estate is going up so fast now, why even work?

    • Depth Charge says:

      ^^Shill.

    • qt says:

      Well jim, if you dont work how can you get your commissions?

      • SocalJim says:

        I was just being sarcastic. I quit my job after the value of my beach homes skyrocketed … however, turns out that I now do rental home repair at least 6 hours a day. Oh well … beats working on Wall Street … which is a slime pit.

  17. WES says:

    The Fed has created money/credit faster than people can produce goods and services!

    Let me introduce you to a banker’s best friend, “Mr. INFLATION”!

    • Jdog says:

      That government money may make the down payments, but the next 5 or 6 years of payments will tell how many end up repossessed…

  18. Auldyin says:

    Wow! Crazy times are coming. It was always said there was no quicker way to lose money than to buy a car, the more expensive the car, the bigger and quicker the loss. But now I wonder if holding onto money is about to become a quicker way to lose money than buying a car?
    I wish you could do your charts for UK and Europe, the data is all there but nobody presents it as clearly as you do. Don’t you have a cousin or something over here to do it for you?

  19. Bobber says:

    Used car transaction volume stays the same, but prices spike. The only explanations that make sense to me are 1) people feel wealthier because of high stock prices and 2) people are driving (rather than flying) to vacation destinations, and they want a bigger better vehicle to make that easier.

    They say to themselves – I’ve picked some good stocks, and I’ve eliminated airfare cost, so I deserve a better automobile.

  20. Depth Charge says:

    What’s even more shocking is when you consider the trajectory, it’s not finished!

  21. mike says:

    I have been in the lower end used aircraft financing for 28 years. The same inflation psyche on used cars has infected used aircraft prices.

    I have valued several thousand airplanes over 28 years for our customers and for the lenders and I have never seen anything like what is now happening to the used lower end aircraft prices. My values are based upon a combination of the two industry standards, Bluebook and Vref and there is no correlation between what the books say the planes are worth and the sellers asking price. It is like the seller looks to see what the books say is the airplane value, and then they add 25%.

    Consequently, there is lender resistance on financing the agreed price but it does not seem to affect a sales transaction despite the agreed price being much higher than book price. A lot of aircraft customers are paying cash and not needing financing. “Free” money from the government does create inflation irrespective of what the co conspirators Powell and Yellen advocate.

    Why would anyone ever believe in a totally bogus CPI ?

    • Wisoot says:

      Paying cash . . . For a plane. Surveillance for you and me. Money laundering galore for wealthy dependent on their cyber hacker employee. Lawyers must be smarting with being demoted to second place.

      • nodecentrepublicansleft says:

        My credit union asked me WHY I was taking out $3400 in cash about 2 yrs ago. (It was to buy a 1999 Acura TL)

        Teller: “It’s a question for a govt form.”
        Me: “Oh good, write this down…I’m taking the money out for drugs, prostitutes and gambling.”

        Teller: “You’re joking right. You don’t want me to write that down.”
        Me: “No Mam, that’s exactly what I’d like you to write.”

        • Ross says:

          Bravo!

        • El Katz says:

          Me: “Oh good, write this down…I’m taking the money out for drugs, prostitutes and gambling.”

          You could have added: “The rest I’m going to waste.”

  22. MarketMissing says:

    I wonder how much of this demand is being driven by folks who are looking at their finances and realizing they can have a home or a vehicle but not both. I’m on the west coast and see more and more vehicles of all types that look like primary residences. I used to see it mostly in big cities but now I’m seeing it all over. Anybody at the lower end of the pay scale can get a lot more car if they ditch rental expenses. Trucks are attractive because they are good work vehicles but they can also pull camper trailers.

    • Jdog says:

      When roughly half the population has less than $500 cash to their name, and you give them hundreds or thousands in free cash, they feel rich. The money begins to burn a hole in their pockets, as soon as it is deposited. On top of that you tell them that if they have kids, this free money is going to continue for at least a year or so… Besides, what do they have to worry about, if they lose their jobs they will probably make more on unemployment anyway…
      Irrational exuberance takes hold and they indulge themselves. There is always a car dealer out there who will sell you a car with little down, no matter how bad your credit is, so long as the price is right and you can fog a mirror.
      This used car boom, is exactly what you would expect to see happen given the circumstances and human nature.
      How long the government will be able to spend trillions every few months to support this, and how long these new buyers will be able to make the payments still remains to be seen…..

  23. N. Weldon says:

    Things don’t make sense. Auto rental agencies aren’t buying, consumer sales are down, yet prices are up?

    It’s as if the prices have gone up for the sake of going up. Perhaps the consumer is going along with any price increases (when there should be price decreases) because they are suffering from pandemic fatique?

    It’s the same thing in the real estate market.

    If we look at the headlines 10-11 months ago, there was all this talk about car inventories piling up.

    Someone or some institution is manipulating the numbers.

    I’m well past tired of not having clear, believable statistics in the U.S., when it comes to prices, and job numbers.

    For example: The dow is NOT a metaphor for how society is doing in any way. Why the typical media quotes it, of A-L-L the business indicator number group thingys….is ridiculous. It’s just an average for a select group of stock. If a party isn’t trading the DIA, or other similar derivative (and most people are not), the number means nothing.

    • Wisoot says:

      They know whats coming? Resource extraction ended?

    • Old school says:

      Don’t know about that. Seniors are all out of safe income interest and are now limited to a 3% to 4% drawdown. You let the indexes drop by 50% and seniors are going to tighten up on their spending.

    • Steven w Sovring says:

      I’m a used truck dealer 20 years now. Business is not better and the economy is not roaring. If youre rich you are doing well but most people have been raked. The dealers are still going into bidding wars on anything good. The reason is simple. The fake fed boom over the last 12 years has created too much fake prosperity fake money and fake successful dealers. There is simply too much money chasing too few good things. The dealers are taking advantage of a populace getting free money. It happened in housing and it’s actually been happening in used trucks for several years but this last year it’s out of control now. The only way prices will come down is when people stop buying or the economy totally crashes wiping out many dealers like it did in 08, 09. I expect that crash to happen soon as this is all unsustainable.

  24. nick kelly says:

    Imagine you are a Japanese auto outfit trying to plan new offerings.
    Question # 1: who does the US male want to pretend to be this year? James Bond, Croc Dundeed, or a rancher/ contractor?

    99 % of the truck thing is vanity. I guarantee you that will be the actual load figure: 99 % of the time the truck has nothing in it, other than passengers. Just check the ones around you. But the guy gets to play ‘truck’.

    So what about when it is needed? I rent one. I had two autos for a while, but couldn’t justify the Ranger PU for the once a month I needed it. If you do, great, but 99 % of the time most folks won’t.

    The rental was incredibly cheap 19.99 per day. My only beef was it was way more truck than I needed or wanted. How an outfit (Budget) can make money renting a 60 K plus unit for that is beyond me.

    Now: segue. We know that auto trends have little to do with reality. We also know that EV’s are now all the rage.
    But…what if suddenly, they weren’t?

    What if the US male suddenly decides that EV’s are not male enough, or something? He’s already destroyed the sedan market for trucks he hardly uses.

    Conclusion: the auto market is as changeable as hemlines, but while the dress maker can re-tool over a weekend, the auto maker can’t.

    • Old school says:

      I don’t think so. If you live a rural life and are do it yourself a truck is nice. I don’t have one but probably will one day. Taking off garbage, pulling a camper, hauling of yard waste, carrying your lawnmower to get repaired, on and on. Like I say I live without one but I need one frequently but stick crap in my car trunk that will make do, but not ideal.

    • Bobber says:

      I’m guessing most people who buy pickups need them to pull RV’s. Truck and RV sales are going up together.

      Go to any campsite and you will see the $50,000 trucks lined up at each stall. That, and pulling boats, are today’s justification for pickup trucks.

      It’s easy to see that out here on the West Coast, where there is a lot of camping and recreational activity.

      • nick kelly says:

        True, if you go to a place where trucks are needed, like an RV site, you will see a lot of trucks. However if you were to try and explain the dependence of the US 3 on truck sales by matching it with RV or boat sales, you will find a huge gap.
        A friend is a perfect example of this: not rich but has some bucks, wife a nurse. Bought a truck but no boat or RV. Nice truck for sure, black Ram. I don’t think it has a scratch in the box after 2 yrs. One of its loads : I threw in a bale of straw when he wasn’t looking.

    • SpencerG says:

      I had a U-Haul dealer explain the economics of those rental pickups to me just last month. I will try to remember everything he told me.

      Because they are buying stripped down models (in massive BULK purchases) they are getting them for about $20,000 each. They rent them out for $19.95 per day… PLUS mileage! That mileage surcharge is important… for 120 miles per day they are getting $70 extra. Rounding everything and the total is about $90 per daily rental.

      They rent them for 1000 days or so over the course of three to four years and then they sell them. Because they are fairly new, fleet maintained, and have relatively low miles… U-haul gets about half of their purchase price back.

      So basically, they are getting the truck for half price… renting it for enough days to pay for it entirely ($20 per day)… paying their dealers “up to” 21% out of the mileage fees ($19 per day)… and then pocketing the sales price of the used truck PLUS roughly 57% of the mileage fees ($51 per day).

      Obviously some of these numbers have changed in recent times (for one thing truck prices are now much higher… to such an extent that Ford hasn’t even made fleet sales of its F-150s since 2015).

      “But the game never changes.” Let’s say U-haul has to increase the upfront cost it pays for a truck by 50% in these weird times. The purchase price of a basic fleet truck is $30K rather than $20K now… but so is the sales price at the tail end of the process 50% higher. Stretch out the period from three and a half years by a few months and most of the other $5000 is taken care of.

      They haven’t had a near-monopoly in this business for 75 years by being bad at math. U-haul would be massively profitable even if they junked the trucks instead of selling them at the end… AND doubled their dealer commissions!

      • VintageVNvet says:

        Absolutely correct SG, especially about the ”They haven’t had a near-monopoly in this business for 75 years by being bad at math.” part.
        Last time I needed to move, 16′ Budget truck, with mileage, was actually less than the rental for a U-Haul 5×8 trailer.
        I was going to do the trailer behind my old 3/4 ton pick up, but decided that although my truck was in great shape to make the trip, the pups and I needed the AC in the rental truck for two very long days in August.
        Never going to do the trailer again after the very good service and ease of loading and unloading of the spacious truck.

      • Jdog says:

        Don’t forget that the income is basically tax free, because a company the size of UHaul knows how to avoid taxes and keep every penny they make just like Microsoft and Walmart. Taxes are for suckers, who work for a living…..

  25. A says:

    Can’t wait to see what new B.S. reason the FED makes up for why this isn’t inflation.

  26. OSP says:

    The appetite for pu trucks and large SUVs could evaporate quickly if gasoline spikes up to 3-4 bucks/gallon.

    • Ensign_Nemo says:

      Just filled my car for $2.99 and 99/100 in Pittsburgh.

      Pennsylvania has high gasoline taxes at 59 cents per gallon, and the Feds add 18.4 cents, so the actual cost is ~$2.26 per gallon, plus tax.

      Our Secretary of Transportation wants to add a mileage tax to get all of the EV drivers. Then they’ll claim that they need to keep the gasoline tax as an ‘anti-carbon’ tax.

      If they keep raising the cost of cars then perhaps horses will make a comeback, until they add a horseshoe tax, and a horsefly tax, and a horse**** tax, etc. :)

      • Heinz says:

        Yes, additional taxes like new mileage taxes will hit you coming and going.

        ‘Their’ motto is “tax anything that moves” until they squeak.

        Add to taxes vehicle fuel inflation scenario now appearing on scene and drivers and car enthusiasts are in for some nasty gas pains.

  27. Ksw says:

    The last time used car prices were up 20% was 2010. Why was that? Author neglects to mention the Cash for Clunkers program signed by President Obama. Good used vehicles were destroyed. It hurt low income buyers who needed cars for work.

  28. YuShan says:

    So if it is true that high inflation is now ingrained into peoples brains while central banks and government keep throwing fuel on the fire, at what point are we going to see a panic? Or is this car buying the start of that inflation panic already? That exploding chart suggests so.

    Central banks better be aware of history. Once high inflation expectation is ingrained in peoples brains, it is very difficult to reverse.

    • Bobber says:

      If there is a valid inflation trend, and I think there is, the 10 year interest rate will keep moving up. Let’s see if that happens. Nobody wants to own a long-term bond with inflation running 3-4%.

      The Fed says inflation is temporary. It reasons the stimulus will end, and so will inflation. Really? If it takes $2T to keep the economy steady now, what makes the Fed think it won’t take another $2T, or more, every year going forward. In my opinion, stimulus and inflation will not end until there is an asset price reckoning or structural changes such as tax increases.

      • DawnsEarlyLight says:

        Interest rates should be at least triple of what they are now. We all know Uncle Fed and his special ‘interest’ cohorts have manipulated rates for the last several decades.

      • Old school says:

        Unless he has changed his mind Gary Shilling and also Harry Dent are saying own the long bond because the ship is going down one more time before the 40 year bond run is over. Dent is bold in his call saying buy 30 year treasury and short the stock market as the asset bubble has to burst.

  29. Micheal Engel says:

    Mar 2020 was the biggest slump ==> Mar 2021 y/y the biggest jump.

  30. Micheal Engel says:

    1) If u own a car 100% u don’t care.
    2) If u own a house 60% – 100%, u don’t care.
    3) If u put a down payment for your son car and cosign, your son
    will pay for gas, the mechi, the insurance co and the bank.
    4) If u put a 20% down payment for your daughter house, your daughter and SIL pay : the bank, the municipality, the insurance co, HD and Lowe’s,
    for a total of about 8% annually.
    5) If your SIL lose his job, the 8% will rise to 10%.
    6) If your granddaughter calls : please help, they are going to throw us out to the streets, u and the gov must support, in retirement, if u can.

  31. Micheal Engel says:

    1) Manhaim monthly : the trend is up since 2003.
    2) There was a bubble down in 2009, a lower low ! and a bubble up in 2011.
    3) There was a plunge in Mar 2020 and there is a jump in Mar/Apr2021.
    4) This spike from 125, a higher low, in Mar 2020 to 175 in Mar 2021, might become a hump, that will lead to a change of direction in the car business.
    5) Fractals can help speculators to make millions in Mar 2021, or lose millions in the Mar 2020 slump.
    6) The Manheim spike is smaller than IWM, SPX and NDX spikes.
    7) Bar dealers cannot click sell like stocks traders. They might be stuck
    for months.
    8) Are all brand new 2020 models sold out : NO !!

  32. Micheal Engel says:

    9) Manheim might got them.

  33. morpheus says:

    I bought myself a Lexus SUV in December. First buy in 15 years.
    I got a good price for it (relatively of course, like a small house in the midwest) until gas prices shot up.
    Now my SUV (17 miles/gallon) doesn’t feel so good.
    But I had kept the old car for another house in another state. It’s mostly unused and stays in the parking lot of a building I own.
    In the last 3 weeks we had 2 unsolicited offers.
    What’s going on?

    • Jeff says:

      So you saw historically low gas prices from the pandemic shutdown and thought: I should go buy a gas guzzler now. Is that right?

      • Depth Charge says:

        That’s sheeple behavior (not calling morpheus a sheeple, just stating fact). People will buy large trucks and SUVs when fuel prices are low, then trade them for gas sippers when fuel prices are high, losing the most amount of money possible. The time to buy fuel sippers is when vehicle and fuel prices are low, and selling them into the market when prices are high. But “buy high, sell low” is the American sheeple way. Kind of like how everybody wants Sh!tcoin at $50,000, but nobody wanted it at $3,000. They’re trying to lose the maximum amount of money, I suppose.

        • Heinz says:

          The muppets think and act in herds. Look at stocks, crypto, and the housing craze for a view into mass psychology in economic behavior.

          It is part of the human condition.

      • morpheus says:

        Just the best vehicle I ever drove. Loved it, bought it. Simple.
        Just as I chose my wife.
        And the price of gas, as much as I don’t like it, is meaningless in my budget.

    • SpencerG says:

      Are the offers on the new Lexus SUV or the old car?

  34. Micheal Engel says:

    1) Hyundai 2021 models are stunning.
    2) If u want to buy a brand new car, ask your area dealers if they have 2020 leftovers.
    3) Their option is either to ship it to Manheim, probably on memo, or sell it for a deep discount, in the dealership, now.
    4) Ask for the manager, give them your email or cell phone, to think about it, for 10 days.
    5) Do u really need a brand new car now at peak bubble ?

  35. tom11 says:

    Used car dealers & auctions?

    Salvage cars & trucks are even going up in price.
    Still the place to buy. Was about 14 yrs ago when I had the
    insurance guy look at my daughters vehicle and say it was “totaled “,
    that I became aware how quick they to scrap these autos.

    • SpencerG says:

      Most trucks are still built on frames… so depending on the type of damage a salvaged one can be alright. But with unibody cars the insurance companies are probably right to salvage them out. They can be expensive to fix after an accident because the body IS the frame. More importantly, they won’t be as safe in the NEXT accident.

  36. Tony bolongy says:

    The birth pangs of hyperinflation is showing up world wide it could take some time
    In my area (southern ontario, Canada) houses are going for $500 000 above asking .example you ask $575.000 the first bid is $1 075 000
    I’m sure this was a precursor for hyperinflation in past historical hyperinflation periods? ??

    • Mike R says:

      Here in the Us, the bank won’t give you a mortgage to cover those kind of ridiculous price gaps. Banks are cracking down bigly on loan amounts, and who they will lend to. Good luck if your credit score sucks, and you are a remote worker. Firms doing the remote working thingy, are targets for massive layoffs dead ahead. Banks are examining that heavily right now. If you work in commercial RE, good luck getting a home loan. And good luck keeping your job. The pandemic is not going away, and it will worsen and spike even bigger later this year. New strains are hitting very hard, and data shows vaccinated folks will both become susceptible to getting the new strains and potential super spreaders since they ‘think’ they are ‘protected’. Like having a prophylactic with holes in it.

  37. Mike r says:

    Bought 3 suvs last year. 1 new, 1 had 500 miles on it, and the other 3 years. All were phenomenal deals. Due to pandemic, cars were not moving for some dealers.

    I could sell all 3 now for more than I paid. The new sienna hybrid is incredible at 36 mpg both city and hwy. the way it handles is awesome. And price is decent since hardly anyone wants a minivan, and no one has caught on yet, how well this sienna performs. Despite j Powell generated inflation, there are deals to be had.

    Oil is going to run way up over $100 a barrel. I’m in the energy industry and Americans have no idea what is about to him them on the gas price front. The price will be a new and permanently higher plateau.

    Those pick em up truck owners will be taking out loans to fuel them. Or taking massive losses when they unload them. The suvs I bought were hybrids w excellent mpg.

    • Anthony A. says:

      We are working our way up to $3 gallon here in Houston, Texas as I paid $2.69 gallon yesterday. A year ago I was paying $1.89 gallon. When Texas hits $3 – $4 gallon the rest of the nation is a dollar ++ higher, and right now crude is at about ~ $60 WTI. When the Arabs and Russians hear we are gobbling up oil at a record pace once the pandemic fears are history, they will put on the squeeze.

      Look out below.

      • R Hughes says:

        So Ca high 3’s and some stations low to mid 4’s. With oil situation and more taxes coming expect to see mid 4’s to even 5 later this year or next

    • Depth Charge says:

      “Those pick em up truck owners will be taking out loans to fuel them. Or taking massive losses when they unload them.”

      Yep. I just filled up my old diesel truck yesterday. I do it about every 6-8 weeks, tops. I paid $3.60 per gallon. Once this fuel goes over $5, I expect serious pain for a lot of these Harryhowmuchamonths who are paying $1,000 per month for the truck, $600 for the RV, $500+ for the fuel, etc. It’s not a sustainable venture for, dare I say, MOST of them. This is going to get ugly.

    • SpencerG says:

      I doubt oil will go anywhere near that high… and certainly not for long. At $70 a barrel EVERY fracker in America (or the universe if you prefer) will jump back in the market and be pumping like mad.

      That is just in the short term… over the long term electric vehicles will reduce oil demand massively… peak gasoline consumption in this country was way back in 2007 and we have barely scratched the surface of that shift yet.

  38. Kenny Logins says:

    Same daft logic as everything else at the moment.

    Prices going up? Better buy at any price now before they go up more!

    Self fulfilling prophecy.

    Spooked by the concept of inflation… so much inflation spooking.

    Which suggests to me the risk and reality is probably the opposite. Deflation.

  39. RoundAbout says:

    If people move out of the city, then they’ll need cars.

    Been seeing lots of temporary CA license plates lately.

  40. Heinz says:

    Used car resilient price appreciation is yet another interesting data point supporting my thesis that we are indeed witnessing a unique version of Mises’ famous ‘Crack Up Boom’.

    In a nutshell, Crack Up Boom idea refers to final crash of credit and monetary system due to continual credit (think massive public debt here) expansion and price increases that cannot be sustained long-term (think of current Everything Asset Bubble, from real estate to BitCoin and NFTs, etc).

    So with all this money creation and debt, consumers’ inflation expectations accelerate to the point that money becomes worthless (or IMO just inflated to where fiat money’s public confidence is broken) and the economic system crashes.

    Since Fed and gubberment’s ploy (they have no other choice given their cherished but false narrative) to keep status quo is unsustainable to anyone with two brain synapses to spark together, then this outcome is baked in cake, IMO.

  41. Micheal Engel says:

    1) Gov infrastructure and states infrastructure to build roads, bridges,
    broadband.. will lift gas prices higher in the future, and Manheim leader of the pack, the pickup trucks, will fail.
    2) Contractors like vans.
    3) People move to FL &TX. Fl RE is hot.
    4) A stunning looking, sharp elbows, smart & single RE saleswoman with
    connections to the banks can easily close one unit per/month.
    5) If she makes 2% on $500,00 per/unit, she can make WF-Homes:
    0.02 x 500,000 x1.5 closing/m x 12 months = $180K/y, before expenses.
    6) She can easily switch from NY burbs to FL. CA saleswoman might
    not be able to sell in TX

    • tom15 says:

      Your right on #1
      Big corps are putting that pork bill together.

      One look at CAT stock and you know the pipeline is greased for the
      next multi trillion bill.

  42. Yort says:

    Used trucks are expensive, yet you can negotiate some good deals at giant dealerships that are downtown in a big multi-million sized cities with very little room on their lot to bring in the new model year until they have moved the previous year models.

    At the end of January, I pickup up a new 2020 Ford truck from 17.9% below MSRP at such giagantic downtown dealership. They had listed an false Internet price that did not include huge “ADDS”, such as $2000 trade in “ADD”, $1400 finance “ADD”, upgraded custom leather, window tinting, bed liner, etc that was not advertised online. I paid cashiers check (they said “nobody” does that, I said guess I’m “nobody”…ha) and they “said” they took a $2,900 hit on the sale (I tipped the young sales “kid” a days wage in cash as he was not going to get paid for the sale by my best guess). They had 43 of the same 2020 truck on the lot, and only room for a single 2021 model (that had a new grill upgrade only). I’ve always bought all my vehicles in January/February, last day of the month, and usually get 15% off MSRP average, as long as the lot is full of the previous year model with no room for the newer models. Then I drive it 5-10 years, and it comes out cheaper than buying used (I perform my own maintenance), even with the 30-40% three year depreciation (also helps to have no finance fees and buy parts on the Internet).

    Accelerated inflation has caught up with the used vehicles, and will most likely catch up for the new vehicles also as how naive would we all have to be to not believe a 25% increase in M3 money stock in one year would not end up in the hands of people who will spend it all, and then some and thus drive up “everything inflation” for at least as long as the free money tree survives…TBD…my best guess a few years…

    The Financial Times M3 multi-year chart below will have consequences at some point:

    https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2Fb6af40c0-8cb5-11eb-9b06-c3faf1b43555-standard.png?dpr=2&fit=scale-down&quality=medium&source=next&width=700

  43. Bobber says:

    I was surprised to see that Epic ski passes for the 2021/2022 season were recently reduced by 20%. This seems inconsistent with inflation in autos, rental cars, and remote real estate.

    As a separate matter, I heard from a moving company representative that moves to Florida are extremely hot right now. Lots of people going in, but few are leaving. Perhaps baby boomers are finally cashing in their real estate in the north and moving to Florida to retire, downsize, and enjoy the weather. Or, perhaps more boomers think they can wrap up their careers working remotely down there.

    • Wolf Richter says:

      Bobber,

      In terms of skiing in the Tahoe area, where Epic has some resorts, the season has been extended to Apr 18 thanks to some late snow. So this is the end of the season. In the Tahoe area, the snow is getting iffy this time of the year, with day-time temps in the 45-60-degree range when the sun is out, and on a really nice day might go over 60, and the snow is fast turning to water during the day.

      So discounts are common this time of the year to get skiers from the Bay Area to go up there – if the ski areas are still open. In many years, when there isn’t that kind of late snowfall, or little snow to begin with, skiing shuts down sooner.

      • Depth Charge says:

        Wolf – he was talking about season passes for NEXT season.

        • Bobber says:

          Yes, I was referring to next season, which is why I found the discount to be a bit out of sync with other businesses. Maybe they are investing to increase market share. With 20% off, Vail has a much greater chance of getting my business, whereas it had zero chance before.

        • Wolf Richter says:

          Thanks. I missed that somehow.

      • Boober says:

        Wolf,
        Just wanted to point out that you addressed Bobber as Boober in your reply. Bobber is not Boober. I am Boober.

        Be best,
        Boober

  44. MonkeyBusiness says:

    I heard that they are making a new Transformers movie. Maybe they need to blow up a ton of cars? ;)

  45. Peter Simmons says:

    This is a symptom of the two sided economy. Those in the upper middle class have more money and lower expenses- and are willing to pay a premium. (Pickup truck buyer median income is 2x the national average). The same thing in happening for single family homes. In both markets – supply is low- and demand is high. Demand is probably being driven by the the same reason – people fleeing urban areas.
    Meanwhile, those in the lower middle class and below are sliding into poverty – fewer of them are buying cars and houses.

    • Depth Charge says:

      “..Pickup truck buyer median income is 2x the national average..”

      I have a hard time believing this. Do you have data? I remember a story a year ago where a guy who was the manager at a lumber yard said all of his young guys, who made far less than him, were driving brand new diesel trucks with payments of sometimes more than $1,000 per month, and most had stopped paying. Meanwhile, he was still driving an old truck and heading into retirement.

      • Antwan says:

        I was skeptical too but it does seem that trucks correlate with higher income.

        “As truck prices climb higher, so too does the average median household income of truck buyers. In September, the average new truck buyer made $100,305 a year.” – 2018

        With US median household income being just under $70k, it’s almost 50% higher. A lot of caveats however. This statistic is only for new vehicles. Reasoning would say that new car buyers have higher incomes than used car buyers. Many on the lower end of the income scale could also have no car. So the median household income of a new car buyer is probably closer to $80k-90k. Considering how expensive pickups can be, it’s not surprising and I certainly wouldn’t say that pickup buyers have higher incomes than cars of a comparable price.

    • jm says:

      You mean twice the national median, not average. “Median” (half above, half below) is much less than “average” (total income divided by number of earners), and is all you’ll ever see in the media (but a lot of journalists are so ignorant they’ll write “average”, anyway). Because the top 10 percent of earners make so enormously more than the vast bulk of the population, the true average is _far_ above the median. Some years ago I tried to estimate it by looking up govrrnment’s total income statistic and dividing by an estimate of number of earners. IIRC was more then twice median (and didn’t include the enormous unrealized capital gains the ZFed has handed out to stock and bond owners, which never shows up as income until the assets are sold).

  46. Prof. Emeritus says:

    Madness, as seen with European eyes. Here it’s the complete opposite: the pandemic ended a 10-year winning streak for SUVs & crossovers. It’s the same thing that happened for coupé-cabriolets and MPVs after 2007, out of fashion, nobody is buying anymore – the biggest suckers back then were the Korean manufacturers, now it’s them again – the Irish and UK still love them, but in every other country the biggest classes are on a downhill.
    What people are buying however are small cars (Fiesta-class, though the Fiesta itself is not selling, Ford is dead on the continent) and increasingly sports cars. Now the latter is a strange story, as people are seeing how the economic restrictions have killed the mass-manufactured sports-car industry and that no more affordable fun-cars will be ever made. What once had the biggest depreciation is now seen as last mohicans and last opportunity to have a “driver’s car”, like the Lotus Elise, Toyota GT86, Alpine A110, Fiat 124 Spider – prices of these are going up.

  47. Ross says:

    Wolf?

    Any thoughts on why the average age of American vehicles is nearly twice that of EU nations?

    https://www.eea.europa.eu/data-and-maps/daviz/average-age-of-road-vehicles-6#tab-chart_1

  48. breamrod says:

    interesting story on my Tacoma . Had a neighbor offer to buy it sight unseen for 10k. Now this is a 2009 single cab that he wanted for his farm. A checked with a dealer who would only offer 7700 in trade as the blue book value said. I told my neighbor that I loved my truck and it wasn’t for sale. He keep bugging me and upped his price first to 11k and then to 12k. Finally told me that there just aren’t any on the market and I could probably get 13 to 14 for it. Crazy market for trucks is right.

  49. Fuzzie says:

    Just more of the last minute buying and loading up with everything necessary, and more, before the boycott of the Biden/Harris economy officially starts in his first quarter.

    • Old school says:

      It just seems to me all the signs of highly distorted economic activities that happen at the top. Fed’s policies have allowed asset bubble to get so big they know a normal recession is terminal to the current financial system so they have to run Zirp plus $120 B / month to know ck the can month by month.

  50. rick m says:

    An Asset Finance Int’l November 2020 story says that European used vehicle residual value is rising, quickest in the southern areas and France, with Sweden and Germany bringing up the rear. Nothing like here though. Since there’s so many extrinsic factors in the EU, comparisons to the US are probably invalid until more stuff breaks, then we can figure it out. Hindsight, etc. They’ve got other reasons. EV’s and Value Added Tax are two easy ones. We apparently don’t have any of the normal economic indicators associated with higher prices, the usual suspects are already under arrest, so to speak, plenty of vehicles unless you’re picky. I would be a cautious seller in any case , what’s to prevent the CDC from determining that denial of access to F-350 Crew Cab financing at submarket rates is conducive to the spread of Covid-19-20-21+ in the oppressed group du jour? A Ford’s in your future, buy a big one, you may be living in it soon.
    If higher prices come about in the absence of the traditional economic precursors, maybe the animal spirits of men sense the diminution of value in money that flows too easily to them, and in the manner of sports bettors who lose their winnings in casinos, get something for it before it’s gone.
    I have my 98 Tacoma (2.7literPrerunner, 279k miles) in the backyard to keep prospective buyers away. 07 E250 swb electrician’s van for local work, newer vehicles are expensive to buy, register and insure, and almost unserviceable by the owner. But the dealerships are busy.
    I wonder how landlords feel about the new vehicles parked in front of their asset-turned-to-nightmare. And knowing that most of those units will require major work to rent again if and when the freeloaders are dislodged. It’s not in human nature to take care of something they didn’t sweat for. And they’ll never trust another tenant, and await the heavy hand of government to swat their profit down. Many properties will be abandoned, only in rare markets and times is renting out places to live an easy dollar.
    Keep your principles visible and your assets concealed. Have wheels on everything you own. Have enough silver to run with and enough gold to swim with. And you’ve never owned guns. Or ever done less than welcome the interference of government in your life.
    2.51/gallon, Walmart Pass Christian ms

  51. Palm Beach says:

    Way to dangerous to drive small car in south florida, will only
    drive 4 door pick up, i’ll pay the fuel bill

  52. ru82 says:

    The COVID 2020 recession year ended up being year that probably outdid most any bull market year. Truly this has been a great recession.
    What can we call it. 2009 was called the Great Recession. Maybe we should call the bull market recession. Give me another recession like this over any bull market. LOL

    Bankruptcies in 2020 fell 29% from 2019. Lowest number over the past 5 years. Both for business and non-business. When of the best recession ever.

    https://www.uscourts.gov/news/2021/01/28/annual-bankruptcy-filings-fall-297-percent

    • Old school says:

      It was determined that the cost should be passed on to the following:

      1. Savers
      2. Middle class through future inflation
      3. Wage earners

  53. Lynn says:

    Something that may be putting a dent in supply are straw buyers and illegal exporters. Maybe this is increasing.

    Jun 11, 2020 ” Alberta RCMP charge three in an international luxury vehicle export fraud”

    July 08, 2020 “Federal agents seize more than 80 luxury cars at Port Everglades bound for Venezuela”

    also

    NH 2013 (outdated, price difference is higher now in some cases) “…a car buyer looking for a new luxury car in Russia or China knows that the same car is available for sale in the United States for $20,000.00 less. So instead of buying a new luxury car at a local dealership in Moscow or Beijing, a foreign car buyer seeks to purchase the same car in the United States and save himself a good deal of money. Is that unfair? According to a recent federal criminal prosecution in New Hampshire, the answer is “yes.”The New Hampshire Prosecution ”

    and LA (2018) “Scams and schemes create enforcement morass at ports”

    One dealership was fined over 600K for letting this sort of thing happen. So, now some dealerships are requiring buyers to sign a non export agreement.

    and there’s an interesting article on how it works at the buying end; “How I Bought Millions of Dollars’ Worth of Luxury Cars and Got Blacklisted by Jaguar Land Rover, Mercedes, and Porsche”

    If you search long enough you can find adds looking to hire people as straw buyers and companies advertising exported cars. LE isn’t looking very hard.

  54. Micheal Engel says:

    1) Egypt president Al Sisi : life is back to normal. Ever Given no longer clog the Suez canal.
    2) If QQQ cross Sep 2 high, it might close the open gap between : Nov 3 and Nov 4.
    3) If QQQ cross the 260 – 268 area, the markdown might start.

  55. Bill says:

    wolf

    interesting dots in the world
    needs connecting

    i love monday’s

  56. Micheal Engel says:

    1) If u buy a brand new car with today low interest rate, inflation will ease the pain, but inflation will lift WTI to fill the tank.
    2) If u sink in 10% down payment to buy a house, every year u have to
    sink in almost the same amount to the bank, to your municipality, to
    the insurance co, to HD & Lowe’s…. ==> perpetually.
    3) Inflation will ease the pain, deflation increase it. That’s why JP
    and Zanet bs about inflation expectation. The Fed = pharma.
    4) If u lose your WFH job, u might lose your house and x3, x4 sunk in down payments money, with no money in the bank and only a shirt on your back.

  57. pieter says:

    1999 Toyota Land Cruiser for sale in a Chevy lot…. looked ok and so I stopped. Opened the drivers side and it is beat to hell inside very bad smoker smell. Sales guy runs up and I ask the price $14,900 and the miles… 219K….. start laughing and he says to me this is a collector piece since they are not making them post 2021 ever again. So funny…yet horribly terrifying. Drove off in laughter.

  58. Marc D. says:

    I think the shortage of new cars because of the computer chip shortage may also be playing a factor in used car prices rising. Fortunately, I don’t need a new car currently, because my 2016 VW only has 32K miles on it.

  59. Captain Unknown Unknowns says:

    >> ‘French Fries’ are Belgian in origin

    Which part of Belgium — a Dutch or a French-speaking area?

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