Metro Denver’s consumer inflation rate continued to accelerate in May, rising 2.1% from March and 3.2% over the past year, with increased transportation costs a key driver of the gains, the U.S. Bureau of Labor Statistics reported Thursday.
Food price gains, up 2.3% the past year, are moderating, while rents remain flat. But buying a vehicle, filling its tank and insuring it has become much more expensive than last year, when consumers were hunkering down and staying off the roads if they could.
Gasoline costs in metro Denver have surged 68.8% the past year, while auto insurance premiums are up 27.3% and used car and truck prices are up 28.6%, according to the BLS.
A shortage of semiconductor chips has limited new car supply, leaving manufacturers unable to meet a demand boosted by billions of dollars the federal government has provided directly to households. Faced with not enough new options, consumers are bidding up used models.
The online car shopping website iSeeCars.com looked at 800,000 sales of 2015 to 2019 model year used cars made in April 2020 and compared those to 400,000 sales of 2016 to 2020 model year used cars made in April 2021 to determine how much the average prices paid for each model had changed.
Nationally, the average price paid for a used car rose 16.8%, or $3,926, a sharp contrast to the dictum that a new car loses a lot of value once it leaves the dealer lot. In metro Denver, the gain was 14.7% or $3,577, which ranked ninth out of 50 metros.
Last year, it seemed some consumers bid up used car prices because the economy was on shaky footing and they needed affordability. Now the story has shifted. The well-off have extra cash to burn and some are pouring that money into nicer rides, with used models substituting for new ones.
“The pandemic has created a clear dichotomy between the haves and the have nots, as we have seen demand for sports and luxury cars grow and demand for more economical cars shrink,” said Karl Brauer, iSeeCars executive analyst, in an email.
Nationally, Chevrolet’s C8 Corvette is the fastest appreciating used car, up 33.9% or $17,432. That model is fairly new, hugely popular and even in normal times would have likely been undersupplied.
Metro Denver lacked enough C8 Corvette sales to provide an adequate sample, which left the Chevrolet Camaro as its leader for price gains. Used Camaro models shot up 47.9% in value or $11,808. Next up was the BMW 5 Series, which saw a 33.8% gain worth $9,593.
The next three biggest gainers in metro Denver were the GMC Yukon XL up 30.9% or $12,801, the Ram Pickup 1500 up 30% or $8,486 and the GMC Sierra 1500 up 28.4% or $10,005.
“Ram 1500 and GMC Sierra are considered to be more luxury trucks, which helps explain why their prices have seen the most gains among the pickup truck segment,” Brauer said. “As we have seen, luxury buyers are more likely to pay a premium for their used vehicles, which is reflected in their significant price hikes.”
Cars.com, another car shopping site, released a survey that also highlighted how tight the car market has become. One in three buyers had reported traveling 100 miles or more to hunt down a car, while 13% had ventured more than 250 miles in search of a set of wheels.
“With the current auto inventory challenges, recent car buyers are going to great lengths to find the car they want,” said Kelsey Mays, Cars.com assistant managing editor in a release. “I don’t anticipate this trend slowing down, either. Of consumers currently in the market and shopping for a car, 65% said they would consider purchasing in another state.”
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