But two new reports indicate that things may be starting to cool off.
Wholesale used car prices — what car dealers pay for the cars they sell to customers — fell in the first two weeks of July, while used vehicle inventories at dealerships increased, according to Cox Automotive.
In addition, the retail price of used cars — the amount consumers pay — has continued to increase, but at a slower pace over the past month, according to a separate Cox Automotive report. While it’s not certain yet, Cox Automotive analysts think retail prices will start coming down over the coming weeks.
Getting all the way back to normal will still take a long time, however, said Charlie Chesbrough, a senior economist at Cox Automotive.
Used car prices have been driven to extremes, thanks to a combination of demand from consumers wary of taking public transportation and a major shortage in the computer chips needed to make new cars.
The average price of a used car in the United States passed $25,000 for the first time ever at the end of June, a 26% increase from the year before and up 29% from two years ago.
Wholesale used car prices are also beginning to taper off. According to a recent Manheim Used Vehicle Value Index report, wholesale used car prices, overall, are still up almost 25% compared to a year ago. But, in the first weeks of July, prices dropped 1.7% compared to the month before.
These price comparisons are statistically adjusted for the differing mix of vehicles sold and for normal seasonal fluctuations, according to Cox.
“The latest trends in the key indicators suggest wholesale used vehicle values will continue to see a similar amount of depreciation in the days ahead,” the report said.
Manheim, a subsidiary of Cox Automotive, is America’s largest seller of wholesale used vehicles to auto dealers.
While the used car market is no longer at a full rolling boil, it will take some time for ordinary car shoppers to notice a difference, Chesbrough said.
“This frenzy to acquire inventory is backing off a little bit so the price is starting to come down a little bit,” Chesbrough said. “That generally means that, four to eight weeks from now, on the retail side, we should see the froth come down a little bit, a little bit less upward pressure.”
Used car prices still aren’t expected to return to anywhere near what they were before the coronavirus pandemic anytime soon, he said.
“My sense is that given the supply shortage on the new [car] side, we’re looking at a used market that’s going to be constrained for supply for the foreseeable future,” he said, “and those prices are going to remain elevated as a result.”
By Teresa Boeckel | York Daily Record
On a recent weekend, drivers stopped at a Pennsylvania Welcome Center, just north of the Maryland line, to take a break on their trips.
Cars and trucks whizzed by on Interstate 83. Peter and Jackie Speaks, who were on their way home to Harrisburg, said they recognize the challenge the state is facing with its deteriorating roads and bridges.
They’ve heard about plans for tolls to pay for work needed, but they don’t know if that’s the answer.
Jackie Speaks motioned to nearby tractor-trailers parked at the rest stop and mentioned how much harder new tolls would be for the industry.
President Joe Biden has proposed $621 billion for transportation in his federal infrastructure bill. It includes about $115 billion for road and bridge repairs nationally.
“Hopefully the (federal) infrastructure bill will be passed,” Peter Speaks said.
But even that’s not enough for the state’s needs.
Pennsylvania faces an $8.1 billion annual shortfall for interstates and bridges, and overall, the state has $9.3 billion in unmet needs across its state-maintained system, which includes highways, bridges, aviation, railroads, transit and ports. Without a significant increase in federal investment, PennDOT says, it has been forced to take money away from regional projects to help the interstate network.
The agency doesn’t know yet the details on how the infrastructure money would be distributed to Pennsylvania, but “any additional federal funds could help our limited state dollars go farther,” PennDOT said in a statement. It would help projects that already are in the works in the coming years.
Peter Speaks said it’s going to take funding from both the federal and state governments to meet the needs. He and Jackie Speaks think that increasing fees, such as for license and registration renewals, might be part of the answer.
Here’s a look at the different ways the state is looking at raising revenue to fund transportation:
Tolling bridges is one of the short-term solutions, which has already been shared with the public.
PennDOT has identified nine bridges around the state — eight that need to be replaced and one that requires rehabilitation — that could be candidates for tolling to help pay for the work.
The department would enter into a private-public partnership with a developer, which would arrange for private financing to design, construct, operate and maintain the structures, said Ken McClain, PennDOT’s alternative funding director.
PennDOT would collect tolls on each of the bridges to pay back the investment over a 30- to 35-year period.
It’s similar to a mortgage on a house, McClain said. The buyer borrows money and pays it back over time.
For commuters with E-ZPass, it would likely cost $1 or $2 in each direction to cross the bridges. A truck driver would likely pay between $4 and $6.
The plan, however, has drawn criticism from commuters, the trucking industry and legislators, saying it would hurt drivers and businesses.
The state Senate recently approved a bill that would stop PennDOT’s