Inflation is (obviously) making a huge impact on the U.S. economy right now. From rising prices at the pump to bigger grocery bills, the effects of inflation are hitting hard across the U.S. It has left many people wondering how to prepare for the next turn in our economy.
While there are many reasons for the state of the U.S. economy, there are interesting findings regarding a specific new challenge: the rising costs of vehicle ownership and the used/new vehicle markets.
How has the used vehicle market impacted inflation?
As of earlier this year, sources at the White House revealed that much of the country’s rising inflation rates can be attributed to the used vehicle market. It was also revealed that the used car market’s contributions to inflation in previous years were close to zero, and it is now more than 1% on a year-over-year basis these past few years.
This is considered a historic shift as previous years saw less of an economic impact by the vehicle market. To be more specific, prices consumers paid for goods and services rose 0.5%, while used car prices rose 3.5%. This 3x increase in inflation is causing a strain on vehicle ownership for many Americans.
What is causing the rise in car costs?
Fluctuating Consumer Demand
The beginning of the worldwide shutdown in 2020 resulted in a shift in consumer demands. Many workers did not need their cars as frequently since they were not leaving their homes. This slowed production and overall sales.
Fast forward to 2021, where many restrictions were lifted and travel was easier – cars made their way back to the forefront of sales with a demand manufacturers were not prepared for.
But wait, aren’t they manufacturing new vehicles? How does this impact used vehicle sales and availability? Simply put, used cars can’t be sold if they were never made to begin with.
The unanticipated demand for cars is not only impacting consumers, but also businesses looking to rapidly expand.
We are all familiar with the supply chain shortages we’ve experienced lately, and the automotive industry is no different. Many cite chip shortages among others as a reason for the lack of cars for sale, in tandem with an increased demand for used cars.
In this case, used vehicles aren’t the only ones being affected, as many companies have watched new car sales plummet in the past few years due to a lack of supply. The lack of chips has resulted in a decline in new car production. New vehicle sales are down 12% because of the chip shortage. The effect of this shortage is expected to last into 2023.
The fluctuating demand for both new and used vehicles alongside shortages for automotive parts have bolstered the automotive industry’s role in our current inflation.
May’s spike in inflation has left many feeling that it’s a wildcard, with various predictions on when this will begin to decline. This means no one can guarantee a price decrease, which has left many stranded.
What does this mean for the many consumers and businesses looking for a new or used vehicle?
Spiking inflation is making it difficult for consumers to buy new and used cars for the same reason – a lack of product accompanied by an unaffordable price. Record-high gas prices and a stress on vehicle parts also make it difficult to own a vehicle at this point in time.
Additionally, many businesses are experiencing a halt in expansion due to these same stresses regarding vehicle ownership.
What’s the solution?
Since vehicle ownership has proven to be difficult in 2022, many businesses are turning to renting as a solution. Renting is quick, easy, and allows a business to circumvent the stresses of inflation that come along with vehicle ownership.
What’s even better news is that renting with Fluid Truck is easier than traditional renting. We’re proud to offer convenient, 24/7 access to our vehicles and fleet technology straight through our app, available on the App Store and Google Play, or directly on our website. Get as many vehicles as you need, at any time, for as long as you need them. Work around what’s best for you and your business, renting is flexible and you aren’t tied to rising inflation costs.
When you rent with us, you’ll never have to worry that it won’t be feasible to get your hands on a vehicle. Join the thousands of businesses across the U.S. that rely on Fluid Truck to take care of their vehicle needs by signing up for a free business account here.