Used car prices are appreciating faster than the stock market and some cryptocurrencies, CNBC reported on Sunday, according to a market research firm Bianco researchthe president of Jim Bianco.
What happened: Used car prices have climbed more than 20% in the past four months, Bianco said, citing the Manheim Used Car Price Index.
The latest data from Manheim shows a sharp increase in wholesale used vehicle prices, even though vehicle inventories, which are already at an all-time high, have stayed at dealerships longer.
The Manheim Index shows that the annual average of used car prices have climbed 30% compared to 2020.
âAs of December 15, the last set of data we have, they’re accelerating more and more right now. There is no peak at least for now, âthe report said, citing Bianco.
In comparison, Bitcoin (CRYPTO: BTC) has risen 5% in the past four months, based on Thursday’s close, while the S&P is up 26% year-to-date.
See also: U.S. automakers – Ford, GM – set 12-year low inventory, but here’s why they could see big second-quarter sales surge again
Used car prices averaged $ 27,569, a 27% increase from the same period last year, according to the report, citing Kelley Blue Book.
Bianco noted that used cars are going to be more expensive as customers always rush to buy them as soon as inventory becomes available.
âIt has all the telltale signs of a bubble,â he warned, adding that used cars are self-depreciating assets and prices aren’t supposed to be that high.
Why is this important: New and used car prices have reached levels not seen in many years as chip shortages have wreaked havoc with automakers around the world.
See also: Cathie Wood warns that destruction of demand in used car spaces could lead to serious problems in auto credit markets
Major car manufacturers such as General Motors Co (NYSE: GM), Ford Motor Co (NYSE: F), Tesla Inc (NASDAQ: TSLA) and others have all struggled to overcome the global chip shortage for over a year now.
The shortages began in mid-2020 when demand suddenly returned after the bottlenecks induced by the pandemic were lifted.
AutoNation Inc (NYSE: AN), America’s largest auto retailer, reported a record profit in October despite lower inventories and warned that dealer inventories would likely remain tight until 2022.
As a perspective, AutoNation had approximately 5,000 new vehicles in stock at the end of September, up from 56,000 a year ago.
Price action: AutoNation shares have risen 65% so far this year. The stock closed up 0.34% at $ 112 per share on Thursday.
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