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Consumer Price Index
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Measuring Price Change in the CPI: Used Cars and Trucks
The used cars and trucks index, a component of the private transportation index, is included in the transportation group of the Consumer Price Index (CPI). The used cars and trucks index is published monthly at the U.S., regional, and area level.
Item definition
The used cars and trucks index is comprised of used cars and trucks from 2 through 7 years of age. Included cars consist of subcompact, compact or sporty, intermediate, full, luxury or status cars. Included light trucks consist of pickup trucks, vans, and specialty vehicles. Specialty vehicles include sport/cross utility vehicles.
The weight of used cars and tucks in the Consumer Price Index is determined by spending on used cars and trucks, less trade-ins on new and used vehicles and other sales of consumer owned vehicles.
Relative Importance
The relative importance of an item category is its percent of the CPI weight as of December of the most recent year.
| Item | Relative importance |
|---|---|
|
New and used motor vehicles |
7.005 |
|
New vehicles |
3.724 |
|
Used cars and trucks |
2.391 |
|
Leased cars and trucks |
0.656 |
Sample selection
The current CPI sample of used cars and trucks was chosen with a data set from the J. D. Power Information Network, a network of car dealers who report sales of used vehicles to the J. D. Power Company. From the universe of 2 through 7 year old vehicles, a sample of 480 vehicles was chosen based on probability proportionate to sales. Monthly price collection of the national sample is undertaken in the Washington office using online data from the National Automobile Dealers Association Official Used Car Guide (NADA). The National sample of 480 observations was proportionally allocated using 2010 Census CPI stratum populations to each of the ten NADA regions. The ten largest CPI sample areas within each NADA region were assigned as “Parents.” Prices are then replicated (duplicated) in all other “Children” CPI areas within each NADA region with appropriate weight adjustments. Taxes are then applied to each observation based on their assigned tax jurisdiction within each individual CPI sample area.
The sample is updated by one model year each September, which maintains the same age vehicles over time. If a production model is discontinued, it is replaced by a comparable model. Periodic resampling is scheduled as resources allow.
Price Change and Quality Adjustment
We do not collect price information on used cars and trucks; all price information for used cars and trucks used in the CPI comes from NADA. All prices are adjusted for depreciation of the vehicle.
Price Change
Starting with January 2018 data, the used cars and trucks index will move to a 1-month depreciated price change. Prior to the January 2018 data, a monthly price relative was calculated for each observation. The price relative was based on a 3 month moving average of the current and last 2 months depreciation adjusted prices. So for month t, we were comparing the price (Dt+Dt-1+Dt-2)/3 to the price (Dt-1+Dt-2+Dt-3)/3, where Dt was the depreciation adjusted price for month t. The 3-month moving average depreciation adjusted prices were used to smooth out volatility in a smaller sample of auction prices. With an increased sample size over the years and to improve timeliness, the CPI was able to move to 1-month depreciated priced changes in January 2018.
To transition from the 3-month to 1-month approach, during January 2018 each quote was computed as the ratio of the 1-month deprecation adjusted price from January over the 3-month average of depreciation adjusted prices in October, November, and December 2017. In February 2018, the transition to 1-month depreciation adjusted prices will be complete as the 1-month depreciation adjusted price from January will appear in the denominator and the 1-month February depreciation adjusted price in the numerator.
Quality adjustment
Quality adjustments are made in the CPI for new and used vehicles based on manufacturers’ costs obtained by our analysts. The quality adjustments that are made to used cars and trucks are the same adjustments that were made to the vehicles when they were new; they just occur in later years. Because the improvements are assumed to have depreciated at the same rate as the vehicle itself, the adjustment amount applied to used cars and trucks is appropriately depreciated.
Data
Access data for used cars and trucks in our online database.
Additional information
Although the CPI uses the NADA Official Used Car Guide to obtain prices, other sources are available. The two most commonly used sources are the Kelley Blue Book and the Black Book. Mention of external data sources should not be considered as an endorsement by BLS.
Information on trends in used car and truck prices can be obtained from several other sources.
Manheim Auto Auctions constructs a price index based on sales at their wholesale auto auctions that are only open to professional buyers. Manheim runs a chain of these auctions and has thousands of vehicles to use as source data. Note that they do not do adjustments for depreciation or quality changes and its index comes out monthly.
Adesa Auto Auctions is another chain of auto auctions; they have various data available on used car pricing trends, but do not produce a specific price index.
Automotive News is a trade publication covering the Automobile industry that sometimes has information on used car and truck pricing trends.
Additional information may be obtained from the Consumer Price Index Information Office by email or calling 202-691-7000. Information on the CPI's overall methodology can be found in the BLS Handbook of Methods.
Last Modified Date: April 24, 2019