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The Automobile Industry

The United States has experienced a rapid acceleration of inflation recently. This article examines the automobile industry, a sector experiencing higher…



The United States has experienced a rapid acceleration of consumer price inflation since early 2021 despite initial assurances from the Federal Reserve and politicians that price increases would be “transitory”. Official annualized inflation, as measured by the Consumer Price Index for all Urban Consumers (CPI-U) increased from 1.4% in December 2020 to 5.4% in June 2021. Far from being “transitory”, the CPI-U then soared to 7% in December 2021 and 9.1% in June 2022. 

Of course, individual components of the CPI-U tend to move around much more than the overall measure. This has been most evident for components that are directly influenced by commodity prices with energy costs being the most obvious example. However, volatility has not been restricted to commodities. The price of new and used vehicles have both increased at a rapid clip over the past year. 

The chart below shows the trailing twelve month rate of inflation for the CPI-U along with new and used vehicles:

My first car was a 1965 Ford Mustang that was nearly a quarter-century old by the time I was lucky enough to own it. One obvious thing about the car was its complete lack of modern technology. I could perform basic maintenance, such as oil changes, replacing spark plugs, rebuilding the carburetor, and much more without resorting to the use of any technology more advanced than a repair manual printed on paper.

1965 Ford Mustang GT Coupe, 289 cubic inch A Code V8 Engine

Nostalgia has its place, but you cannot stop progress. The world has changed, and modern vehicles are essentially rolling computer systems heavily laden with advanced technology. Highly trained technicians are needed to perform most maintenance procedures. Supply chains for automobiles have become increasingly intricate and fragile and “just-in-time” inventory systems leave little margin for error. Assembly lines can be brought to a halt when key components suddenly become unavailable. 

At the start of the pandemic, automakers closed plants in order to comply with mandates to shut down production in order to protect employees. Potential customers were unable to visit dealerships and the industry braced for a downturn of indeterminate length. The actions taken by automakers at the start of the pandemic rippled down the supply chain and caused companies supplying key components to also curtail or redirect production. These actions, while necessary at the time, turned out to not be easily reversible when the economy started to gradually open up.

Modern automobiles use hundreds of microchips. When auto production came to a halt in early 2020 and only slowly ramped back up, the industry reduced orders for microchips. However, customer demand for electronics continued through the pandemic and by the time automakers were ready to ramp up production, microchips were in short supply. Although conditions in microchip supplies have been easing recently, this has not entirely alleviated production problems for automakers. 

When consumer demand increases and supplies are tight, the predictable result is a rise in prices, and this is exactly what has happened for new cars. The average price paid for a new vehicle exceeded $48,000 in June 2022 for the first time. As a point of comparison, two years ago, the average price of a new vehicle was $38,530. To make matters worse, interest rates for auto loans have been rising. The average monthly payment on a new car loan was $686 in June 2022 and 12.7% of new car buyers have signed up for monthly payments over $1,000.

With new cars in short supply, used cars began to experience rapid inflation starting in September 2020. This inflation was more extreme than for new cars. In June, I published a profile of America’s Car-Mart which included the following chart showing the average sales price of Car-Mart vehicles over time:

Source: America’s Car-Mart — SEC Filings

America’s Car-Mart offers vehicles at the low end of the used market. Most vehicles are between five and twelve years old and have between 70,000 to 150,000 miles. 

CarMax is a the largest used-car dealership in the United States and offers vehicles that are generally newer and have lower mileage compared to America’s Car-Mart. The following graph shows the average sales price of CarMax vehicles over time:

Source: CarMax — SEC Filings

The rapid rise in used car prices has resulted in strange situations such as cars actually appreciating in value. In some cases, people who purchased vehicles several years ago have been able to sell at a profit, something that is normally unheard of. Recovery rates realized by dealers who must repossess vehicles have also increased, leading to more aggressive repossessions. In normal times, dealers avoid repossession since it usually results in significant losses. 

It is interesting to research sectors of the economy in turmoil and the automobile industry is no exception. In addition to the profile of America’s Car-Mart published in June, I have been researching CarMax more recently for a profile that will be published next week. Rather than include background information on the automobile industry in the CarMax write-up, I decided to put together this article to bring together some of the trends and sources that I’ve found. 

The information in this article might be useful to those who are interested in further study of the auto industry. I have simply included a number of statistics that I find interesting. There is no overall theme to this article other than to highlight selected statistics and trends along with data source links for further study. I have created many of the charts based on underlying data sets while other charts are used directly. The exhibit captions contain links to the underlying source.

Interesting Statistics and Trends

The automobile market is an important component of gross domestic product. GDP figures include the value of new motor vehicles and parts. The used market is not included in GDP figures. In the second quarter of 2020, new motor vehicles and parts were running at $734.2 billion on a seasonally adjusted annualized basis. This was slightly under 3% of GDP for the second quarter. The following chart shows the share of motor vehicle output as a percentage of GDP over several decades:

Source: Deloitte

According to a recent Deloitte report, the downward trend in the importance of domestic automobile production has to do with an increasing share of imports as well as higher growth in other sectors of the economy. We can see from the chart that automobile production is also highly cyclical, as we would expect. The sharp decline and subsequent rebound experienced during the pandemic was exaggerated and compressed, but not atypical compared to prior economic downturns.

The exhibit below shows the total number of motor vehicles registered in the United States since 1990. As of 2020, there were just under 276 million registered vehicles, of which 253.1 million were light duty vehicles and 8.3 million were motorcycles. The balance was comprised of heavy duty trucks and buses. We can see that total number of registered vehicles has increased slowly over the past decade.

It is important to understand that government statistics consider many ordinary passenger vehicles to be light-duty trucks. Along with pickup trucks, most minivans and sport utility vehicles are considered to be light-duty trucks, not automobiles. The automobile category is comprised of what we would identify as cars — sedans, coupes, and convertibles. There has been a multi-decade shift in consumer preferences from automobiles to light-duty trucks. The exhibit below shows the composition of registered vehicles in the United States in 2020.

How much are Americans using their vehicles? As we might expect, total vehicle miles traveled does not normally change that much from year to year. However, the pandemic caused a major reduction in travel which was reflected in a historic plunge in vehicle miles traveled in early 2020:

Source: St. Louis Fed

This plunge was quickly reversed as the economy reopened and we are now essentially back to normal in terms of vehicle usage. As an aside, public transit ridership never recovered from the pandemic. Public transit ridership in May 2022 was down 40.8% from its level in May 2019. It appears that people have returned to their cars, but not necessarily for the purpose of commuting, which is the primary use of public transit. 

Over time, the durability of automobiles has increased, and this has been reflected in a rising average age of light vehicles in operation, as shown in the exhibit below:

Given the relatively slow growth in registered vehicles and miles traveled, it stands to reason that an increasing age of the light-vehicle fleet would reduce the number of new vehicles required annually. The increasing average age of vehicles also has implications for the used vehicle market. As vehicles last longer, resale value is likely to hold up somewhat better over time. The used car buyer looking at a typical seven year old car today could reasonably expect it to last another five to seven years. Two decades ago, a seven year old car was quickly approaching the end of its expected life.

The exhibit below shows light vehicle sales in the United States since 1976. What is perhaps surprising is the amount of time that was required to recover from the decline during the financial crisis and recession of 2008-09. Aside from a brief spike that I believe was due to the “cash for clunkers” program, it took several years for auto sales to recover to the 15-18 million unit range that prevailed prior to the crisis.

Source: St. Louis Fed

As noted previously, the average age of a light vehicles in the United States has increased significantly, something we can deduce from total registered vehicles rising slowly over time even as new vehicle sales experienced a prolonged downturn during the first half of the 2010s. 

As noted earlier, market preferences have shifted from passenger vehicles to light trucks in recent years. The following chart is similar to the one above except it breaks down total light vehicle sales between passenger vehicles and light trucks.1

Now that we have looked at some of the high level trends in terms of the size of the vehicle fleet and annual sales, let’s take a look at new and used auto prices. There are multiple sources of auto price data, some of which is behind paywalls. However, I have found publicly available pricing data from the Bureau of Transportation Statistics which gives us a sense of how new and used auto prices have trended in nominal dollars over long periods of time.

The following chart shows the average price of a new vehicle from 2010 to 2021. While the underlying data set includes figures prior to 2010, they are not directly comparable to more recent data due to a change in the data source.

The Bureau of Transportation Statistics dataset does not include used car prices after 2019, so it is of limited utility for our purposes. However, we do have the charts for America’s Car-Mart and CarMax presented earlier showing recent trends in used car prices at the low-end and mainstream segments of the used car market.

In nominal terms, both new and used car prices have increased significantly over the years. However, according to the Bureau of Labor Statistics, quality improvements in automobiles supposedly accounted for the entirety of the price increases until the recent post-pandemic spike. The following charts show a very long view of the CPI for new and used vehicles since the mid 1950s.

New Vehicles

Source: St. Louis Fed

Used Vehicles

Source: St. Louis Fed

If you are skeptical that quality improvements account for nearly all of the nominal increases in new and used vehicles from the mid-1990s until just prior to the pandemic, you are not alone. However, it is true that vehicles have improved a great deal over that quarter-century span. The increasing average age of vehicles on the road demonstrates that durability has increased, and it is true that current cars have more electronics and safety enhancements compared to the vehicles of the mid-1990s.

The Bureau of Labor Statistics has published a webpage explaining how it adjusts the CPI for vehicle improvements. Another document, Guidelines for Quality Adjustment of New Vehicle Pricesgoes into even more detail. Ultimately, how to account for quality improvements is a judgment call. 

In addition to the 1965 Ford Mustang, over the years I have owned a 1987 Plymouth, a 2001 Ford F350, a 2003 Toyota Camry, and a 2008 Ford Mustang. While the 1965 Mustang and 1987 Plymouth were very primitive by modern standards, the vehicles of the 2000s had many of the same conveniences we take for granted today, with the exception of navigation systems and integration with mobile devices. 

While the extent of quality adjustments over the past quarter century is debatable, it is clear that we have seen significant inflation since the pandemic that cannot be explained by changes in quality, and the official CPI figures reflect this reality.


It is difficult to study individual companies within an industry without first looking at the industry as a whole. This is definitely the case when it comes to the automobile industry in the United States. We are fortunate to have a wealth of statistics that are publicly available, although it takes quite a bit of digging to uncover the desired data.

Over the past two years, the pandemic has heavily impacted the market for both new and used vehicles. As the supply of new vehicles was constrained due to persistent supply chain problems, buyers turned to the used car market. Heavy demand for used cars caused significant price inflation that far exceeded inflation for new vehicles. As supply chain conditions ease, new vehicle production should increase in the coming months. The impact on new and used car pricing remains to be seen.

Hopefully this article has been helpful to those with an interest in the automobile market. Next week, I will publish a profile of CarMax, the largest used car dealership in the United States. If you would like to receive that profile, as well as to gain access to all previous business profiles, please consider signing up for a paid subscription.

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  1. Note that the Bureau of Transportation Statistics dataset is annual while the St. Louis Fed’s dataset is monthly and shows data on an annualized basis.

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Biden Signs Bill To Declassify COVID Origins Intel

Biden Signs Bill To Declassify COVID Origins Intel

Having earlier issued his first veto since taking office, rejecting a bill that would have…



Biden Signs Bill To Declassify COVID Origins Intel

Having earlier issued his first veto since taking office, rejecting a bill that would have reversed a Labor Department rule on ESG investing, President Biden signed a bipartisan bill late on Monday that directs the federal government to declassify as much intelligence as possible about the origins of COVID-19.

His signature follows both the House and Senate unanimously approving of the measure, a rare moment of overwhelming bipartisan consensus.

The vote tallies meant that the measure would likely have survived a presidential veto had Biden opted to withhold his signature.

Biden, in a statement, said he was pleased to sign the legislation.

“My Administration will continue to review all classified information relating to COVID–19’s origins, including potential links to the Wuhan Institute of Virology,” he said.

"In implementing this legislation, my administration will declassify and share as much of that information as possible, consistent with my constitutional authority to protect against the disclosure of information that would harm national security."

Of particular interest to freedom-loving Americans who were tyrannized, censored, banned, and deplatformed for even daring to mention it, is the small matter of whether the virus leaked from the Level 4 Virus Lab at the Wuhan Institute of Virology (or instead, as The Atlantic proclaimed recently, a sick pangolin fucked a raccoon dog and coughed in someone's bat soup in a wet market.

The Department of Energy and other federal agents such as the FBI have increasingly backed a lab leak as the likely origin of the virus, while some lawmakers have even suggested Beijing may have deliberately allowed it to spread.

Tyler Durden Mon, 03/20/2023 - 20:41

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Spread & Containment

Asia’s trade at a turning point

Policymakers in Asia are rightly focused on the potential reconfiguration of global supply chains, given the implications these shifts may have for the…



By Sebastian Eckardt, Jun Ge, Hassan Zaman

Policymakers in Asia are rightly focused on the potential reconfiguration of global supply chains, given the implications these shifts may have for the development of their export-oriented and highly open economies. While the focus on potential shifts on the supply side of the global and regional trading system is well-justified, equally dramatic shifts on the demand side deserve as much attention. This blog provides evidence of the growing role of final demand originating from within emerging Asia and draws policy implications for the further evolution of trade integration in the region.

Trade has been a major driver of development in East Asia with Korea and Japan reaching high-income status through export-driven development strategies. Emerging economies in East Asia, today account for 17 percent of global trade in goods and services. With an average trade-to-GDP ratio of 105 percent, these emerging economies in East Asia trade a higher share of the goods and services they produce across borders than emerging economies in Latin America (73.2 percent), South Asia (61.4 percent), and Africa (73.0 percent). Only EU member states (138.0 percent), which are known to be the most deeply integrated regional trade bloc in the world, trade more. Alongside emerging East Asia’s rise in global trade, intra-regional trade—trade among economies in emerging East Asia—has expanded dramatically over the past two decades. In fact, the rise of intra-regional trade accounted for a bit more than half of total export growth in emerging East Asia in the last decade, while exports to the EU, Japan, and the United States accounted for about 30 percent, a pattern that was briefly disrupted by the COVID-19 crisis. In 2021, intra-regional trade made up about 40 percent of the region’s total trade, the highest share since 1990.

Drivers of intra-regional trade in East Asia are shifting 

Initially, much of East Asia’s intra-regional trade integration was driven by rapidly growing intra-industry trade, which in turn reflected the spread of cross-border global value chains with greater vertical specialization and geographical dispersion of production processes across the region. This led to a sharp rise in trade in intermediate goods among economies among emerging economies in Asia, while the EU, Japan, and the United States remained the main export markets for final goods. Think semiconductors and other computer parts being traded from high-wage economies, like Japan, Korea, and Taiwan, China for final assembly to lower-wage economies, initially Malaysia and China and more recently Vietnam, with final products like TV sets, computers, and cell phones being shipped to consumers in the U.S., Europe, and Japan.

The sources of global demand have been shifting. Intra-regional trade no longer primarily reflects shifts in production patterns but is increasingly underpinned by changes in the sources of demand for exports of final goods. With rapid income and population growth, domestic demand growth in emerging East Asia has been strong in recent years, expanding by an average of 6.4 percent, annually over the past ten years, exceeding both the average GDP and trade growth during that period. China is now not only the largest trading partner of most countries in the region but also the largest source of final demand for the region, recently surpassing the U.S. and the EU. Export value-added absorbed by final demand in China climbed up from 1.6 percent of the region’s GDP in 2000 to 5.4 of GDP in 2021. At the same time, final demand from the other emerging economies in East Asia has also been on the rise, expanding from around 3 percent of GDP in 2000 to above 3.5 percent of GDP in 2021. While only about 12 cents of every $1 of export value generated by emerging economies in Asia in 2000 ultimately met consumer or investment demand within the region, today more than 30 cents meet final demand originating within emerging East Asia.

Figure 1. Destined for Asia

Source: OECD Inter-Country Input-Output (ICIO) Tables, staff estimates. Note: East Asia: EM (excl. China) refers to Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand, and Vietnam.

These shifting trade patterns reflect dramatic shifts in the geography and makeup of the global consumer market. Emerging East Asia’s middle class has been rising fast from 834.2 million people in 2016 to roughly 1.1 billion in 2022. Today more than half of the population—54.5 percent to be precise—has joined the ranks of the global consumer class, with daily consumer spending of $12 per day or more. According to this definition, East Asia accounted for 29.0 percent of the global consumer-class population by 2022, and by 2030 one in three members of the world’s middle class is expected to be East Asian. Meanwhile, the share of the U.S. and the EU in the global consumer class is expected to decline from 19.2 percent to 15.8 percent. If we look at consumer-class spending, emerging East Asia is expected to become home to the largest consumer market sometime in this decade, according to projections, made by Homi Kharas of the Brookings Institution and others, shown in the figure below.

Figure 2. Reshaping the geography of the global consumer market

Figure 2

Source: World Bank staff estimates using World Data Pro!, based on various household surveys. Note: Middle-class is defined as spending more than $12 (PPP adjusted) per day. Emerging East Asia countries included in the calculation refer to Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand, Vietnam, and China.

Intraregional economic integration could act as a buffer against global uncertainties  

Emerging economies in Asia are known to be the factories of the world. They play an equally important role as rapidly expanding consumer markets which are already starting to shape the next wave of intra-regional and global trade flows. Policymakers in the region should heed this trend. Domestically, policies to support jobs and household income could help bolster the role of private consumption in the steady state in some countries, mainly China, and during shocks in all countries. Externally, policies to lower barriers to regional trade could foster deeper regional integration. While average tariffs have declined and are low for most goods, various non-tariff barriers remain significant and cross-border trade in services, including in digital services remains particularly cumbersome. Multilateral trade agreements, such as ASEAN, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP) offer opportunities to address these remaining constraints. Stronger intraregional trade and economic integration can help diversify not just supply chains but also sources of demand, acting as a buffer against uncertainties in global trade and growth.

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“I Couldn’t Remain Silent”: Physician Assistant Fired For Reporting COVID-19 Vaccine Adverse Events To VAERS

"I Couldn’t Remain Silent": Physician Assistant Fired For Reporting COVID-19 Vaccine Adverse Events To VAERS

Authored by Matt McGregor via…



"I Couldn't Remain Silent": Physician Assistant Fired For Reporting COVID-19 Vaccine Adverse Events To VAERS

Authored by Matt McGregor via The Epoch Times (emphasis ours),

For her efforts to report injuries to the Vaccine Adverse Events Reporting System (VAERS) and to educate others in her hospital system on doing the same, Physician Assistant Deborah Conrad said she was labeled an anti-vaxxer and fired from her job.

Whistleblower Deborah Conrad tells her story in Jackson, Miss., on Feb. 27, 2023. (Courtesy of Charlotte Stringer Photography)

Today, the New York-based Conrad tells her story at medical freedom conferences throughout the country, the most recent being one in Mississippi where physicians, scientists, and the vaccine injured warned state lawmakers to pull the COVID-19 vaccines from the market.

Conrad told The Epoch Times she began to see early danger signals in 2021 upon the vaccine rollout, and with that, resistance among her colleagues to report on them.

After the vaccines came out, there was this uptick in unusual symptoms, some of which I had never seen in my 20-year career,” Conrad said. “In every case, it was in somebody who had received the COVID-19 vaccine.

Conrad said she had never admitted an adult patient with RSV (respiratory syncytial virus) until the COVID-19 vaccines.

“And every patient who came in with RSV was vaccinated for COVID,” Conrad said. “It wasn’t normal.”

Then, there were the adolescents with no previous medical conditions who had gotten the COVID-19 vaccine a week prior and, suddenly, they were struck with pneumonia and not able to function, she said.

They weren’t able to walk or eat, and they were completely and totally fatigued,” Conrad said.

This was in 2021 before myocarditis was being discussed, so many of those early cases that were probably myocarditis were diagnosed as pneumonia, she said.

“A lot of these myocarditis cases came in with fevers because of this massive inflammatory response that was taking place in the body, so they would be labeled as septic, treated as if we were treating pneumonia or fevers of unknown origin,” Conrad said. “We’d treat them with antibiotics and all sorts of other things, not realizing that they were having heart failure.”

Conrad began reporting to VAERS, which she said was an overwhelming task not made easy by its multiple user-interface complications.

My entire life had been taken over by doing these VAERS reports by myself,” she said.

In meetings with leadership, she would propose implementing a reporting system and hiring someone to manage the reports, she said.

‘A Hostile Environment’

“They kept telling me we’re looking into it and we’ll get back to you,” Conrad said. “Around April 2021, leadership came back and said no one else is reporting injuries—implying that I was crazy and there was nothing really going on with the vaccines.”

Leadership then audited her reports, she said and concluded that she was overreporting.

“I was then told that by doing VAERS reports and even discussing VAERS that it was an admission that the vaccines were unsafe, so it’s contributing to vaccine hesitancy,” Conrad said.

From there, it became a “very hostile environment” that compelled her to seek legal counsel, who wrote letters to the Department of Health, the CDC, and the FDA.

No one cared,” Conrad said. “Finally, I had had it. It was so unethical; I couldn’t take it anymore. These VAERS reports are critical to assuring these vaccines are safe for us all. I could no longer be a part of a system that is lying to the American people.”

Conrad decided to become a whistleblower, telling her story on Del Bigtree’s The Highwire, knowing, she said, that it would cost her job.

I couldn’t remain silent, even if it meant losing my career and everything I worked for,” she said. “I was fired a few weeks later and walked out like a criminal in front of all my peers.”

The initiative and education she had brought forth to report to VAERS were squashed that day, she said.

Whistleblower Deborah Conrad speaks about her termination for attempting to utilize the VAERS reporting in her hospital system, in Jackson, Miss., on Feb. 27, 2023. (Courtesy of Charlotte Stringer Photography)

National Vaccine Injury Act of 1986

According to Barbara Loe Fisher, co-founder and president of the National Vaccine Information Center (NVIC), under the National Vaccine Injury Act of 1986, it’s a federal requirement for health care workers to report vaccine-related adverse events to VAERS.

Fisher, whose son was harmed by the DTP vaccine in 1980, worked with other parents of vaccine-injured children in establishing the NVIC in 1982.

“The 1986 Act was driven by parents of DPT vaccine injured children asking the government to pass legislation to secure vaccine safety informing, recording, reporting, and research provisions in the vaccination system to make it safer, and to create a federal compensation system alternative to a lawsuit against manufacturers of vaccines that injure or kill children,” Fisher told The Epoch Times.

In addition to NVIC arguing that physicians and vaccine manufacturers should be giving informed consent and report injuries, the organization maintained they should also continue to be held accountable in a civil court to serve as an incentive for physicians to administer vaccines responsibly, for manufacturers to produce safer vaccines, and for adequate federal compensation to vaccine-injured children.

Read more here...

Tyler Durden Mon, 03/20/2023 - 19:00

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