Data from the U.S. Bureau of Labor Statistics shows that the price of used cars and trucks jumped up by 40.5% from January 2021 to January 2022. Used pickup truck prices have risen at a faster clip than new trucks, with the average used full-size pickup truck eclipsing $40,000 in 2021.
Why the Hike in Pricing for Used Trucks?
The reason for the spike in used-truck prices is the result of too few vehicles available for sale during the pandemic and too many buyers. Factory closures followed by supply-chain disruptions caused new vehicle inventories to become tight, which resulted in fewer trade-ins and fewer used vehicles available. Vehicle output shrank by 3.3 million due to plant closures during the pandemic, according to an article in the Chicago Tribune.
Rental car companies and other fleet buyers have added to the vehicle shortage. They are typically a major source of used cars and trucks for dealers and have been selling fewer vehicles. Fleet buyers are simply not buying as many new vehicles (due to their high cost and delayed availability) so they aren’t offloading their used trucks.
The Cost of Fuel Adding to Construction Spend
Add to this the high cost of diesel which is needed to power trucks and machines that are widely used in construction projects and materials, and you have a confluence of factors impacting the spend on a project. Rising gas prices affect energy-intensive heavy construction products such as bricks, cement, copper, and aluminum where energy accounts for about one-third of costs.
The cost of construction had already begun to rise in 2021. It is, in fact, the highest it’s been in 50 years with contractors and home builders feeling the effects. According to recent Census Bureau data, construction costs increased by 17.5% over the year from 2020 to 2021. This reflects the largest spike from one year to the next since 1970. Furthermore, the costs in 2021 were more than 23% higher than in pre-pandemic 2019.
Even if contractors are able to find used trucks to replace their old vehicles, they are paying a higher price for the vehicles along with the fuel needed to go to and from a job. These and other surges in prices should be factored into the cost of a job moving forward.
Sources: Chicago Times, Financial Times