5 things to know about the unprecedented used-car market
Early in the pandemic, automakers—like many other businesses—were forced to temporarily shut down their plants. This led to a chain reaction of events that culminated in an unprecedented car-buying and selling market. To better understand the current state of the industry, Jerry compiled statistics on new and used auto sales from market experts and government sources.
When automakers paused production on assembly lines, plants held off on buying parts from suppliers. These parts included semiconductor chips, which have important functions from improving engine efficiency to making backup cameras function. Chipmakers responded by rerouting supplies to the electronics industry.
By the summer of 2020, automakers were already feeling the pressure of needing to build new vehicles while lacking a key ingredient to do so. Meanwhile, the drastic shortage of new vehicles created a surge in demand for used cars and sent prices soaring. More than 40 million used vehicles were sold in 2021: an all-time high reflecting a 10% jump from the year before. The supply shortage is expected to last at least into the second half of 2022; Intel’s CEO Pat Gelsinger told CNBC in April that he expects the shortage to “drift” into 2024.
Keep reading to learn more about this market shift and how consumer buying behavior has changed.
cleanfotos // Shutterstock
Almost half of used-car shoppers opted not to buy
After the labor market bounced back amid a quickly reopening economy in 2021, it cooled in 2022 and wages failed to keep pace with inflation. Consumer prices rose 8% from February 2021 when compared to the same month in 2022, and rising prices may be a motivating factor for second-guessing big-ticket purchases. Meanwhile, 428,000 jobs were added in April—a slight downtick from previous months.
More than two-thirds of adults who contemplated purchasing a new car or home changed their minds, according to a March 2022 Morning Consult survey. Among used car shoppers, nearly half (48%) said cost was a determining factor for not purchasing.
Best Auto Photo // Shutterstock
The average age of vehicles on the road rose to new heights
Americans are holding on to their cars longer, according to research from IHS Markit. Ten years ago, the average age of a car on the road was 9.6 years old; in 2021, the average age rose to 12.
The continued microchip shortage may be one reason why car owners are holding onto their vehicles. Industry analysts say a mix of soaring car prices and improved endurance (with some cars lasting up to 200,000 miles) will affect consumer car-buying behaviors going forward. J.D. Power forecasts that if inflation does not ease, even more consumers may be priced out of the new car market this year.
Used car prices are up from 2021, but have declined since January
Inflation sent prices up over the past year and the automobile industry was no exception. The wholesale price of all used cars grew by 9.7% between May of 2021 and 2022, according to Manheim Market Report. Used vans saw the biggest price increase, followed by used compact cars. The upward trend does appear to be slowing: Starting in January 2022, the report recorded decreasing gains.
Many buyers still intend to purchase a used car in 2022
Despite high costs for new and used vehicles, car buyers are still shopping. A Statista survey published on April 21 found that nearly a quarter of respondents planned to buy a car in 2022. Many consumers planning to purchase a new vehicle are now considering used cars even though prices have skyrocketed for both.
One advantage: Certified pre-owned vehicles have a comparatively better supply, with 2019 cars especially prevalent. With inventory shortages, many of the “new” cars showcased in dealerships are from the 2019 model year.
Simone Hogan // Shutterstock
Used vehicle sales were down 21% year over year
Used car retail sales dropped by 13% between March 2022 and April 2022, according to Cox Automotive research. This is part of a larger industry cooling trend as used retail sales saw an estimated year-over-year decline of 21%. Prices for wholesale used vehicles—cars that dealers buy directly from auctions or other wholesale sellers—saw a slight decline of 1% between March and April 2022.
The pandemic’s long-term impact on the car-buying market remains to be seen. Many buyers are increasingly shopping for cars online and seeing fewer offers for markdowns and bargains. As car production ramps back up, many used car shoppers may swing back into the new car market if prices come back down, decreasing the demand for used vehicles.
This story originally appeared on Jerry and was produced and
distributed in partnership with Stacker Studio.
These 5 charts show the ups and downs of the US stock market over 10 years
The U.S. stock market is a complicated beast, and with recent events like the COVID-19 pandemic, we’ve seen some volatility in the last few years. Stocks dipped quite a bit during the pandemic but have recovered since.
To get an idea of how the stock market has fared in the last 10 years, watch trends of major market indices—or certain groups of companies’ stocks that give a sample of how the entire market is performing. Perhaps the most well-known market index is the S&P 500, a group of the 500 largest companies on the U.S. stock market.
While the S&P 500 is widely regarded as the best indicator of how the stock market is faring, other market indices can give you a different view based on the type of companies they track. Dow Jones, for instance, follows 30 of the largest companies in the country from various industries. The NASDAQ includes all stocks on the NASDAQ market, largely comprised of tech companies.
By watching the performance of these and other market indices, investors can get a good idea of how the U.S. stock market as a whole has performed over time. Olive Invest examined historical equities data from S&P Dow Jones, NASDAQ, and other data sources to see how the stock market has fared over the last decade.
How stocks have performed over the last decade
This chart shows a significant increase in stock index values from the last decade, despite a brief drop in 2020 during the pandemic. At the start of the COVID-19 pandemic, there was a steep drop-off in index values. However, they bounced back by the end of 2020 into 2021.
Index values have held relatively steady growth across the last 10 years. The NASDAQ, S&P 500, and Dow Jones Industrial Average have all doubled in value since 2012.
This chart measures the Chicago Board Options Exchange volatility index (VIX index), designed to show how current events and uncertainty affect stock prices. Essentially, the more fluctuation you see here, the more uncertainty investors and the public have about the future, which can significantly impact the market and even help project market crises.
Unsurprisingly, the most significant spike in volatility from the last decade was in March 2020, at the beginning of the COVID-19 pandemic. The last two years have shown a reduction in volatility since this spike, but in general, there is more uncertainty than 10 years prior.
Rates of return since 2000
The S&P 500’s annual return on investment is a critical indicator of the stock market’s performance. The average return since the S&P 500’s establishment is 11%.
There are a few notable data points here—perhaps the most prominent of which is the Great Recession in 2008. That financial crisis resulted in the most significant drop in the S&P 500 return of the last 20 years. Since the recession, however, the rate of return has been above average almost every year.
S&P stocks by sector
The S&P 500 tracks the top 500 U.S. companies on the stock market. Knowing what types of businesses make up the majority of the index is essential to understanding which sectors have the most success.
In 2022, Information Technology made up 26.4% of the S&P 500—an industry high in the last 20 years. Similarly, health care is gaining ground in the previous few years, though it is still short of its historical high.
The financial sector has seen a downturn in the last decade—though this may change with the reclassification of major shares next year.
Number of publicly traded companies declines
In the last 20 years, there has been a significant drop in how many publicly traded domestic companies are on the U.S. stock market as more companies exit the market and there are fewer IPOs.
The last decade, however, has been far more stable. Experts suggest the change is connected to natural fluctuations and changing dynamics in the market’s major industries. McKinsey attributes a significant portion of the drop-off to acquisitions.
Still, there have been fewer IPOs in the last several years, which can be a disappointment for new investors trying to get in on the ground floor.
This story originally appeared on Olive Invest and was produced and
distributed in partnership with Stacker Studio.
2023 brings more demand for cloud, web dev, and IT skills for a slew of lucrative tech jobs
Recruitment company Randstad published 2023 lists for Canada’s most in-demand tech jobs and skills.
Today’s businesses continue embracing digital transformation through automation, cloud systems, and remote work arrangements into 2023.
Still, skill shortages and employee attrition plague the Canadian workforce. One constant that remains is the demand for highly skilled IT and tech professionals — which just increased by 25% in 2022.
Recruitment company Randstad recently released roundups of Canada’s most in-demand tech skills and IT and tech jobs for 2023. The good news is prospective workers have ample fields, industries, and salary ranges to consider as they peruse the job market.
And we’re not just talking about the IT industry. Randstad reminds us that tech professionals are sought after in pretty much every industry, especially banking, administration consulting, employment agencies, and software publishers.
Randstad cites data, security, business system, and quality assurance analysts in their list. These roles require not only technical skills like Microsoft Azure and experience with cloud technology, but also project management skills earned through previous tenures or certifications like the project management professional (PMP) or certified scrummaster (CSM).
Other in-demand jobs listed include cloud architect and network engineer, positions calling for significant expertise in Java, Python, and cloud technology, on top of other technical and soft skills.
We also see an increase in average salaries for 2023, jumping from $51,900 to $154,300 in 2022 to $74,000 to $130,600 in 2023. But tech professionals seeking the highest salaries should gravitate toward developer/programmer roles, a position that also made Randstad’s more general best jobs in 2023 list. Notably, the full-stack developer role topped Randstad’s highest-paid jobs list, fetching as high as $130,000.
Randstad also shares a long list of highly sought-after technical skills, from C# and Java to Linux and API.
While years of professional experience would certainly help today’s prospective candidate, it’s not always a deal breaker. McKinsey reminds us of a curious phenomenon in the tech industry — 44% of tech professionals transitioned from a non-IT role. That’s because companies indeed want qualified candidates with skills, but also seek enthusiastic, hardworking professionals interested in learning and growing with the field’s constant innovations.
Another notable finding was Ranstad’s certification recommendations. These aren’t suitable for beginner tech professionals; rather, they’re a way for an entry-level, associate, or executive professional to easily highlight their prowess on their resumes, like the certified information security manager (CISM) certification.
Peter Bendor-Samuel, CEO of research firm Everest Group, described the tech demand to Forbes as a result of consistent investment in software-driven operating platforms despite reduced discretionary spending.
Companies are cutting out the fluff — but people who can create and improve technology, security, and cloud computing solutions and systems are certainly not fluff.
DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.
Americans spend $179 on fuel each month—here’s how to spend less
Owning a vehicle comes with a whole host of costs—from insurance and maintenance to parking and tolls. And if the past year has proven anything, it’s that another cost associated with vehicle use—namely fuel—can fluctuate wildly, putting further strain on your bank account for an already costly necessity.
CoPilot looked into the Bureau of Labor Statistics’ Consumer Expenditure Surveys to see how much Americans spend on fuel for their vehicles and used sources from insurance companies, transportation fleet managers, and government agencies to determine some ways to lower that expenditure.
On average, Americans spent $179 per month (or $2,148 annually) on gasoline, other fuels, and motor oils in 2021, accounting for around 3% of overall annual expenses. In terms of finding decisive ways to cut that cost, one front-of-mind idea might be to consider an electric vehicle. EVs are gaining in popularity, the major automakers are investing heavily in an electric future, and the government incentivizes most EV buyers.
While switching to a car with better fuel economy, such as a hybrid or fully electric vehicle, can lead to big reductions in monthly fuel expenses, hybrids and EVs often cost more than their gasoline-only counterparts, and the fuel savings may not offset that difference for a number of years. What’s more, the infrastructure EVs depend on for charging remains in something of a developmental stage, making them a limited alternative to gas-powered vehicles—at least for now.
There are approximately 250 million cars and trucks on U.S. roadways; less than 1% are electric. So for those either not in the market for a new vehicle or simply content to stick with the reliability of gasoline-powered travel, the following list offers a wide range of suggestions, best practices, and easy lifestyle adjustments that can reduce the monthly costs associated with fueling a personal vehicle.
Wealthy households spend more than twice as much on gasoline
Even as gas prices were at their highest since 2014 (adjusted for inflation), spending on fuel in 2021 increased from 2019 levels by only $54 per year on average. And while the drastic reduction in driving brought on during the height of the COVID-19 pandemic in 2020 had a great impact on fuel spending that year, it does not seem to have extended to significantly changed habits in the following year—driving in 2021 dropped by only 1% when compared with 2019 levels.
Though average spending on fuel in 2021 was high, the lack of an even more dramatic increase due to high gas prices can be attributed mainly to the steady rise in the fuel efficiency of vehicles over the past decade.
Another important consideration raised by this is whether or not the burden of those fuel expenses is felt equally across income levels. Bureau of Labor Statistics data suggests it does not. For those in the lowest income quintile, spending on fuel represented 3.6% of total expenses. The burden decreased for each subsequent income bracket; in the highest quintile, it represented just 2.4% of total costs.
While this disparity might seem minimal when considering the upper limit of the lower quintile’s household earnings is just over $27,000, and the lower limit (or floor) of the highest quintile is $141,000, that 1.2% difference comes starkly into focus.
So while the increase in the fuel economy of newer cars seems to have a relative equalizing force on fuel expenses when taken on average, income disparity implies that those in lower income quintiles do not reap the benefits of those improvements in automotive engineering.
Consider alternative forms of transportation
From their walkability to the accessibility and affordability of public transit, urban areas such as cities offer residents, especially those living in city centers, alternatives to using personal vehicles to get around. This isn’t just beneficial to their health and that of the environment; it also helps people reduce fuel costs.
Overall, those who live in urban areas spent $3,303 less on transportation than those in rural areas in 2021. Fuel expenses accounted for roughly 13% of transportation costs, meaning even those who owned cars in urban areas spent on average $39 less per month on fuel than those in rural settings.
This is not to say, however, that rural or micropolitan areas cannot take advantage of alternative forms of transportation. Small towns across the U.S. have begun to see the value in investing in bike-share programs, using its infrastructure funding to add bike-protected lanes on their streets. This is especially true in smaller college towns, where foot and bike traffic tends to be high.
So whether it’s via bike, scooter, or sneakers, tackling short-distance trips by means other than your vehicle can translate to more cash in your pocket.
Keep a close eye on how you’re using your vehicle’s features
The data is clear: Sensible driving makes a meaningful impact on the efficiency of your car.
Frequent braking and acceleration, fast driving, and A/C overuse are a few habits that can increase the overall cost of travel in your vehicle. Using A/C during hot weather can reduce fuel economy by more than 25%, according to the Department of Energy. Parking your car in shade, rolling down your windows at low speeds, and preemptively letting hot air out of the cabin as you begin your journey are a few ways to decrease the impact of heat and make your car more comfortable A/C-free.
The power of a car’s acceleration is something many, if not most, drivers love, and many car buyers put a particular value on speed capability when making their decision. For most vehicles, however, speeding also comes at a cost. For every 5 mph above 50, the cost per gallon of gas increases, depending on your vehicle’s make, model, and year.
Suppose you are driving a 2020 Ford F-150 4WD (incidentally, the bestselling truck in the U.S. since the late 1970s); the difference between going 65 mph and 80 mph is approximately $1 per gallon of gas—meaning what it costs you per 100 miles to hit the highway at 80 is equivalent to the price of an additional gallon of gas or more. Considering the average person drives 13,476 miles per year, keeping to the lower speed (on average) translates into more than $440 in fuel savings.
Coupled with the 15%-30% decrease in fuel economy brought on by frequent braking and acceleration, maintaining steady speeds, accelerating and braking gently, using cruise control, and leaving ample space between your car and the one in front of you can cut your fuel costs while also keeping you safer on the road.
Properly maintain your vehicle
In addition to benefiting its life span, properly maintaining and organizing your vehicle can lead to a small but mighty decrease in monthly fuel expenses.
Keeping your tires inflated to recommended levels, reducing excess weight, and using the recommended grade of motor oil all benefit fuel economy, according to the DOE.
Moreover, and as per basic physics, your car’s fuel use is greatly impacted by aerodynamics; so, while it might seem handy to keep that cargo pod on your roof, or that bicycle rack on your bumper, it can decrease your car’s efficiency by as much as 8% when you’re just tooling around town and as much as 25% on the interstate.
T. Schneider // Shutterstock
Purchase fuel with purpose
An ongoing myth is that premium fuels will make your car more efficient. While they won’t hurt your vehicle’s performance, premium fuel makes no difference for most cars.
There are ways to get more out of your gas purchases through grocery store, gas station, and credit card reward and money-back programs. If you know your habits well enough, you’ll be able to make such programs worthwhile. As per capita gas consumption has hovered in the 350-450 gallon range over the past 20 years, using such programs can translate to big savings.
One of the more effective ways to minimize the price of gas is by using apps and services that, when combined with a little forward planning, allow you to chart out your gas refuels at stations you know will have favorable prices.
Gas prices can fluctuate wildly within a relatively small area. Apps like GasBuddy are built specifically to help you plan around gas price variance and minimize its impact on long trips or high monthly usage. Most navigation tools like Waze or Google Maps also come with built-in gas price features as well.
Avoid driving altogether
This might seem a rather extreme recommendation, but even if you don’t live near public transit, there are still ways you can reduce the time you spend driving and, therefore, the amount you spend on driving.
Carpooling even a few times a week can lead to many positives, including a decreased carbon footprint and lower fuel expenses. Moreover, carpooling is often supported by corporate incentive programs, so it’s worth looking into at your place of work.
Other options to reduce your reliance on a personal vehicle include riding a bike or e-bike, walking when possible, reducing the number of cars in your household, and coordinating your errands to minimize individual car usage. These alternatives can make a substantive difference not only for your budget but for your health and well-being as well.
Finally, the easiest way to lower your spending on fuel is to spend no money on fuel whatsoever. If you’re able to consider ditching your car entirely, the widespread availability of ride-share and taxi services and car rental agencies can help fill your personal transportation needs when and if they arise.
This story originally appeared on CoPilot and was produced and
distributed in partnership with Stacker Studio.
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