How BLS Measures Price Change for Used Cars and Trucks in the Consumer Price Index
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 car and truck index is published monthly at the U.S. level and
for each of the four census regions. Index numbers are not published at the
primary sampling unit level (cities). The Used Cars and Trucks Index is
comprised of used cars and trucks from two through seven years of age.
||Relative Importance December 2007
|New and Used Motor vehicles
| New Vehicles
| Used Cars and Trucks
| Leased Cars and Trucks
The weight of Used Cars and Trucks 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.
Pricing. The Bureau of Labor Statistics (BLS) does not collect price
information on used cars and trucks. All price information for used cars and
trucks used in the CPI comes from the N.A.D.A. Official Used Car Guide (NADA).
All prices are adjusted for depreciation of the vehicle.
A monthly price relative is calculated for each observation. The price
relative is based on a three month moving average of the current and last two
months depreciation adjusted prices. So for
month t, we are comparing the price (Dt+Dt-1+Dt-2)/3 to the price
(Dt-1+Dt-2+Dt-3)/3, where Dt is the depreciation adjusted price for month t.
The current CPI sample of used cars and trucks was chosen with the J. D.
Power Information Network. This is 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.
The CPI sample consists of 480 observations. These observations are
replicated in all of the CPI areas (after tax adjustments).
The sample is updated by one model year each September through November.
This maintains the same age vehicles over time. If a production model is
discontinued, it is replaced by a comparable model. A complete resampling is
scheduled every 5 years.
Quality adjustments are made in the CPI for new and used vehicles based on
manufacturers costs obtained by the BLS 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
Issues associated with used cars and trucks
Although the CPI uses the N.A.D.A. 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 . 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
auctions. These are wholesale auto auctions only open to professional buyers.
Manheim runs a chain of these auctions and has thousands of vehicles to use as
source data. They do not do adjustments for depreciation or quality changes.
The index comes out monthly.
Adesa Auto Auctions is another chain of auto auctions. They have various
data available on used car pricing trends but dont have a specific price index
Automotive News is a trade publication covering the Automobile industry.
It sometimes has information on used car and truck pricing trends
Additional information on the Consumer Price Index
can be found in the BLS Handbook of Methods, chapter 17,
"The Consumer Price Index," Bulletin 2490 (1997).
The current version of this chapter is also available on the BLS Internet site at
www.bls.gov/opub/hom/homch17_a.htm or you
may call the Information and Analysis Section of the CPI
Last Modified Date: March 3, 2008