Measuring Price Change in the CPI: New vehicles
The new vehicles index, a component of the private transportation index, is included in the transportation group of the Consumer Price Index (CPI). Together with the index for used vehicles, it makes up the new and used motor vehicles index. The new vehicles index is published at the U.S., region, division, and local level.
The new cars index is composed of subcompact, compact or sporty, intermediate, full, and luxury cars. The new trucks index is composed of pickup trucks, vans, and specialty vehicles; specialty vehicles include sport and cross utility vehicles.
The relative importance of an item category is its percent of the CPI weight as of December of the most recent year.
New and used motor vehicles
Used cars and trucks
Leased cars and trucks
Information from the Telephone Point-of-Purchase Survey (TPOPS) is used to select the dealerships surveyed for the new vehicles index. All new vehicles sold for consumer use are eligible for selection. A disaggregation process based on dollar volume sales is utilized to select the unique make, nameplate, and model whose prices will be followed over time for the index. The disaggregation process is a probability sampling method that uses the proportion to dollar volume of sales to select from among the new vehicles offered for consumers by the retail outlet. Each vehicle is described in detail including make, nameplate, model, engine, transmission, doors, and options.
Price change and quality adjustment
Each year, the CPI performs a model year change over procedure for all vehicle indexes. For the new vehicles index, the CPI replaces the old model with the new one when the dollar sales of the new model are 50 percent or more of the total sales for the vehicle over the past 30 days. While new models may be introduced anytime during the year, they are most often introduced in the fall and are generally reflected in the CPI beginning in September through February.
The price used in the index is an estimated transaction price based on sales for the model over the past 30 days. Prices are collected for the base price, destination charge, options, dealer preparation charges, and applicable taxes. Averages are then estimated to adjust the price for markups, dealer concession or discounts, and consumer rebates. Finance charges are excluded from the price, and any incentives associated with low-interest financing are excluded from the discount or rebate amount.
The basic formula for the total transaction price used in calculating the new vehicles price index is:
Base price of new vehicle + transportation to dealer + total price of packages & options + dealer prep and miscellaneous charges + additional dealer markup – dealer concession or discount - rebate +applicable non-sales tax = total transaction price
Quality adjustments are based on costs provided by manufacturers in categories such as reliability, durability, safety, fuel economy, maneuverability, speed, acceleration/deceleration, carrying capacity, and comfort or convenience. Adjustments are also made when equipment is added or deleted from the tracked model. Adjustments are not made for changes in gasoline content due to mandated air quality requirements. Additional information is available in the Guidelines for Quality Adjustment of New Vehicles Prices document.
Access data for new vehicles in our online database.
Information on trends in leased cars and truck prices can be obtained from several other sources including Ward’s Automotive, Kelly Blue Book, and Edmunds.com. Average price data for new vehicles is available from the Bureau of Economic Analysis. The mention of these sources does not constitute or imply endorsement, recommendation, or favoring by the U.S. Bureau of Labor Statistics.
The Producer Price Index (PPI) program publishes an annual report on quality changes to new models. The report provides the average model year changes in invoice price and a retail equivalent price, as well as the estimated value of quality changes. These reports are available on the PPI Archived Reports on Quality Changes for Motor Vehicles webpage.
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 CPI section of the BLS Handbook of Methods.
Last Modified Date: May 23, 2019