The three prominent factors that reduced new vehicle purchases in the U.S. are the shortage of semiconductor chips, the war in Ukraine and the Covid-19 related blockades that shut down factories in China.

As a point of reference, new vehicle purchases in the U.S. market in 2022, at 13 million 754,000 units, fell to their lowest level since 2011.

Another weighting: that same volume declined 8% year-over-year.

In the years leading up to the Covid-19 pandemic, U.S. sales of new passenger cars and light trucks averaged about 17 million units per year.

According to data from the U.S. Department of Commerce, the recent trend went like this: from 2019 to 2020, sales went from 16 million 961,000 to 14 million 472,000 units, and from 2021 to 2022, sales declined from 14 million 947,000 to 13 million 754,000 units.

Also compared to previous pandemic years, used unit transactions averaged more than double those for new vehicles.

At the start of Covid-19, new vehicle purchases fell below an annual run rate of 9 million units, and manufacturers rushed to cancel supply orders, including semiconductor capacity commitments, capacity that was quickly put to other uses.

Vehicle purchases

Soon, the combination of stimulus payments and restrained spending (on things like travel and dining) resulted in a particularly optimistic consumer.

Despite strong demand for new vehicles, semiconductor supply constraints began to reduce production volumes in mid-2021.

Since then, manufacturers have achieved only about 80% of «normal» production levels.

According to iShares Trust, that unmet demand for new vehicles inevitably jumped its banks, flowing relentlessly into the used market.

Used vehicle prices became parabolic through 2021, surpassing 70% above pre-Covid-19 levels.