Tag Archives: Brendan Williams

Improving How We Measure Prices for New Vehicles

We have a guest blogger for this edition of Commissioner’s Corner. Brendan Williams is an economist in the Office of Prices and Living Conditions at the U.S. Bureau of Labor Statistics.

For nearly as long as cars and trucks have been sold, the BLS Consumer Price Index (CPI) has tracked changes in the prices consumers pay for new vehicles. Our traditional method of determining the change in vehicle prices is to survey dealers and collect estimated prices for models with a specific set of features. For example, a Brand X 8-cylinder two-door sports coupe with a sunroof. We recently debuted a research index for new vehicles based on a large dataset of prices actually paid, which we call “transaction” prices. This is just one of many efforts currently underway in the CPI (and throughout BLS) to identify and introduce new sources of data into our statistical measures. As you are about to learn, a lot goes into introducing these new measures.

We purchased the new data for new vehicles from J.D. Power. The new dataset includes records of the prices paid during hundreds of thousands of transactions every month—far more than the roughly 2,000 vehicle prices in the CPI sample. The larger dataset provides more precise measures of price change.

But it’s not as simple as plugging the new data into the monthly CPI. We found that applying current CPI methods to the transaction data produced a biased index. So we had to make some changes. We combined an estimate of the long-run trend in new vehicle prices with a measure of high-frequency fluctuations in the market. The long-run trend is based on the year-over-year price change between a vehicle in the current month and the same vehicle in the prior model year 12 months ago; we get these values from the J.D. Power data. The high-frequency fluctuation is extracted from a monthly index based on current methods used in the CPI.

The research index includes all types of new vehicles—cars, SUVs, and trucks. And since the data reflect actual transactions, the shift in consumer preference from cars to other types of vehicles is reflected in the data. This differs from the currently published CPI, which has maintained a roughly equal weight between cars and trucks.

The new vehicles research index performs very similarly to the published index. From December 2007 to March 2020, the research index (untaxed) increased 8.2 percent, while the official new vehicles index (which is taxed) increased 7.7 percent. Looking under the hood, the research truck index is also similar to its published index. The difference in the car indexes is larger, with the official index showing a 5.2-percent increase, while the research index shows only a 1.5-percent increase.

Chart showing trends in research and official price indexes for new vehicles, 2007 to 2020

Editor’s note: Data for this chart are available in the table below.

While the new vehicle indexes look similar, the research index has a much lower standard error, which means there is less variation in the data. The research index had a 12-month standard error of 0.11, compared to the 0.43 standard error in the new vehicles index.

This research index is just one of many ways BLS is innovating the CPI and all our measures. For more information on BLS efforts to use new sources of data in the CPI, see “Big Data in the U.S. Consumer Price Index: Experiences & Plans.” Details of the methods and other aspects of research are in, “A New Vehicles Transaction Price Index: Offsetting the Effects of Price Discrimination and Product Cycle Bias with a Year-Over-Year Index.”

We are asking for your feedback about whether to use this research index or the current index. We specifically want to know whether you think this proposal improves our methods and data sources. Please tell us what you think about the research new vehicles data by emailing cpixnv@bls.gov. You can send other CPI-related questions to cpi_info@bls.gov.

Research and official price indexes for new vehicles
MonthResearch index, trucks untaxedOfficial index, trucks untaxedResearch index, all vehicles untaxedOfficial index, all vehicles untaxedResearch index, cars untaxedOfficial index, cars untaxed

Dec 2007

100.0100.0100.0100.0100.0100.0

Jan 2008

99.9100.299.6100.199.2100.0

Feb 2008

100.199.999.899.799.599.7

Mar 2008

100.899.3100.299.399.699.5

Apr 2008

99.998.799.698.999.399.2

May 2008

99.698.199.698.599.699.1

Jun 2008

100.197.7100.898.4101.599.2

Jul 2008

98.797.1100.098.3101.499.6

Aug 2008

96.395.898.397.6100.799.3

Sep 2008

95.794.797.996.9100.599.0

Oct 2008

95.894.797.896.8100.398.9

Nov 2008

95.294.797.296.999.999.0

Dec 2008

94.094.795.996.898.598.9

Jan 2009

94.095.595.797.597.899.5

Feb 2009

95.296.796.498.298.199.7

Mar 2009

95.297.496.398.597.899.7

Apr 2009

96.697.897.498.798.699.8

May 2009

96.898.197.698.998.699.9

Jun 2009

97.098.697.499.397.9100.1

Jul 2009

96.698.996.699.696.9100.3

Aug 2009

96.997.797.098.197.498.7

Sep 2009

99.098.099.498.5100.199.0

Oct 2009

98.899.899.3100.4100.0101.1

Nov 2009

99.2100.799.5101.6100.0102.5

Dec 2009

99.3100.999.2101.699.3102.5

Jan 2010

99.3101.199.2101.599.3102.1

Feb 2010

99.8101.499.5101.699.4102.1

Mar 2010

100.4101.4100.2101.4100.2101.7

Apr 2010

100.9101.2100.7101.198.3101.3

May 2010

101.0100.8100.8100.8100.7101.1

Jun 2010

101.3100.6100.9100.6100.7101.0

Jul 2010

101.5100.5101.1100.598.2100.8

Aug 2010

101.7100.5101.2100.3100.6100.6

Sep 2010

101.7100.7100.9100.5100.0100.8

Oct 2010

102.3101.0101.2100.999.7101.1

Nov 2010

102.5101.5101.2101.199.4101.2

Dec 2010

102.3101.9100.8101.498.9101.3

Jan 2011

102.4102.4100.8101.798.7101.3

Feb 2011

102.7103.3101.1102.699.2102.4

Mar 2011

103.7103.8102.0103.199.9102.9

Apr 2011

104.3104.0103.0103.5101.4103.5

May 2011

104.7104.3103.8104.3102.7104.7

Jun 2011

104.6104.3103.8104.7103.1105.5

Jul 2011

104.4104.0103.7104.5103.1105.4

Aug 2011

104.3103.7103.6104.1103.2105.1

Sep 2011

104.1103.6103.5104.1103.4105.2

Oct 2011

104.2103.8103.5104.3103.1105.2

Nov 2011

104.3104.1103.4104.4102.6105.2

Dec 2011

104.4104.3103.5104.6102.5105.3

Jan 2012

105.0105.0103.9105.0102.7105.4

Feb 2012

105.1105.9104.0105.6102.8105.8

Mar 2012

105.4106.0104.5105.6103.5105.7

Apr 2012

105.7106.1104.8105.7103.8105.9

May 2012

105.2105.8104.4105.7103.5105.9

Jun 2012

105.4105.8104.5105.6103.5105.9

Jul 2012

105.1105.5104.1105.3103.1105.5

Aug 2012

105.0105.5104.1105.2103.1105.4

Sep 2012

105.2105.6104.3105.2103.3105.3

Oct 2012

105.3105.8104.5105.4103.7105.4

Nov 2012

105.6106.2104.6105.9103.4106.1

Dec 2012

105.7106.5104.5106.2103.0106.4

Jan 2013

105.7107.1104.6106.7103.1106.8

Feb 2013

106.3107.2105.1106.8103.5106.8

Mar 2013

106.4107.4105.2106.8103.6106.8

Apr 2013

106.7107.7105.5107.0103.8106.8

May 2013

106.8107.6105.5106.8103.8106.6

Jun 2013

106.4107.8105.1106.9103.3106.4

Jul 2013

106.4107.6105.0106.6103.2106.1

Aug 2013

106.4107.3105.0106.3103.2105.8

Sep 2013

106.3107.6104.9106.4102.9105.8

Oct 2013

106.5107.6105.1106.5103.2105.7

Nov 2013

106.7107.8105.1106.6103.0105.8

Dec 2013

106.4108.0104.6106.7102.0105.9

Jan 2014

106.5108.1104.6106.7101.8106.0

Feb 2014

107.1108.6105.2107.1102.3106.3

Mar 2014

107.3108.6105.3107.1102.4106.2

Apr 2014

107.8109.0105.7107.4102.6106.4

May 2014

108.1108.9105.8107.3102.4106.4

Jun 2014

107.9108.4105.5106.9101.8106.0

Jul 2014

108.2108.6105.7106.9101.9105.9

Aug 2014

108.6108.7105.9106.7101.7105.4

Sep 2014

108.4108.7105.6106.7101.3105.4

Oct 2014

108.7109.0105.9107.1101.5105.7

Nov 2014

108.5109.2105.5107.2100.8105.9

Dec 2014

108.3109.4105.1107.2100.0105.8

Jan 2015

109.0109.3105.8107.2100.9105.8

Feb 2015

109.2109.9106.0107.8101.0106.4

Mar 2015

109.4110.2106.2108.0101.1106.5

Apr 2015

109.8110.5106.6108.2101.6106.5

May 2015

109.7110.6106.4108.2101.3106.5

Jun 2015

109.9110.5106.5108.2101.3106.5

Jul 2015

109.7110.2106.2107.7100.9105.9

Aug 2015

110.0109.8106.3107.3100.5105.5

Sep 2015

110.5109.8106.7107.2100.6105.3

Oct 2015

110.5109.8106.6107.2100.4105.2

Nov 2015

110.6110.2106.5107.499.9105.2

Dec 2015

111.0110.1106.9107.4100.4105.3

Jan 2016

111.5110.6107.3107.9100.7105.8

Feb 2016

111.8111.2107.7108.5101.2106.4

Mar 2016

112.0111.4107.8108.5101.1106.2

Apr 2016

112.2111.2108.0108.2101.3105.8

May 2016

111.9111.0107.6108.0100.7105.6

Jun 2016

111.9110.8107.4107.7100.1105.2

Jul 2016

111.1110.7106.8107.7100.0105.0

Aug 2016

111.8110.3107.3107.499.8104.7

Sep 2016

111.5110.3106.9107.299.5104.6

Oct 2016

111.3110.6106.7107.599.1104.9

Nov 2016

110.9110.6106.4107.699.0105.0

Dec 2016

111.1110.9106.5107.898.8105.1

Jan 2017

112.0111.9107.4108.999.8106.3

Feb 2017

111.8111.9107.3109.0100.0106.5

Mar 2017

112.1111.7107.3108.799.5106.0

Apr 2017

112.1111.7107.3108.699.3105.9

May 2017

111.9111.6107.1108.399.2105.5

Jun 2017

112.0111.1107.1107.899.1104.9

Jul 2017

111.9110.4106.9107.098.4103.9

Aug 2017

111.8110.2106.6106.697.9103.4

Sep 2017

111.4109.8106.3106.197.6102.8

Oct 2017

111.5109.7106.5106.097.9102.7

Nov 2017

112.0109.9106.8106.497.4103.2

Dec 2017

111.4110.7106.3107.297.9104.0

Jan 2018

111.9111.0106.9107.698.7104.4

Feb 2018

111.8110.8106.9107.498.9104.2

Mar 2018

111.2110.8106.3107.498.3104.2

Apr 2018

111.4110.3106.7106.999.3103.7

May 2018

111.1110.5106.4107.198.8104.1

Jun 2018

110.9110.6106.3107.299.1104.2

Jul 2018

111.3110.5106.7107.299.4104.3

Aug 2018

111.4110.2106.8106.999.5104.0

Sep 2018

111.3109.8106.8106.699.8103.9

Oct 2018

111.2109.6106.8106.5100.0103.9

Nov 2018

111.5109.8107.0106.799.9104.1

Dec 2018

110.7110.0106.3106.999.6104.2

Jan 2019

111.3110.8106.8107.6100.0104.8

Feb 2019

111.7111.0107.2107.7100.2104.9

Mar 2019

111.6111.5107.1108.199.9105.2

Apr 2019

112.0111.5107.4108.2100.1105.2

May 2019

112.2111.3107.6108.0100.3105.2

Jun 2019

111.7111.0107.2107.9100.6105.2

Jul 2019

111.9110.7107.4107.6100.6104.9

Aug 2019

111.5110.3106.9107.2100.2104.6

Sep 2019

111.6109.9107.1106.7100.1104.1

Oct 2019

111.9109.8107.3106.6100.3104.1

Nov 2019

111.3109.9106.8106.6100.0104.1

Dec 2019

111.2110.4106.8107.099.8104.3

Jan 2020

111.8111.0107.4107.7100.4105.1

Feb 2020

112.2111.4107.7108.2101.0105.7

Mar 2020

112.7110.9108.2107.7101.5105.2