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Consumer Price Index
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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.
Item definition
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.
Data source
The new vehicles index is estimated using a transactions dataset purchased from J.D. Power that includes observed transaction-level prices and detailed vehicle information. Each observation includes a transaction price as well as a set of 40 variables including rebate values and vehicle characteristics. Sales tax rates are applied by BLS for index calculation.
Relative importance
The relative importance of an item category is its percent of the CPI weight as of December of the most recent year.
| Item | Relative importance |
|---|---|
|
Transportation |
15.898 |
|
Private transportation |
14.828 |
|
New and used motor vehicles |
6.420 |
|
New vehicles |
3.684 |
|
Used cars and trucks |
2.012 |
|
Leased cars and trucks |
0.517 |
Sample selection
The size of the J.D. Power new vehicle dataset depends on the transaction volume and number of participating dealers at any given time, but we typically receive data on 250,000 transactions per month, reported by participating dealers across the country. The majority of nameplates purchased across the country are represented in the dataset. Vehicles specifically referenced as fleet vehicles, police vehicles, work trucks, or cargo vehicles are removed.
The J.D. Power data are grouped into “Designated Market Areas” that correspond to all the major cities in the current CPI sample and a large pool of small and mid-sized cities. These Designated Market Areas are mapped to the 32 index areas that represent the CPI geography.
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 (“the 50 percent rule”). 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. New vehicles are reviewed in accordance with CPI analyst procedures. This includes review for model year comparability and quality-adjustment when necessary, using data received by BLS from automobile manufacturers.
Price change and index calculation
The price used in the index is a geometric average transaction price for each vehicle type within each index area.
Monthly price relatives are constructed based on comparing vehicles in month t with month t-1 using the Tornqvist price index formula with expenditure share weights. This index provides the input for the high-frequency component used in the new vehicles index. The high-frequency component is the estimate of a cyclical component, which is then combined with a year-over-year relative.
A year-over-year (YoY) relative based on comparing vehicles in month t with month t-12 is calculated using an expenditure weighted Tornqvist formula, as well. The 12th root of the YoY relative is taken to scale the price change down to a monthly frequency. This method allows the CPI to estimate the price change across model years for similarly aged vehicles. The resulting YoY price index is then adjusted using the time series filter to model the latest cyclical trend (the high-frequency component described above), which more accurately represents short-run fluctuations.
Price change for each geographic area in the CPI for new vehicles is calculated as:
Note: With the January 2023 data release, the CPI for new vehicles introduced a methodology improvement to the time series filter that estimates the most recent cyclical trend/short term fluctuations. Prior to January 2023, this value had been calculated using an estimate of 
made in the current month, t, using an historical series that included the latest data. Starting in January 2023, will be estimated using the data only up to t-1.
Additional information on the new vehiclesindex formula methodology is available in the working paper: “A New Vehicles Transaction Price Index: Offsetting the Effects of Price Discrimination and Product Cycle Bias with a Year-Over-Year Index.”
Quality adjustment
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.
Data
Access data for new vehicles in our online database.
Operational information
To meet publication deadlines, the CPI program receives data from J.D. Power on the 25th and last day of the reference month. Compared to the experimental new vehicles index (R-CPI-U-NV), which received the dataset on the 5th of the reference month, the CPI will not account for approximately nine percent of total new vehicles transactions going forward. Internal research concluded that this data truncation does not have a statistically significant impact on item-level relative calculation. The reduced sample showed only minor compositional differences from the full sample. This is the only notable change between the J.D. Power experimental methodology used to generate R-CPI-U-NV.
Additional information
Information on trends in leased cars and truck prices can be obtained from several other sources including Ward’s Automotive, Kelley 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: February 9, 2024