Used Car Dealers

The 23,577 used car dealers in the US sell pre-owned vehicles purchased from the general public and other sources. Unlike new car dealers, used car dealers generate little revenue from maintenance and repair services. Most firms outsource service agreements to a third party.

High Cost of Inventory

The used car dealer industry is capital intensive with most firms requiring outside funding to build inventory, which accounts for 55-59% of total assets.

Shift to Online Sales

The used car dealer industry has accelerated the shift to online sales of vehicles.

Sep 9, 2026 - New Car Prices Push More Buyers Toward Used Vehicles

• The dearth of affordable new cars is pushing more budget-conscious shoppers toward used-car lots, potentially widening the customer base for used car dealers. According to Edmunds data, just 4% of US new vehicles sold for less than $25,000 in the first half of 2026, while another 10% sold for $25,000 to $30,000. A decade ago, most new vehicles sold for less than $30,000. Automakers have dropped many entry-level models as production costs have risen and manufacturers have favored higher-margin vehicles. New car prices have jumped 49% since 2015, leaving some shoppers unable or unwilling to buy new. That creates an opportunity for used car dealers, particularly those with reliable vehicles below $30,000, but strong demand for affordable used cars could also keep wholesale acquisition costs elevated and make it harder for dealers to maintain both inventory and margins.
• The US trade fight with Canada could give used car dealers another burst of demand, but it may come with higher acquisition costs and tighter inventory. Proposed 50% tariffs on Canadian vehicles, auto parts, and steel could raise new car prices, pushing more shoppers toward used vehicles as a cheaper alternative. The wildcard is how quickly the rules keep changing. Tariffs have been announced, delayed, revised, and threatened again, making it difficult for automakers and dealers to know where new vehicle prices are headed. That uncertainty can spill directly into used values, particularly for late-model vehicles that compete closely with new cars. Dealers benefit from stronger traffic, but replacement inventory could become more expensive as demand heats up and owners hold onto their vehicles longer. For used car dealers, the trade fight could bring more customers through the door without necessarily making those customers easier or more profitable to serve.
• Used car affordability has deteriorated sharply since 2019, leaving budget-conscious buyers with far fewer options. An iSeeCars analysis of 11.4 million vehicles found that only 11.4% of three-year-old used cars now cost less than $20,000, down from nearly half in 2019, while the share of five-year-old vehicles below that price threshold fell from 69.2% to 26.6%. The average three-year-old used vehicle now costs $32,651, up 38.2% from 2019, with average prices rising by roughly $1,300 per year over that period. Used vehicles remain cheaper than comparable new ones, but elevated prices are eroding their traditional affordability advantage. Buyers seeking to stay within tighter budgets are increasingly being pushed toward older, higher-mileage vehicles with greater potential maintenance costs or are taking on larger loans to afford transportation, reflecting broader affordability pressures across the automotive market.
• Used electric vehicles (EVs) are no longer just a bargain-bin segment, with demand strengthening enough that prices are rising after years of steep depreciation, giving dealers a chance to improve margins while attracting cost-conscious buyers. Cox Automotive reported that used EV sales in June 2026 were 20.3% higher than a year earlier, even as more off-lease vehicles entered the market. Average used EV listing prices climbed 7% year over year to $38,342, while days' supply remained below comparable gasoline vehicles, suggesting dealers are successfully absorbing the additional inventory. Recurrent Auto also found prices for comparable used EVs have increased 5.1% since January, with models priced below $20,000 posting nearly 10% gains as buyers seek affordable alternatives to expensive new vehicles.

Industry size & Structure

The average used car dealer operates out of a single location, employs 8 workers, and generates $6.2 million annually.

• The used car dealer industry consists of over 23,570 firms that employ 187,900 workers and generate $146.4 billion annually.
• The industry is concentrated at the top and fragmented at the bottom; the top four companies account for about 20% of industry revenue.
• Large firms include CarMax, DriveTime, and America’s Car-Mart. AutoNation and Penske Automotive Group also have used car dealerships.