Used Car Dealers NAICS 441120

May 7, 2025 - Wholesale Used Car Prices Soar

• Used car auction prices jumped to their highest level of the year in 2025, according to Cox Automotive’s Manheim Used Vehicle Index, with consumers rushing to buy used vehicles ahead of coming auto tariffs. The index rose 4.9% in April year over year, which is the highest it has been since October 2023. From the previous month (March 2025), the index increased 2.7%, a significant climb from the typical month to month increase of 0.2%. Cox Automotive noted that the industry’s usual “spring bounce” in wholesale prices falls off by the end of April, but this year price appreciation has continued throughout the month. While tariffs directly affect new car prices, they indirectly also increase used car prices as consumers turn to used vehicles as an alternative and reduce available inventory.
• Prices for one to five-year-old used cars increased 1% year over year in March 2025 because of tariffs, the first time prices have increased in two years, according to a study from research site iSellCars. The average price increase for a used vehicle was $317 in March, compared to a price decrease in February of $238. With automakers raising prices on new cars (or rethinking its production strategy altogether), consumers will turn to used cars to compensate, but the ripple effect of fewer new cars will also drive used car prices higher since it eventually stifles inventory of more recent used car models. The glut of older inventory forced prices down because of low demand (which dealers will be happy to sell) assuming they can cut good deals if used car prices continue to rise with tariffs making those vehicles the primary available auto inventory for sale in the US.

• Consumer prices for used cars and trucks fell 4.4% year over year in December 2024, according to the Producer Price Index by the US Bureau of Labor Statistics. Employment by used car dealers declined 1% in January 2024 from the same period the year prior, while average wages for nonsupervisory employees grew 9.2%, reaching $25.83 per hour. Prices on used cars came down after COVID-induced supply chain problems on all new automobiles eventually affected supply downstream. Used car dealers could see boosted sales in early 2025 as a result of Trump’s 25% tariff on imported cars - if prices rise too much, consumers will turn to the used car market to compensate. An extended tariff fight would eventually lead to higher used car prices as well, according analysts at J.P. Morgan.
• Used car dealers face growing headwinds as Q1 2025 draws to a close, with the industry still struggling from issues of dwindling vehicle supply and high interest rates on car loans. The supply scarcity comes from the lingering pandemic-induced shortage of new car production, which ripples down to the used market with less older cars being traded in. Three-year-old vehicles (usually lease trade-ins) are the sweet spot for used car sellers and buyers - they are still relatively new and usually have a couple warranty years left. But prices on those vehicles rose 3.3% year over year in Q4 2024 per comparison car shopping site Edmunds. Stubbornly high interest rates are also depressing used car sales, making them feel almost as expensive as a new car for many consumers. Used car loans average from about 8 to 10%, almost double what it was five years ago, according to Auto Spies.