Why Used Automotive Costs Are Going up: Tariffs, Excessive Prices, Fewer New Vehicles

There’s sticker shock, after which there’s no matter is going on with America’s used-car market. Costs for a slightly-less-than-new-car have been hovering over the previous few years. Earlier than the pandemic, the common value for a 3-year-old automobile topped out at a bit over $22,000. In 2025, the fee is upward of $31,000. And in response to Edmunds, which tracks the automotive market, that quantity could quickly sound like a discount.

“I imply, it is type of mind-boggling for anyone who had the pleasure or context of getting purchased pre-2020, proper?” says Ivan Drury, the director of insights at Edmunds.

You might keep in mind the used-car apocalypse nestled contained in the whole-world apocalypse in the course of the COVID-19 outbreak. Provide chain disruptions in new automobile manufacturing, elevated competitors from rental automotive firms, and a surge in demand from customers looking for to socially distance themselves from others behind the wheel triggered a scramble for older autos. Like many issues post-pandemic, the used automotive sector is just not again to regular. The common value of all used automotive transactions is beneath its pandemic peak, however nonetheless hundreds of {dollars} dearer than it was six years in the past. Costs are creeping up once more, too: The latest Bureau of Labor Statistics knowledge reveals they’re up 6% over the previous yr.

“These hangover results from a lot disruption from years in the past, it is all enjoying out now,” Drury says.

With tariffs within the combine and new automotive costs persevering with to creep up, the long run could also be worse. The reply to the perennial query of when is the “finest time” to purchase a used automotive could now completely be “there is not any such factor as a finest time.” And when it comes time to get a automotive, new or used, hope you’ve gotten a while to buy round.

Or as Drury places it: “It is not simply reestablishing your expectations, however coming to phrases with right now’s new actuality, which is sadly not in your favor.”

To state the plain, earlier than a automotive can be utilized, it needs to be new. So when there is a droop in new automobiles rolling off the lot, that hits the used automobile market down the street. In accordance with knowledge from Edmunds, thousands and thousands fewer new automobiles have been bought within the US lately. Sixteen to 17 million new automobiles had been bought yearly within the US from 2014 to 2019. From 2020 to 2022, that quantity fell to 13 to 14 million annually. Gross sales have been creeping again up — Edmunds estimates gross sales will lastly surpass 16 million once more this yr — however even with the rebound, the ripple results of the pandemic-era semiconductor scarcity and different supply-chain and gross sales complications proceed to have an effect.

“These autos by no means entered the automobile ecosystem to turn into used autos for customers, and that is the crux of the matter proper now, it is that gap that was made,” says Jeremy Robb, senior director of financial and business insights at Cox Automotive.

There merely aren’t as many individuals going to dealerships seeking to commerce in automobiles they purchased new two, three, or 4 years in the past. And if they’re turning up, it is with autos that had been dearer within the first place due to pandemic-era pressures. Stephanie Brinley, an automotive analyst at S&P International, says that due to provide chain points, carmakers centered on “their hottest fashions and their hottest trim ranges,” which tended to be on the center or high-end of their value vary.

“So you’ve gotten a mixture of a automobile that was dearer within the first place and comparatively low provide,” Brinley says.

Leasing is an element, too. Sometimes, about 30% new automobiles are leased yearly, Robb explains, however that fell to about 17% in 2022. Automakers would fairly prospects merely purchase a automotive outright — they make extra off of it — so heightened shopper competitors for a restricted variety of dear new autos decreased the necessity for producers to supply leasing phrases, as a result of they had been promoting premium automobiles for near full value. Most leases mature in 36 months, at which level the automotive is usually turned in and placed on the used automotive market.

“The lease maturities have actually been contracting over the previous yr and a half and can proceed to contract,” Robb says.

Other than the pandemic, there are different usually consumer-unfriendly shifts within the new automotive market which can be trickling all the way down to the used automotive market. New automobiles have gotten extraordinarily costly as individuals load up their autos with all types of dear options and tech. As soon as a brand new automotive’s value goes up, used automobiles of the identical mannequin go up, too, as they are typically anchored collectively. American drivers lean towards larger, pricier automobiles, which is ok with automakers for the reason that bigger fashions have a tendency to provide extra income. Many extra reasonably priced, smaller autos have been pulled off the market altogether — RIP to the Ford Focus, Chevy Cruz, and Dodge Dart. The influence is multi-fold: Used automobiles are dearer as a result of they had been dearer once they had been new, house owners could also be holding onto them longer to justify the upper price ticket, and a few extra cost-conscious would-be new automotive patrons are being priced out of the market.

“We’re not seeing an ideal growth of latest autos and positively not entry-level new autos, so the individuals who would look to a $30,000 entry-level mannequin are pressured into the used automotive market,” says Sam Fiorani, an business analyst at AutoForecast Options. Some producers are beginning to discover the lacking a part of their lineups and fill it, however even these costs are going up shortly. “The place entry-level was $15,000 not too way back, it is out of the blue closing in on $30,000,” Fiorani says.

“Each time you do one thing that raises the price of a brand new automotive, they’re at such excessive ranges already, what you are actually doing is creating one other used automobile shopper,” Robb says.

Once I ask analysts and auto specialists whether or not the used-car value image goes to get brighter anytime quickly, the reply is kind of… not likely. Whereas autos are taking longer to promote as individuals hunt for offers and suppose it by means of, demand is not coming down. Nathan Garnett, chief enterprise officer at on-line market OfferUp, tells me that whilst itemizing costs for used automobiles have elevated on the platform over the previous yr, sell-through charges haven’t budged. “Patrons are keen to pay these costs,” he says.

It is sensible: The US may be very car-dependent, and in case you want a automotive to get to work or college or the grocery retailer, you want a automotive, full cease. Plus, driving could be a enjoyable and nice approach to get round.

As with many different industries, the tariffs are an elephant within the room. Brinley, from S&P International, says their implications are the “thousand-dollar query.” Many automakers have been consuming the prices of tariffs, although that may’t go on perpetually if commerce uncertainty persists. Brinley says they’re “cautiously watching” for commerce agreements with the EU and Japan to be solidified, however larger questions loom round negotiations between the US, Canada, and Mexico — particularly for the reason that free commerce deal between the three nations is up for assessment in July 2026. “Within the meantime of all of that, automakers are transferring by means of rather a lot, so costs will come up,” she says.

You possibly can’t make new used automobiles.

Whereas tariffs have not been a giant issue up to now, the anticipation of them triggered some individuals to tug ahead their buy of a brand new automotive to keep away from anticipated value hikes sooner or later. That is good for the used market in that they traded of their outdated automotive, however on the similar time, sellers who’re additionally anticipating greater costs paid extra for trade-ins than they’d have in any other case. “That is messed with the market a bit,” Drury says.

Tariff-driven purchases have not been linear, both, says Kevin Roberts, director of financial and market intelligence at CarGurus, a automotive analysis and gross sales web site. They noticed gross sales of latest and used autos decide up in March and April, round President Donald Trump’s Liberation Day tariff bulletins, normalize, after which decide again up once more towards the top of the summer season. “I feel individuals had been simply type of like, ‘Oh, costs might go up even additional. I ought to go get a automotive now if I used to be type of in search of one,” he says.

One of many extra uncomfortable realities of the American economic system within the wake of the pandemic is that costs is not going to return to their earlier ranges. Whereas inflation has slowed, we can’t see widespread deflation (nor can we need to). Meaning resetting expectations earlier than you stroll onto the automotive lot, growing a little bit of price ticket amnesia, and kissing that 2013 value you’ll have in your head goodbye. There are absolutely offers available, however they’re arduous to search out, and the $20,000 that may have gotten you a stable 3-year-old automobile 10 years in the past will now land you an 8-year-old automotive with 80,000 miles on it. On used autos, we have made our mattress, and now we’ve got to lie in it.

“You possibly can’t make new used automobiles,” Fiorani says.

Emily Stewart is a senior correspondent at Enterprise Insider, writing about enterprise and the economic system.