A lot of Americans who have been shopping for a used car over the past couple of years have walked away from dealerships feeling like the math just does not work. Prices are high, affordable options are scarce, and the usual logic of buying used to save money has become significantly harder to apply. The reasons behind this are more structural than most buyers realize, and they trace back to decisions and disruptions that started before most people were paying attention to the auto industry at all.
The average transaction price for a new car in America hit $49,275 in March 2026, according to Cox Automotive and Kelley Blue Book, and a decade ago that average was closer to $33,000. That gap has pushed an enormous wave of buyers who would normally consider a new vehicle directly into the used market instead. A $500 monthly payment that once covered a midsize SUV now barely gets a compact car, according to JD Power Senior Vice President Tyson Jominy. As new vehicles have moved further out of reach for middle-income households, the used market has absorbed that demand, and supply has not kept up.
The supply problem has a specific origin. During the pandemic, factory shutdowns and supply chain disruptions meant that far fewer vehicles were built than in a normal year, and those missing cars are being felt right now. Every vehicle that was never manufactured is a vehicle that never made it to a trade-in, never came off a lease, and never cycled through the used market pipeline. Those missing vehicles would normally be entering the market today as lease returns, trade-ins, and fleet rotations, but instead the pipeline is thinner than usual, and vehicles that are two to four years old remain some of the most difficult inventory to source consistently.
JD Power’s Jominy offered a useful way to picture this: a new vehicle sale is the marble at the top of a mousetrap game, working its way through every chute and ladder down to the bottom. When millions of those marbles never entered the top of the game during the pandemic years, the entire chain below it ran thinner. By JD Power’s estimate, the U.S. auto industry sold roughly 16 million fewer vehicles than it would have if annual sales had held at the 2016 record of 17.5 million, amounting to approximately a year’s worth of volume, with about half of that shortfall occurring since the pandemic began.
There is another layer to this that does not get talked about enough. Beyond just building fewer cars, automakers also pulled back on practices that feed the used market. Leasing and incentives were both scaled back significantly because supply was so short there was no need to attract buyers. Industry incentives, which had averaged roughly 9.5% of vehicle prices before the pandemic, fell to a fraction of that, and have only partially recovered to around 6.5% to 7% in 2026, still well below pre-pandemic levels. Leasing matters here because a three-year lease creates a nearly guaranteed return of a late-model used vehicle. Fewer leases signed in 2022 means fewer quality used cars hitting the market in 2025 and 2026. Leasing penetration fell to just 16% in late 2022, and the Q1 2026 new-vehicle leasing rate remains at nearly identical levels to 2025’s 20% mark, with no major shift in incentives expected to change this anytime soon.
The pandemic also changed the profit logic of the auto industry itself. Automakers learned that lower inventory combined with stronger pricing discipline could protect their margins, so they prioritized trucks, SUVs, and higher trims while cutting back on lower-profit vehicles. Unit sales fell but revenue held up, and that lesson continues to shape strategy. The result is an industry that is not in a hurry to return to the kind of high-volume, low-margin production that once kept the used market well-stocked. Automotive forecasters are calling for steady to lower new vehicle sales in 2026, with the industry still operating below the more than 17 million annual sales it sustained for five consecutive years before the pandemic.
The average price of a new car has now reached $49,191 according to Kelley Blue Book, and the cost of financing a used car carries its own pressures, with interest rates on used loans generally running higher than those on new vehicle loans. The supply of truly affordable used vehicles, specifically those under $15,000 that first-time buyers and working families depend on, sits at a 38-day supply. Those cars sell fast because competition for so few of them is intense.
The average used car sold for $26,342 in April 2026, about 3% higher than a year before, and no significant price changes are expected through the summer. Some relief may come gradually. More off-lease vehicles are beginning to return to market as three-year contracts signed during the modest leasing recovery of 2023 expire. Shoppers should see a meaningful increase in off-lease vehicles returning in 2026 compared with years prior, though overall used vehicle prices are expected to remain stable to slightly elevated for the year. For buyers, the near-term reality is a market where the affordable end is thin, late-model inventory remains competitive, and the conditions that created this gap will take time to fully unwind.
