Used Cars Are Getting More Expensive Again

The past five years have been unusually active for the used car market, and the latest data suggests the pressure on prices is not going away yet. Cox Automotive says its Manheim Used Vehicle Value Index rose to 213.4 in mid March, up 5.3% from a year earlier, while CNBC reported that used car prices had reached their highest point since the summer of 2023.

What makes the current move more interesting is that it is not happening in a normal market. In the years after the pandemic, the used car business was shaped by shortages, sharp swings in demand, and uneven supply. New vehicle production problems reduced the flow of cars into the market, which helped push buyers toward used vehicles and lifted prices well above pre-pandemic levels. 

That pattern did not disappear when supply chains improved. Instead, the market entered a slower rebuilding phase, with inventory gradually recovering but still not fully normal. Cox Automotive said February used vehicle supply stood at 2.13 million units, with days supply at 42, a level it described as still relatively constrained compared with recent years. 

Demand is helping keep prices firm. Cox Automotive said retail used vehicle sales in February were up 5.5% from a year earlier, and its March update said five straight weeks of higher sales trends had supported the market. When shoppers keep buying at a healthy pace while supply stays limited, sellers have less reason to cut prices.

Affordability is another reason the used market keeps drawing buyers. New cars remain expensive, so many households look at used vehicles as the more practical option. Cox Automotive said the used vehicle market continues to offer consumers a strong value proposition compared with new vehicles, especially at a time when lower priced inventory is still hard to find. 

The shortage is especially noticeable in cheaper vehicles. Cox Automotive noted that used cars priced below $15,000 had only 31 days supply in February, which is below the overall market average. That matters because budget buyers have fewer alternatives, and their demand can put extra pressure on available inventory. 

Looking ahead, the market may remain firm for a while longer. Lease maturities are expected to improve supply over time, but that recovery is gradual, and some of those returning vehicles will be electric models rather than the gasoline powered cars many shoppers still prefer. For now, the combination of steady demand, limited supply, and a still expensive new car market is keeping used vehicle prices on the rise.