2 Reasons Used Car Prices Will Remain High in 2025
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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Prices for near-new used cars are on the rise — and likely won’t come down anytime soon. According to a recent Edmunds analysis, prices of three-year-old used vehicles increased by 3.3% year over year to $29,710 on average by the end of 2024, up from $28,772 the previous year.
“For used-car shoppers who have held off on a purchase with hopes of a more stable market and stronger discounts, 2025 could prove to be a challenging environment from both selection and pricing perspectives,” the analysis states.
Here’s why used car prices are likely to remain high in 2025.
The Used Car Market Is Not Bouncing Back in the Way the New Car Market Is
The Edmunds analysis predicts that the new car market will improve this year, but it doesn’t believe the same can be said for the used car market.
“The new and used markets are closely connected, and market conditions on one end often influence the other,” Joseph Yoon, consumer insights analyst at Edmunds, told GOBankingRates. “In this case, the infamous new-vehicle supply shortage from three years ago means there are fewer near-new used vehicles coming back to the market in 2025.
“While supply continues to rebound in the new-car market in the years since the pandemic-induced semiconductor chip shortages, the used market is now feeling its own inventory strain.”
A Low Supply of Used Cars Is Keeping Prices High
A large factor in the high prices for used cars is the law of supply and demand.
“Supply is down on one particularly highly coveted vehicle type — the 3-year-old vehicle,” Yoon said. “That’s because 2022 marked one of lowest new-car sales volume years in recent memory with only 13.8 million units moved — the lowest since 2011’s 12.8 million sales.
“Adding to the overall low level of transactions that year, the market experienced a notable downturn in lease deals because incentives disappeared as interest rates went up, leading to high monthly payments that lease customers typically try to avoid,” he continued.
“Only 18% of new cars were leased that year. As a result, only 2 million 3-year-old off-lease vehicles will potentially return to the market in 2025 — half the typical 4 million seen in the late 2010s. The limited supply of those desirable near-new used vehicles is likely to keep used pricing elevated throughout 2025.”
Advice for Used Car Buyers in 2025
If you want to buy a used car this year, there are still several factors on your side. First, you can now consider older cars, since these tend to still have all the bells and whistles you want at a lower cost than newer used vehicles.
“If you’re reentering the market for the first time in a while, it’s worth considering that today’s used cars are a lot more reliable than used cars from 10 or 20 years ago,” Yoon said. “Vehicle tech advancements over the past decade have been significant, so you should still be able to find solid safety and connectivity technology features even if you’re looking at older cars.”
Secondly, you can expect to get a good price for your trade-in vehicle.
“Because supply is strained in the used market, consumers can expect an uptick in the value of their trade-ins,” Yoon said. “Shoppers can check the value of their trade-in using an appraisal tool like this one on the Edmunds website.”
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