Used-Car Prices Climb To Their Highest Level Since Summer 2023 as Household Budget Strain Deepens
Written by
Lydia Kibet
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Jenna Klaverweiden
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If you’ve been holding off on buying a used car hoping prices would go down, you may be in for a shock. Used-vehicle prices have been going up.
The Manheim Used Vehicle Value Index, which tracks wholesale used-vehicle prices dealers pay at auction, saw a 6.2% increase year over year to the highest point since summer 2023, according to Cox Automotive. Here’s what’s pushing the prices of used cars up.
Strong Demand
One of the major drivers behind rising used-car prices is increasing demand. “As soon as this year began, prices at Manheim started moving higher as dealers anticipated strong demand from higher tax refunds to consumers,” said Jeremy Robb, chief economist at Cox Automotive.
This is especially true given that the cost of new vehicles has increasingly gone up. The average price of a new car is almost $50,000, a 30% increase in six years, per PBS. For buyers priced out of the new car market, used becomes the only viable option.
Limited Supply
While demand is climbing, supply isn’t keeping up. Cox reported that inventory tightened in the first quarter. Fewer vehicles mean sellers have more pricing power, especially for high-demand models. “Retail list prices for popular three-year-old vehicles [are] running roughly 2% higher than last year and above typical seasonal trends,” Cox reported.
When supply shrinks and demand grows at the same time, prices almost always follow.
Household Budget Strain Is Changing Buyer Behavior
As used-car prices go up, many households are being forced to adjust their budgets. In fact, many are already struggling to keep up with everyday costs of things like housing, groceries and insurance premiums.
This has resulted in a market where even desirable options feel expensive, leaving many opting for reliable transportation due to financial constraints.
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