Used Vehicle Prices Experience Slight Decline After April Peak
In May 2025, used vehicle prices showed a modest decline following a surge in April driven by consumer concerns over potential tariff-induced price increases. The Manheim Used Vehicle Value Index, which monitors prices at U.S. wholesale auctions, decreased by 1.5% from April to May, yet values remain 4% higher than the previous year.
Wholesale Prices Lead Market Trends
The index's April peak reflected accelerated buying as consumers rushed to secure vehicles before anticipated tariff hikes. While wholesale prices softened slightly in May, they continue to exceed last year’s levels significantly. Traditionally, retail prices respond to shifts in wholesale values; however, recent years have seen retail prices decline at a slower pace than wholesale prices.
Factors Influencing the Used Vehicle Market
Although recent tariff adjustments and political policies do not directly target used car sales, fluctuations in new vehicle prices, production rates, and overall demand indirectly shape the used car market dynamics. This market remains a primary source for vehicle purchases among Americans.
Inventory constraints contribute to sustained price levels. With approximately 2.2 million used vehicles available, supply is low relative to historical norms. This shortage results from prolonged vehicle retention by owners, combined with disrupted production caused by recent global supply chain challenges and the pandemic.
Sales Trends and Market Outlook
- Retail used vehicle sales in May declined by 3% compared to April.
- Year-over-year sales demonstrate a 4% increase, indicating ongoing demand.
Market experts note that after years of volatility, the used vehicle market prices have started to stabilize in 2024, although fluctuations persist due to external economic pressures.
