Used Car Prices Are Rising Again
New car prices are rising, tariffs are costing Americans billions, the conflict in the Middle East is pushing up fuel prices, and now used car prices are also soaring. New data shows that wholesale used car prices in March were higher than at any time since the summer of 2023. This is a sharp deviation from the norm, as March is typically a stable month for the industry. Here’s what this means for consumers.
Key points of the situation:
Data and the Manheim Index
According to Cox Automotive, the Manheim Used Vehicle Value Index rose to 215.3 in March. This represents a 6.2% increase compared to last year and is the highest reading since mid-2023. Compared to the previous month, prices rose by 1.4%. It is important to remember that these are wholesale prices that dealers pay each other at auctions. The final price for the consumer at a dealership will undoubtedly be higher.
Cox data shows that the average listed price for a used car was $25,287 as of February, compared to over $49,100 for a new car, highlighting the gap that continues to push buyers towards the used market.
Factors of High Demand and Limited Supply
Higher tax refunds helped stimulate demand at the beginning of the year, and buyers are not slowing down. The sales conversion rate, a key indicator of how many auction lots are actually sold, reached 68.2%, significantly above historical averages. This is typically a sign that dealers are actively competing for inventory.
Wholesale inventory stands at only 24.5 days, which is still a relatively tight measure. At the same time, retail inventory has fallen below 40 days, creating pressure that supports high prices across all segments. Lower new car sales are also reducing the volume of trade-in vehicles, further limiting supply in the used market. Even prices for vehicles from rental fleets rose 7.5% compared to last year, adding pressure across various segments.
Electric Vehicles Lead the Growth
Despite the wave of off-lease electric vehicles entering the market, their prices are rising even faster than those of ICE vehicles. The electric vehicle price index jumped 7.9% compared to last year and 3.7% from February. Rising gasoline prices, now exceeding $4 per gallon, are clearly pushing buyers towards electrified options, despite objections from many enthusiasts. Premium vehicles are leading the growth, while compact cars and pickups are lagging. Nevertheless, every segment shows growth compared to last year.
“Moving into summer, we expect Manheim Index values to hold steady, as many consumers have not yet filed their tax returns this year,” said Jeremy Robb, chief economist at Cox Automotive. “The end of March typically proves to be the ‘peak’ for pricing activity. The conflict in the Middle East could have dampened American consumer sentiment, but we haven’t seen that yet – our data shows economic resilience.”
Future Forecasts
Since many consumers are still waiting for tax refunds, demand may continue through spring and even into early summer. Cox Automotive still expects prices to stabilize later this year, but for now, the market remains unusually resilient. Analysts have slightly raised their used car sales forecast for 2026 to 20.4 million units, although total sales volume is still expected to fall by about 1% compared to 2025.
The current situation in the used car market is a result of the complex interplay of global and local factors. Geopolitical tensions are affecting energy carriers, which in turn makes electric vehicles more attractive, despite their traditionally higher initial cost. The resilience of demand despite rising prices may indicate that a car remains a necessary component of life for many households, while alternatives like public transport or new purchases are less accessible. This creates a tense situation for buyers, who will likely be forced to either pay more or consider older models until the market begins to stabilize later in the year.