Used car prices hit record highs in 2025: What buyers need to know

USA Today

4 days ago

Used car prices hit record highs in 2025: What buyers need to know
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The average sales price of a three-year-old used car in America surpassed $30K for the first time since 2023.
The average age of used cars returning to dealerships has gone up, attributable to the low amount of new car sales during the semiconductor chip shortage several years ago.
While shoppers looking to buy a newer used car may have to pay more, drivers returning their leases may see a higher payout or trade-in value for their vehicle.
According to a new report from auto industry experts, used cars are more expensive than they've been in years.
A May 22 report from Edmunds indicated that in the first quarter of 2025, the average transaction price for used cars 3 years old or less jumped above $30,000 for the first time since 2023. The price of lightly used vehicles closed in on the average sales price of brand-new cars, making it just $17,000 less expensive to buy used, rather than new. That is the narrowest difference between new and used car prices since 2022, Edmunds reported.
The report also indicates that the average age of vehicles traded in has grown from 7.3 years old to 7.6 years old in the span of a year.
The shifts, which indicate a tougher market for potential buyers, may result from the aftereffects of the pandemic-era semiconductor chip supply shortage, coupled with tariff-related anxieties among buyers.
Chip shortage ripple effect
The leap in used car prices can be attributed in part to the semiconductor chip shortage from the COVID-19 pandemic, the report said. The supply shortage of new cars several years ago is resulting in a smaller inventory of used cars now.
Leasing dropped sharply in 2022 and 2023, meaning fewer 3-year-old used cars are returning to dealerships in 2025. As supply shrinks, price goes up.
Why used car prices are rising in 2025: What every buyer needs to know
Ivan Drury, the author of the report at Edmunds, told the Free Press that the market conditions of 2022 and 2023 led to a natural shrinkage of lightly used cars in today's economy.
"Not only has it just outright reduced volume, but leasing penetration rates took a dump," Drury said. "They were like the lowest we had seen in 10 years. ... So, naturally, we are going to see a deficit in this vehicle type from the very get-go."
While the changes in the used car market may strain some buyers' wallets, the market may be advantageous for drivers who leased a new vehicle in the last three years. Dealers seeking to grow the amount of lightly used cars on their lot may be paying more as they return at the end of their leases.
The report notes: "3-year-old lease-return values are coming in higher than automakers originally forecasted — offering some drivers unexpected trade-in advantages."
A sign of what's to come?
While supply shortages of years past affect the supply of used cars now, experts at Edmunds predict the looming supply strain from President Donald Trump's tariff plans may create a similar stir in the market.
The report cites the early 2020s as a "historical precedent and a likely guide to the complications ahead," as Trump and automakers go back and forth on the future of automotive tariffs.
Drury added that the instability in the auto market now will affect future used car markets, much like what is happening with COVID-19-era vehicles.
"We're repeating this cycle over and over," Drury said.
In his report, Drury predicts that there may be a larger range of resale values, as already-imported foreign models are expected to be met with higher demand than their brand-new counterparts and pre-owned American-made vehicles. If tariffs tighten new vehicle inventory, "spillover demand could once again inflate values of used vehicles, particularly for near-new models," Edmunds said.
American cars most expensive on average
If the used car market is too volatile, skirting tariffs with an American-assembled new car may not assuage any concerns, either.
A separate report from Cars.com indicates that American-made vehicles are more expensive than imported vehicles. Through the first quarter of 2025, Cars.com reported that cars assembled in the United States had the highest average price point at $53,000, making them more expensive than the overall average price of a new car at $49,000.
According to Drury, the reason for steeper prices among American-assembled cars is that the larger, more expensive cars in the American market are assembled here.
"It's the vehicle types that bring up that average," Drury said, noting that larger, more expensive vehicles like trucks and SUVs are manufactured in the United States.
With prices shifting upward, the best time to buy a car has already passed, Drury said:
"I'd say that was yesterday."
Contact Liam Rappleye: [e-mail]