Average Used Car Now $25K - What Buyers Need to Know
Remember when a 5-year-old sedan could be yours for $15,000? These days, even a "bargain" on the used lot feels like bidding at an auction. Used car prices are now about 40% higher than before the pandemic, and the government's Consumer Price Index (CPI) - which tracks price changes over time - shows used cars at one of the highest levels in decades (rising far above normal inflation).
From 2005 to 2020, the CPI for used cars barely budged, rising from about 98 to 101. But since the pandemic, prices have soared: in May 2025, the index hit 184, up sharply from 130 in January 2020. After a 60% surge from early 2020 to mid-2022, prices have only eased slightly and remain stubbornly high.
With no signs that record-high used car prices will ease anytime soon, did the pandemic simply patch a broken market, or did it rewrite the rules for good? Let's find out.
A Brief History of the Wild Ride
Used car prices were relatively flat for the last two decades. And then the pandemic. It reset the market, pushing prices far above anything seen since the early 2000s and creating a new, more expensive normal for buyers. Factory shutdowns and surging demand sent the used car CPI from 130 in January 2020 to 209 by June 2022. When supply halves and demand doubles, "normal" depreciation disappears and bargain-hunting becomes like panning for gold.
Figure 1: Monthly Used Car Consumer Price Index (CPI) and Manheim Used Vehicle Value Index, January 2019–May 2025.
This chart is crucial to understand what is going on. It screams at us "this is the new normal". The key thing to note here is lock-step. When depreciation is in lock-step with the CPI, we are in completely new territory. What you knew as "normal depreciation" is gone. It shows retail and wholesale prices rising and falling together since 2019. The pandemic erased normal depreciation, pushing used car values to a new, higher baseline - a shift that still defines today's market. What you can also clearly see in the chart is recent volatility; it's all over the place. It seems volatility is another feature of the new normal.
Pandemic Shock vs. Demand Hangover
Dealers still debate home-delivery auctions versus in-person haggling. Wholesale indexes like Manheim's surged 30% year-over-year in early 2022, then reversed gradually. Tip: wholesale vs. retail - wholesale dips don't always translate to sticker cuts; carrying costs and financing rates keep margins tight. Range anxiety for buyers now really means wondering if a $400 monthly payment on a seven-year-old SUV was madness or a survival tactic.
Crunching the Numbers: Depreciation and Price Index
Today's average listing sits near $25,500. Compared with pre-COVID values, that's 30–40% higher. Factor in maintenance, AAA's 2024 estimate is 10.13 cents per mile, or ~$1,519/year at 15,000 miles; insurance up 10–15%; financing rates flirting with new-car levels. Ironically, you pay more for a decade-old sedan than you did for a new model 5 years ago.
Saturday morning lots remain ritual: tailgate meetups, engine rev demos, testers chewing on breakfast burritos. Online apps add alerts: "Price dropped $200!" evokes a dopamine hit like finding a hidden highway shortcut.
Tip: negotiation tactics - know the true market by checking multiple sources.
There's almost reverence in cleaning someone else's coffee stain from the seat before a test drive. It's communion among gearheads and bargain seekers. The pandemic boom taught us that used-car prices can surge like race-day adrenaline - and the bust reminds us of gravity.
If you're waiting for used car prices to "return to normal," you might be waiting a good while. The new normal is higher prices, fewer bargains, and a market that can turn on a dime. The best advice? Shop smart, check multiple sources, and move quickly when you spot value. Because in this market, volatility isn't just a phase - it's probably the road ahead.
In the end, all we want is that familiar engine rumble and the thrill of a deal that smells like possibility - even if the sticker still stings. At every mile, the used-car market whispers its own story: one of scarcity, strategy, and stubborn passion.
Copyright 2025 The Arena Group, Inc. All Rights Reserved.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Axios
5 hours ago
- Axios
Job market gloom hasn't been this bad since the Great Recession
Americans haven't been this gloomy about the job market since the Great Recession. Why it matters: Fears about joblessness have surged since President Trump unveiled plans to impose steep tariffs on foreign goods. The economy might have hit a soft patch, but it has so far dodged the bleak predictions from a few months ago. Consumers are still bracing for the worst to come. By the numbers: As of early August, that pessimism was in step with that of the 2008 financial crisis. About 62% of consumers believe unemployment will worsen in the year ahead, according to the University of Michigan's latest monthly survey. That's bounced around a little in the last few months, but consistently hung around levels not seen since the Great Recession. What they're saying: The concerns about higher unemployment are paired with worries about an inflation resurgence. "Although CPI inflation has not surged, our data show that consumers are still bracing for an increase in inflation to come," Joanne Hsu, the director of the University of Michigan's consumer survey, wrote in a report. "Moreover, consumers are also concerned that labor markets will weaken." The intrigue: Economic conditions are strikingly different compared to the last time consumers felt this glum. Then: The economy was in the midst of what was the worst economic downturn since the Great Depression. The stock market was falling off a cliff, unemployment filings soared and the jobless rate would ultimately peak at 10%. Now: The economy is slowing, though fears are worse than the official data suggests so far. The unemployment rate is holding at a historically low 4.2%, as of July. Hiring has stalled, but so have layoffs. There are fewer unemployment filings now than in July 2021, when a record-low share of Americans (14%) said they anticipated higher unemployment in the year ahead.
Yahoo
20 hours ago
- Yahoo
The 'one' reason this strategist is nervous about the economy
Simplify Asset Management chief strategist Michael Green joins Market Domination Overtime with Josh Lipton to discuss recent economic data and the markets reaction. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime. What would you say, um, you learned this week, Michael? What were your big lessons, your big takeaways? Well, to me, the most interesting part of the week was the fact that we sold off on the, um, CPI or the, I'm sorry, that we rallied on the CPI beat, and then we sold off on the PPI miss very briefly. The irony between those two is that the CPI outperformance was perceived as relatively positive for rate cuts. And then, of course, the PPI miss was very heavily tied into a particular segment of the, of the economy. It was tied to what's called, um, tradeable services in particular portfolio management services. As a portfolio manager, I can assure you I did not raise my prices this week or this past month. What actually did happen is that that index is basically just a proxy for the S&P 500. So the great irony of this past week was we beat on CPI. That causes the, the S&P to rise. The S&P rising causes PPI to miss, which causes momentary distress. That was a fun learning this week. It felt like, Michael, the markets looked at those prints, CPI and PPI, and said, listen, they looked it over and said, there's nothing in these reports that derail the Fed from giving us that cut we expect in September. Is that what you saw? Well, we certainly saw that with the CPI. We saw that pricing back off a little bit with the PPI miss, in particular, as I mentioned the areas and services, etc. Those are areas that are going to pass through to CPI and PCE in the next month. Um, that actually lowers the prospect that we're going to get that giant rate cut, the 50 basis point cut that I think a lot of people had tried to price in. Um, we've already heard, um, Fed, you know, Fed presidents and governors come out and speak and say, we're a little less favorable. Maybe we're going to be a little bit more cautious after the PPI print. I've had some economists on the show, Michael. Let's get your take on this. Who say, listen, stop being so worried about the inflation boogie man. Inflation is going to come, and then it's going to, it's going to, it's going to come, and then it's going to ease. It's going to be transitory. It's not going to be persistent. Stop worrying. What do you make that argument? So I generally fall in that camp, and I, I guess I'm one of the economists that you have on TV that say that sort of thing. But the, the, the simple reality is that the underlying forces in the global economy are actually quite deflationary, not inflationary. Slowing population growth, slowing labor force growth, this means all else equal that we need to make less investments to maintain the capital labor ratio, which is used for productivity gains. All else equal, this suggests that there's less pressure than people want. A year ago, all we heard about is the shortage in housing. Now we're hearing about rising inventories and supplies. Um, we have a very, very bifurcated economy right now. And the one thing that I would say that caught my attention and makes me a little bit nervous is in the inflation reports what we saw is a rapid acceleration and how much the government is paying for things. One of the views on inflation that I happen to subscribe to is ultimately, if the government decides to pay more for stuff, the rest of us are going to have to pay more for stuff. And so I'm a little cautious that we could see a pickup in inflation that's a little bit more durable, but we're just going to have to see how that plays out. Overall, I think we have to be very, very cognizant that slow growth is not particularly inflationary. Related Videos How markets could have a 'déjà vu' moment with Sept. rate cut Trump–Putin meeting, retail sales, consumer data: What to Watch How some retail investors view crypto now Intel stock jumps on report Trump admin. is considering stake Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Yahoo
Consumer sentiment falls for first time in 4 months as inflation expectations surge
Consumer sentiment soured in August for the first time in four months as Americans grew antsy about where inflation is headed. The latest University of Michigan consumer survey released Friday showed year-ahead inflation expectations soared to 4.9% in August from 4.5% in July. That pessimism was seen across demographic groups and political affiliations. Overall, sentiment dropped 5% month over month, the survey showed. On an annual basis, inflation has held at 3% or lower so far this year, though core inflation stripping out more volatile food and energy prices rose 0.3% between June and July, the largest gain in six months. Hotter-than-expected wholesale inflation data released this week suggested consumers may face more pricing pressure in the months to come. Learn more: July CPI breakdown: Consumers are feeling the crunch of accelerating inflation Still, 'consumers are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused,' said Joanne Hsu, the survey director, in a statement. (High country-specific tariffs took effect last week.) Sign up for the Mind Your Money weekly newsletter By subscribing, you are agreeing to Yahoo's 條款 and 私隱政策 Consumers in the survey also expect the job market to weaken, following what is now a three-month streak of disappointing jobs numbers. Though the unemployment rate has been hovering between 4% and 4.2% since May 2024, the US economy added 73,000 nonfarm payrolls in July, less than the 104,000 expected by economists. Meanwhile, May and June jobs figures were revised sharply downward to a total gain of just 33,000 jobs. 'The share of consumers expecting unemployment to worsen in the year ahead was about 32% in 2022 and as recently as November 2024, but is now about 60%, a reading last seen in the Great Recession,' Hsu wrote in a report that was also released Friday. But tariff worries and recession talks aside, consumers are still getting out their credit cards: Retail sales in July were up 0.5% from the month prior. Read more: What is inflation, and how does it affect you? Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at
