As we look ahead to 2025, the dynamics of the used vehicle market appear to be settling after a tumultuous period marked by erratic price swings. Following the significant price inflations seen during the Covid-19 pandemic, the market is expected to stabilize, providing relief for potential buyers and sellers alike. According to data from Cox Automotive, the fluctuations in wholesale prices observed in recent years are likely to diminish, marking a slowdown in volatility. Their projections indicate that the Manheim Used Vehicle Value Index will conclude 2025 with prices approximately 1.4% higher than they were at the end of 2024. This anticipated modest increase is in stark contrast to the considerable drops of 7% and nearly 15% experienced in previous years, hinting that the market is finding its equilibrium.
The extensive disruptions in the automotive supply chain caused by the pandemic played a substantial role in the inflation of used vehicle prices. During the peak of the crisis, new vehicle inventory dwindled, leading to inflated demand for used cars. This surge in demand contributed to unprecedented price rises, with the market witnessing an unrecorded 46.6% increase in 2021 and a significant 14.2% spike in 2020. As new vehicle production struggled due to logistical setbacks, these conditions nurtured a perfect storm that propelled used prices to unsustainable levels. In light of this, the government had highlighted the escalating used vehicle prices as a key driver of inflation during those years, underscoring the profound impacts of external factors on consumer markets.
As of December, the average listing price for used vehicles stood at $25,565—showing a slight uptick from the previous month yet reflecting a 3% decline from the same time last year. This data points to a new phase for the market where stability is becoming more common, despite the residual effects of past price surges. Retail prices, which typically shadow wholesale price trends, have not decreased at the same rate recently, suggesting a lag in the market’s response to the stabilizing wholesale figures. Jeremy Robb from Cox Automotive notes that while some pandemic influences are waning, continued volatility is still anticipated in their projections.
Looking ahead, Cox Automotive predicts a modest year-on-year increase in used vehicle sales, expecting it to reach approximately 37.8 million in 2025—a 1% increase from prior figures. This forecast, which includes an anticipated 1.2% rise in retail sales, signifies a cautiously optimistic outlook as buyers adjust to the changing landscape. Industry trends suggest that consumers are likely to adapt to the current pricing climate, driven largely by stability in wholesale prices and the gradual easing of previous economic pressures.
Overall, while 2025 is poised to offer a more predictable environment for used vehicle pricing, it is important for buyers to remain vigilant in their purchasing strategies now that the market is regaining its footing post-pandemic.