The market for used vehicles has experienced a rollercoaster of pricing fluctuations over the past few years. Following the turmoil caused by the COVID-19 pandemic, where prices surged due to supply chain disruptions and heightened consumer demand, a semblance of stability is anticipated to take hold during 2025. According to data from Cox Automotive, wholesales prices are expected to conclude 2025 around 1.4% higher than at the close of 2024, signifying a moderate uptick rather than the extreme volatility seen in previous years.
To fully grasp the current predictions, it’s crucial to take a step back and analyze historical data. Throughout 2020 and 2021, used vehicle prices skyrocketed by an extraordinary 14.2% and 46.6%, respectively, catalyzed by severe supply shortages stemming from both production halts and logistical challenges. Such drastic price surges not only painted a challenging picture for buyers but also contributed heavily to inflationary pressures acknowledged by the Biden administration.
Cox Automotive’s data reveals a gradual but palpable shift back toward normalcy. While 2024 did experience a modest 0.4% price increase, significant annual drops of 7% and closer to 15% occurred in 2023 and 2022, respectively. Despite these reductions, the reality remains that used vehicles are still more expensive than pre-pandemic levels. This persistent elevation in prices can be attributed to ongoing supply chain constraints and prevailing consumer demand.
As of December, the average listing price for used vehicles reached approximately $25,565, marking a slight increase from the previous month, yet down 3% from the same time last year. This reflects not only the current market conditions but also the residual effects of the previous years’ price inflations. Furthermore, the retail prices consumers face typically lag behind wholesale price changes, a phenomenon that has been amplified in recent years as the market readjusts.
Individuals assessing the used car market should remain aware that fluctuations are still likely throughout the year, although they are expected to be far less severe compared to the past few years. Cox’s data suggests an average annual increase of 2.3% at year’s end when excluding the anomalies of 2021 and 2022, with a customary monthly change hovering around 0.2% in typical years.
As we cast our gaze forward to 2025, Cox Automotive forecasts that used vehicle sales will experience a modest year-over-year increase of 1%, totaling around 37.8 million transactions. This projection includes 20.1 million retail sales, marking a 1.2% increase. While these prospects may seem dim compared to explosive growth years, they represent a foundational recovery and sustainable growth trajectory for the used vehicle market.
As the used vehicle market gradually stabilizes, potential buyers will likely experience a less tumultuous shopping environment compared to the chaos of the pandemic years. However, purchasers should remain prudent, as overall prices are still above pre-pandemic norms, suggesting a definitive change in the landscape of automobile pricing that could resonate for years to come.