Used car market trends have dramatically shifted in recent years, rising due to lower new vehicle production and stabilizing when new vehicle production increased. Vehicle shoppers and dealership owners aren't sure what to expect from used car prices in 2025. The question everyone is asking is when used car prices will drop. Let's explore used car price trends that have emerged thus far in Q1 and expert predictions on pricing for the rest of the year.
Used Car Pricing Trends from 2024
Experts predicted that cars, trucks, and SUVs would see price drops in 2024 while electric vehicles and hybrids would get more expensive. But what actually happened?
In 2024, wholesale used vehicle prices fell around 5%1 from the year before, and the average retail listing price for used vehicles was down 6%1 from Q1 to the beginning of Q4. These lower prices contributed to rising used vehicle sales in late 2024, predicted to reach 19.9 million by year-end1. Hybrid and electric vehicles have gone down in price in 2024.
Car dealerships might finally move past the significant disruptions that have affected the vehicle sector in the past few years, with some stability returning3. Prices are decreasing, which can be good news for dealerships sourcing inventory and consumers. A higher supply of new vehicles is one reason for the lower prices, as well as economic uncertainty and changing consumer preferences4.
Experts expect 2025 to be the year when the used car market stabilizes even further, as the middle of 2024 marked the end of the dramatic ebbs and flows of used-vehicle pricing5.
Used Car Market Trends in Q1 of 2025
So far in 2025, used vehicle prices are still falling slightly, just like many experts predicted. Currently, the average price of a used car is $25,571, which is much lower than the peak of $31,095 in April 20226,7 — however, different types of vehicles experience price changes at different rates.
For instance, used car prices were down -0.43% the week of January 27, 2025, compared to -0.58% the previous week6. The price drop for trucks and SUVs in the last week of January was -0.35% compared to -0.56% in the previous week6. The question now is whether these trends will continue through the rest of the year.
Predictions for the Rest of 2025
Looking ahead to the remainder of 2025, how will used car prices continue to evolve? Will car prices drop in 2025 even more?
Used Car Prices Stabilize
Experts predict that used car prices will stabilize further throughout the rest of this year8. One firm forecasts a 1.4% increase in adjusted used vehicle prices year over year in December 2025, which is very modest compared to the typical 2.3% yearly growth in prices5. The firm also forecasts a 1.2% increase in retail used vehicle sales this year compared to 2024, reaching 20.1 million sales5.
Growth in the Electric Vehicle Market
Used electric vehicle prices fell in 2024 and will likely continue to decline in 2025, helping fuel the growth of the used EV market. Though volume is still low relative to the entire used vehicle market, demand for electric vehicles is strong and growing at a high rate5. Dealerships appealing to many vehicle shoppers may benefit from including used electric vehicles in their inventory.
Declining Interest Rates Help Drive Vehicle Demand
Previously, even when used vehicle prices fell, stubbornly high interest rates kept many buyers out of the market. Interest rates are expected to fall in 2025, which may help draw more buyers into the used and new vehicle markets9.
How Dealers Should Respond
Dealers must always consider used car market trends when making dealership inventory decisions. Given the 2025 used car market trends, dealers might find great vehicles at more affordable prices than last year or the year before. If you've been waiting for car prices to fall to stock up on more inventory, now is an ideal time to do so. As used car price trends stabilize, make sure you're pricing your inventory competitively to boost your sales.
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Sources
- (7 October 2024). Manheim Report: Wholesale Used Vehicle Prices Trend Lower in September After Two Months of Gains. Cox Automotive. Retrieved January 24, 2025, from, https://www.coxautoinc.com/news/september-2024-muvvi/
- Olsen, P. (27 December 2024). Used Car Price Trends for January 2025. Carfax. Retrieved January 24, 2025, from, https://www.carfax.com/blog/used-car-prices
- Crumley, B. (8 January 2025). Price Stability Slowly Returns to Used Car Markets. Inc. Retrieved January 24, 2025, from, https://www.inc.com/bruce-crumley/price-stability-slowly-returns-to-used-car-markets/91105364
- Michalik, A. (18 September 2024). Decoding the decline in used car prices and what’s next for the market. CBT News. Retrieved January 24, 2025, from, https://www.cbtnews.com/decoding-the-decline-in-used-car-prices-and-whats-next-for-the-market/
- (8 January 2025). Manheim Index: Used-Vehicle Values Stabilized in 2024, As Industry Faces Inventory Challenges in Year Ahead. Cox Automotive. Retrieved January 24, 2025, from, https://www.coxautoinc.com/news/december-2024-muvvi/
- Fischer, J. (23 January 2025). Used Car Price Trends for 2025 (Updated Weekly). CarEdge. Retrieved January 24, 2025, from, https://caredge.com/guides/used-car-price-trends-for-2025
- Fischer, J. (20 April 2023). Used Car Prices Are Falling, and It’s Only the Beginning. CarEdge. Retrieved January 24, 2025, from, https://caredge.com/guides/used-car-price-trends-january-2023
- Wayland, M. (8 January 2025). Used vehicle prices expected to continue to stabilize in 2025 after pandemic volatility. CNBC. Retrieved January 24, 2025, from, https://www.cnbc.com/2025/01/08/used-car-prices-2025.html
- (18 December 2024). The Federal Reserve Fades into the Background as Other Factors Take Center Stage. Cox Automotive. Retrieved January 24, 2025, from, https://www.coxautoinc.com/market-insights/fed-rate-decision-december-2024/
