Used vehicle prices are projected to continue stabilizing in 2025, following a period of extreme fluctuations due to the COVID-19 pandemic and its associated supply chain disruptions. Cox Automotive expects that wholesale prices, tracked through the Manheim Used Vehicle Value Index, will end 2025 approximately 1.4% higher than December 2024. Although prices will still experience some month-to-month variation due to seasonality and other factors, these fluctuations are expected to be much less drastic than those seen in previous years.
Price Fluctuations and Historical Trends
After experiencing significant price changes in recent years, 2024 will see a modest 0.4% increase in used vehicle prices. This follows sharp price declines of 7% in 2023 and nearly 15% in 2022, which came after the pandemic-induced price hikes. In contrast, used vehicle prices surged by 46.6% in 2021 and 14.2% in 2020, driven by the combined effects of supply shortages and increased demand during the pandemic. These historical price movements reflect the volatile nature of the used vehicle market during the past few years.
The rise in used vehicle prices played a significant role in the broader inflationary pressures during the pandemic. As new vehicle production was severely limited due to supply chain issues and a lack of parts, the availability of new vehicles plummeted. This scarcity drove more consumers to the used car market, leading to substantial price increases. The Biden administration identified the surge in used vehicle prices as a key contributor to inflation during this period.
Stability for Car Buyers
The stabilization of used vehicle prices presents a more favorable environment for potential car buyers. Although prices remain higher than they were before the pandemic, the volatility of the past few years has largely subsided. Retail prices typically follow wholesale price trends, but they have not decreased as rapidly as wholesale prices in recent years. Despite this, the market is expected to be less erratic moving forward, with a more predictable pricing structure in place.
Looking ahead to 2025, Cox Automotive forecasts a 1% increase in used vehicle sales, totaling 37.8 million vehicles. This includes a 1.2% rise in retail used vehicle sales, amounting to 20.1 million. The overall forecast suggests that while used vehicle prices will remain elevated compared to pre-pandemic levels, the market will become more stable, with steady pricing and sales patterns expected in the coming years.