As of June 2025, used car prices in the U.S. have soared by approximately 40% compared to pre-pandemic levels, with the average price for a three-year-old vehicle reaching $30,522 and the overall used car market hitting $32,317. This dramatic increase, tracked by indices like the Consumer Price Index (CPI) and Manheim Used Vehicle Value Index, has left budget-conscious buyers struggling to find affordable options. In 2019, nearly half of three-year-old cars sold for under $20,000; today, only 11.5% fall in that range, forcing many to reconsider their purchasing plans.
Several factors are fueling this unprecedented rise. The COVID-19 pandemic disrupted new car production, leading to a shortage of vehicles that erased normal depreciation and established a higher price baseline. Supply chain issues, including microchip shortages, further constrained new car inventories, pushing demand toward the used market. Low leasing levels in 2022 and 2023 have also reduced the availability of lightly used vehicles, driving up prices for near-new models.
Recent trade policies, particularly tariffs on imported vehicles and parts, have exacerbated the situation. While tariffs don’t directly affect used car sales, they increase new car prices, prompting more buyers to opt for used vehicles, thus inflating demand and prices. The Manheim Index reported a 4.9% price jump in April 2025, the highest since 2023, partly due to tariff-related fears spurring early purchases. Additionally, financing costs have risen, with interest rates for used car loans averaging 11.3%, and maintenance expenses, estimated at $1,519 annually by AAA, add to the financial burden.
The shrinking gap between new and used car prices—now only $16,900 compared to $19,300 in late 2023—has led some to question whether buying new might be more cost-effective. As tariffs and economic uncertainties persist, experts predict continued pressure on used car prices, particularly for late-model vehicles. For now, buyers face a tough market, with affordable options dwindling and no immediate relief in sight.