The average used car was listed for $25,512 at the beginning of July. That’s just $71 higher than the price a month earlier, and 1% higher than a year ago.
Used car prices have remained surprisingly steady this summer despite punishing tariffs on new cars. Used car prices typically rise when new car prices rise, as would-be new car buyers turn to used cars to save money.
However, new car prices have stayed fairly stable in the first months of President Trump’s new tariff policy.
New Car Prices Holding Steady
- The supply of new cars remains relatively stable, while demand is dropping
New car prices have stayed relatively flat for two reasons.
One reason is simple supply and demand.
On the supply side, tariffs on imports raised the cost of building cars outside the U.S. Tariffs on parts raised the cost of building vehicles in the U.S., since many parts are imported.
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However, automakers typically keep more than two months’ worth of new cars available, so any change in the cost of importing or building cars can take months to show up at the lot.
On the demand side, news about tariffs and other economic uncertainty has slowed car shopping. Americans rushed to buy cars early in the tariff scheme. But once that rush ended, foot traffic into dealerships fell.
The other reason is that automakers and dealers are taking steps to keep the full effect of the tariffs from showing up on the sticker price. They’re trimming incentives, spreading costs across many models, and cutting their own costs everywhere they can.
With new car prices relatively flat, there’s little pressure on used car prices.
Used Car Inventory Almost Flat
- Used car inventory was tight before tariffs began
Used car inventory is similarly stable. Used car dealers started July with a 45-day supply of used cars for sale, just two days less than a year ago.
Used car inventory has stayed historically low for several years. During the height of the COVID-19 pandemic, automakers built about 8.1 million fewer cars than they would have in normal times. Those cars will never reach the used market, keeping numbers low for years.
Most Affordable Cars Still Hardest to Find
- Dealers are still short on older, higher-mileage used cars
Buyers shopping for truly affordable used cars have the hardest time this month.
Used cars priced below $15,000 continue to be scarce, with only a 32-day supply, which is 13 days below the industry average.
The top five sellers of the month were listed at an average price of $23,800, almost 7% below the average listing price for all vehicles sold. Once again, Ford, Chevrolet, Toyota, Honda, and Nissan were the top-selling brands, accounting for 49% of all used vehicles sold.