The used vehicle market has been characterized by significant fluctuations in pricing over the past few years, leading to uncertainty for both buyers and sellers. Following a dramatic rise in prices influenced by the COVID-19 pandemic, forecasts by Cox Automotive indicate that we are likely to see a period of stabilization starting in 2025. Historical data reveals that the volatility in used car prices peaked at an astonishing 46.6% increase in 2021, a year marked by unprecedented demand and supply chain disruptions. Consequently, this unprecedented demand for used vehicles was largely fueled by a lack of new vehicle availability, stemming from widespread production delays and shortages in automotive parts.
Cox Automotive’s Manheim Used Vehicle Value Index, which measures the wholesale prices of used cars sold at auction, suggests that used vehicle prices might close 2025 at approximately 1.4% higher than at the end of the previous year. This is a notable moderation compared to the fluctuations observed in 2022 and 2023, where prices plummeted by 15% and nearly 7%, respectively. Despite these declines, it’s evident that prices remain inflated compared to pre-pandemic conditions. The crucial takeaway for potential car buyers is the indication of stability in pricing, which is a welcome change from the frenetic buying environment of the pandemic years.
Impacts of Inflation and Buying Power
The Biden administration has highlighted the rise in used vehicle prices as a significant contributor to broader inflationary trends during the pandemic. While the stabilization of used car prices is a sign of market recovery, it is noteworthy that current retail prices have not reverted to pre-pandemic levels. Typically, retail vehicle prices align with wholesale trends; however, the lag in retail price adjustments indicates persistent consumer strain and demand issues.
Cox’s data reveals that the average listing price for used vehicles hovered around $25,565 as of early December 2025, minimally increasing from $25,493 the previous month but reflecting a decrease of 3% compared to a year prior. Such data underscores an essential concern: while the market is beginning to stabilize, affordability remains a primary issue for many prospective buyers who are grappling with tighter budgets as a residual effect of inflation.
Looking ahead, Cox Automotive forecasts a modest growth in used vehicle sales, predicting a year-on-year increase of 1% to reach about 37.8 million transactions by the end of 2025. This projection encompasses a retail sales figure of approximately 20.1 million used vehicles, translating to a 1.2% rise. While these figures portray a slight upward trend in the market, they do not erase the lasting effects of the earlier price surges.
As the auto industry approaches 2025, the trajectory of used vehicle pricing appears to be transitioning from a tumultuous period toward greater stability. Nonetheless, both buyers and sellers must remain vigilant to evolving market dynamics, and overall economic conditions will undoubtedly play a pivotal role in shaping the future landscape of the used vehicle market.