A closely watched measure of used car prices is climbing again, highlighting the continued strain on American consumers as strong demand collides with limited supply.
According to Cox Automotive, the Manheim Used Vehicle Value Index rose 6.2 percent in March compared to a year earlier, reaching its highest level since the summer of 2023. The index tracks the prices dealerships pay for used vehicles at auction, offering a snapshot of market trends that often ripple out to everyday buyers.
The rise in wholesale prices has been building since the start of the year, driven in part by expectations of increased consumer activity during tax refund season. Those refunds, analysts say, helped unlock pent-up demand and pushed used vehicle sales higher in the first quarter.
Jeremy Robb, chief economist at Cox Automotive, noted that late March is typically the peak for pricing activity. However, he suggested that this year’s trend may extend further, given the strength of demand seen so far. At the same time, he acknowledged that global uncertainty—including the ongoing conflict in the Middle East—could eventually weigh on consumer confidence, even if the data has yet to reflect that impact.
On the supply side, the picture remains tight. Retail inventory of used vehicles fell below two million units at the end of March, marking the lowest level recorded in Cox’s data. That shortage is keeping prices firm, particularly for popular models. Three-year-old vehicles, often considered a sweet spot for value-conscious buyers, are now priced about 2 percent higher than a year ago and above typical seasonal patterns.
Affordability challenges in the new car market are adding to the pressure. New vehicle sales have declined 5 percent so far this year, while used vehicle sales have edged up 1 percent. As more consumers are priced out of the new market, they are turning to used options, further tightening supply.
That shift is also being reinforced by structural factors. Fewer new car sales mean fewer trade-ins, limiting the flow of vehicles into the used market. At the same time, lingering effects from the COVID-19 pandemic continue to be felt. Automakers produced roughly 8 million fewer vehicles than usual in 2021 and 2022, according to data from Kelley Blue Book, leaving a lasting gap in supply.
While the average listing price for a used vehicle—$25,287 in February—remains below the highs seen in 2022, it is still rising year over year. For many buyers, the bigger concern is how those prices translate into monthly costs.
Data from Edmunds shows the average amount financed for a used vehicle reached $29,314 in the first quarter, up about $1,000 from a year earlier and significantly higher than pre-pandemic levels. Buyers are increasingly stretching loan terms and putting less money down in an effort to keep monthly payments manageable, which averaged $559.
For those searching for lower-priced options, the challenge is even greater. Vehicles priced under $15,000 are in especially short supply, with just 31 days of inventory available in February—well below the industry average.
The result is a market where demand remains resilient, but affordability continues to erode, leaving many Americans navigating a difficult road as they try to balance necessity with rising costs.
