As more and more drivers are priced out of the new vehicle market, experts say used cars are increasingly becoming the go-to for buyers trying to get a ride that fits their budget. But the flood of interest in used vehicles means there are fewer pre-owned cars on dealers’ lots, and fewer sales of new cars will eventually mean less used inventory.
Both factors boost the average price of used vehicles, which was up about 6% last month compared to March 2025, according to the Manheim Index, a used-vehicle value analysis.
“There’s somewhat of a shortage of pre-owned cars,” CarEdge co-founder Ray Shefska said. “And because new-car asking prices are so damn high, even with elevated used-car prices, there’s still a big enough spread that people are trending back towards used cars because they just can’t afford the new ones.”
Sales of near-new used vehicles from model years 2024 or later rose roughly 24% in the first three months of 2026 compared to the same time period last year, according to a CarGurus industry analysis.
“You’ve got average transaction prices on new vehicles at $50,000 (and) 24% of car loans are seven years or more. Over 20% of monthly car payments (are) over $700 a month,” said Sam Abuelsamid, vice president of market research for automotive communications firm Telemetry Group. “There are only so many people who can afford that.”
The size of the U.S. used-vehicle market is already at least twice that of the new-car market (which Cox Automotive has projected at 15.8 million this year), Abuelsamid said. Sales of used vehicles will only grow because of the high price of new vehicles.
The popularity of used vehicles means they sell faster and there are fewer available, driving up prices. The number of available used vehicles on dealer lots is “the tightest on record,” Cox Automotive chief economist Jeremy Robb told auto industry insiders earlier this month.
“While affordability concerns boost demand for used vehicles as consumers trade down, a lower new vehicle sales rate constrains trade-ins,” Robb said. “And that’s a crucial supply input for the used market.”
Smaller used vehicles priced under $30,000 have been selling the fastest, a signal of the high demand for affordable transportation, according to CarGurus.
“It’s a long tail evolving trend due to the fact that new cars have been increasing in price for decades now,” said Kevin Roberts, CarGurus’ director of economic and market intelligence. “New cars continue to get more and more expensive. And this was a pre-COVID trend; COVID just accelerated that.”
Added tech and safety features are among the top factors in long-term trends driving up the cost of new vehicles, Roberts said.
Katie Downs last week traded in a 2023 Subaru Forester she bought new in December 2022 for a used 2024 Ford Explorer at Ford Motor Village in Dearborn. The 30-year-old Canton resident said she was looking for something larger to make space for her toddler, a stroller, her dog and groceries.
Her husband, Steve Downs, said the price of the new Subaru in 2022 was roughly $10,000 to $15,000 lower than the prices of similar new vehicles they considered this year. After buying a house in February, Katie Downs said she did not want to have to put more money down for another vehicle.
She said the goal was to keep monthly payments the same, but that “wasn’t going to happen” if they bought new. The difference between monthly payments was close to $700 a month for a new Explorer vs. $570 a month for the used one with 14k miles.
“New just wasn’t going to be quite in the budget,” Katie Downs said.
Where used car prices are headed
Auto industry experts say prices could come down this year after a spring surge in sales fueled by buyers armed with tax refunds. The value of used vehicles is highest during tax season, Robb said.
Uncertainty over the Iran war and gas prices, U.S. midterm elections and upcoming negotiations over trade between the United States, Canada and Mexico are expected to dampen overall vehicle sales, Robb said. That could also mean more used vehicles on dealer lots and a drop in prices.
“The end of March typically proves to be the ‘peak’ for price action at Manheim, but the way this tax-refund season is unfolding, it could continue for a bit longer,” Robb said. “We thought we’d see some impact from the Middle East conflict, and that may still happen. But right now, the data is clear: used-vehicle demand is healthy and inventory levels are relatively tight.”
But long term, Roberts and Shefska said more expensive new models will continue to push the price of used vehicles higher.
“Even though the manufacturers keep talking about producing more affordable cars, they don’t,” Shefska said. “And because those cars are really only affordable for, I would say, 13-15% of the population out there (who) feels as if they can actually afford to buy a car that’s over $50,000, it just keeps putting pressure on used car prices.
“And since new car prices are up, used car prices are up,” he added.
The cheapest used cars
As drivers who previously bought new move into the used market and used prices go up in response to the higher demand, there still are options for buyers in need of vehicles in the $10,000 price range, Roberts said. But vehicles selling at that price point now are much older models.
“What $20,000 or $25,000 got you pre-COVID and what it gets you now is, you’re generally going to have a vehicle with more age on it and then more mileage on it,” Roberts said.
There’s a bright spot for southeast Michigan shoppers. While many dealers across the United States are struggling to get enough used cars on their lots to meet demand, Metro Detroit is a beacon for pre-owned vehicles, said Ryan McQuiston, Village Ford’s pre-owned sales manager.
Used-car dealers get much of their inventory from off-lease vehicles, and because leasing is so popular in the Detroit area, McQuiston said local dealers have higher inventories of used vehicles. That means better pricing.
“We have the inventory for people to purchase,” McQuiston said. “No. 2: It’s at good prices.”
sballentine@detroitnews.com
This article originally appeared on The Detroit News: Used cars are having a moment
Reporting by Summer Ballentine, The Detroit News / The Detroit News
USA TODAY Network via Reuters Connect
