Used-vehicle prices are on a five-month streak of inflation as many consumers are priced out of new cars and both used- and new-vehicle demand have surged as shoppers try to avoid trade tariff-fueled price inflation.
The increased demand that supercharged the spring selling season has eaten into used supply and jacked up prices as a result, electric vehicles being the exception.
Prices of 1- to 5-year-old vehicles rose about 14% from March through July in the first segment inflation in two and a half years, according to data compiled by auto search engine and research website iSeeCars.com.
The company reviewed 1½ million used vehicles sold in July 2024 and last month to arrive at the numbers. The average used vehicle went for $31,770 last month, up 4% year-over-year, the company said.
The inflation appeared to start moderating in July, when used prices rose about 4% after jumping 5% in June.
“The factors impacting used car values, including limited supply and concern over tariffs, makes predicting future pricing trends difficult,” said analyst Karl Brauer in the report. “But the pullback in used car value increases last month suggests we may see some moderation in their growth for the remainder of 2025.”
Used-vehicle prices actually declined a year ago by about 5%, iSeeCars said. Now they’re headed in the opposite direction, led by luxury models, though a handful of budget cars were among the top 20 price gains, including the Chevrolet Trax, whose average price rose about 18% year-over-year in July, its research showed.
“The preponderance of higher-priced used luxury models gaining value suggests many of the consumers driving up used car values are former new car buyers who have switched to the used car market and are willing to spend a fair bit of money to get the vehicle they want,” Brauer said.
Electric vehicles, on the other hand, have been falling in price, dropping about 9% in May, 5% in June and 1% in July. Those are modest declines, though, compared to the 24% deflation a year ago, said iSeeCars, which pointed out July’s decrease was the smallest value drop in more than two years, “suggesting the market has finally found a balance between used electric car supply and consumer demand.”
The company pointed out the irony of EV price deflation just ahead of federal tax breaks for purchases and leases ending in October.
“It’s likely we’ll see a last-minute increase in both new and used EV purchases before the incentives vanish, followed by a decline in sales and demand,” Brauer said. “That could cause a short-term drop in prices right after the incentives go away, but also a longer-term increase, as fewer EV sales will ultimately mean a lower supply and a likely increase in values.”
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