After a brief period of stability in 2024, the used car market is again showing signs of strain as supply constraints and rising prices return. According to new data from Edmunds, the average transaction price for a 3-year-old used vehicle rose to $30,522 in Q1 2025 — a 2.3% increase from the previous year and the first time this figure has exceeded $30,000 since Q2 2023.
The rising prices are accompanied by longer lot times, with used vehicles now spending an average of 38 days on dealer lots, up from 34 days in Q1 2024 and the highest level recorded since early 2021.
The longer lot times paired with higher average transaction prices show dealers are likely maintaining higher asking prices and demonstrating a willingness to wait for the right buyers given the lower supply.
The tightening supply of near-new vehicles stems largely from a sharp drop in leasing activity during 2022 and 2023, reducing the number of lightly used vehicles returning to the market. Edmunds reported the average age of trade-ins reached 7.6 years in Q1 2025 — the oldest on record since Q1 2019.
In parallel, the pricing gap between new and used vehicles is narrowing. The difference between the average transaction prices for new and 3-year-old used vehicles dipped to $16,970, the smallest spread since Q3 2022. This erosion signals a return of pricing pressure in the used market, especially with tariffs on new cars threatening to exacerbate new vehicle shortages.
Edmunds cautioned that resale value projections may become more volatile. “The 2020s in particular have proven just how impactful external influences can be on upending predicted resale values,” the release noted. As tariffs take effect unevenly across countries, trade-in values may rise unexpectedly for certain models, particularly those built overseas or in smaller volumes.
“For shoppers with trade-ins, country of assembly — usually a nonfactor — now plays an unexpected and potentially significant factor in a vehicle’s resale value,” Edmunds said, encouraging consumers to seek multiple trade-in offers.
For dealers, the scarcity of new vehicles may increase reliance on used inventory to maintain sales volume and support certified pre-owned programs. Edmunds recommended reevaluating inventory sourcing strategies to manage through anticipated market turbulence.
While not as universal as the COVID-era chip shortage, targeted tariffs could introduce similarly disruptive dynamics, reshaping supply and pricing patterns in both the new and used vehicle segments.
