Used vehicle prices surge as tariff fallout fuels volatility

Wholesale used-vehicle prices in the US surged in June, continuing their upward trajectory despite market volatility caused by auto tariffs and shifting economic conditions. The Manheim Used Vehicle Value Index (MUVVI) rose by 1.6 per cent from May, marking a 6.3 per cent year-on-year increase and reaching a level of 208.5, its highest point since October 2023. The jump reflects persistent price pressures in the used-vehicle market, despite signs of cooling retail sales.

Market volatility driven by tariffs and supply dynamics

The rise in the Manheim Index comes amid the backdrop of tariffs imposed on imported vehicles by the Trump administration. These tariffs disrupted new vehicle sales, which in turn affected used vehicle pricing. According to Jeremy Robb, Senior Director of Economic and Industry Insights at Cox Automotive, the wholesale appreciation trends have been more volatile in the second quarter of 2025, largely due to the continued impacts of tariffs on new car sales and supply chains.

“The market has experienced significant fluctuations due to tariff-induced volatility,” Robb explained. “The Manheim Index has shown consistent gains since last June, but with tougher year-on-year comparisons on the horizon, we may see some tapering in the second half of 2025.” Robb also noted that despite these fluctuations, retail vehicle sales remain stronger than in previous years, providing some support for higher values.

While the seasonal adjustment to the index exaggerated the rise in June, non-seasonally adjusted prices saw a decline of 1.1 per cent from May. However, even with this dip, unadjusted prices were still up 5.1 per cent compared to the same time last year.

Luxury vehicles and EVs lead the charge

Price increases were seen across most vehicle segments in June, with the luxury segment showing the most significant growth. Luxury vehicle prices jumped by 8.8 per cent year-on-year, maintaining their position as the fastest-growing category in the used-car market. SUVs also saw a notable price hike of 6 per cent compared to June 2024, while compact cars, in contrast, registered the weakest performance, declining by 0.1 per cent.

Electric vehicles (EVs) continued to demonstrate remarkable growth, with wholesale prices rising 12.1 per cent year-on-year in June, far outpacing the 5.6 per cent increase in non-EVs. This marked a significant rebound after EV prices hit their lowest levels in nearly three years in mid-2024. Month-over-month, EV prices increased by 1.5 per cent, slightly ahead of the 1.4 per cent gain for non-EVs. This shift is seen as a reflection of growing diversity in the used EV market, with more models contributing to the price increases.

“The used-EV market is becoming more diverse, and this is contributing to a broader recovery in pricing,” Robb noted. He added that a potential surge in demand for used EVs could occur in the third quarter, especially as consumers look to take advantage of expiring tax credits.

Retail sales lag, inventory levels stable

On the retail side, used-vehicle sales were slightly down in June, dipping 1.5 per cent from May. However, sales were still up 2 per cent compared to the same month in 2024, suggesting a slow but steady recovery in consumer demand. The average retail listing price for a used vehicle rose by 0.3 per cent over the last four weeks, indicating some stability in pricing at the consumer level.

Inventory levels remained relatively stable, with the used-vehicle supply finishing June at 45 days, the same as in May and just one day lower than the same time last year. This stability comes as new vehicle sales continue to decline. June saw a 4.2 per cent drop in new vehicle sales compared to the previous year, and volume fell sharply by 14.2 per cent from May, reflecting the ongoing effects of the tariff-induced price hikes on new cars.

Outlook for the second half of 2025

Looking forward, the used-vehicle market is expected to face more challenges in the second half of 2025 as the year-on-year comparisons become tougher, particularly in the latter part of the year. The Cox Automotive forecast predicts that used-vehicle sales will reach 20.1 million units in 2025, a modest 1.2 per cent increase over 2024. This growth will be tempered by constrained supply, driven by lower production during the pandemic and fewer lease returns entering the market.

Despite the anticipated slowdown, Cox Automotive projects that the Manheim Index will continue to rise, though at a slower pace, ending 2025 with a 1.8 per cent year-on-year increase, just below its long-term average increase of 2.3 per cent. The shifting dynamics of new and used vehicle supply and demand will likely keep the used-vehicle market in flux, with tariffs continuing to play a significant role in shaping pricing trends.