The used car market has been a rollercoaster ride in recent years, influenced by factors like the pandemic, supply chain disruptions, and rising interest rates. As we look into 2025, learn the potential used car inventory trends that could shape the sector.
January 2025 Used Car Market Forecast
Inventory
Used car inventory remains tight
While supply chain issues may ease slightly, the used car market will remain tight in January 2025. A limited number of used cars will be available due to economic conditions and changing consumer preferences.
Overall inventory fluctuations and newer models take center stage
Overall inventory levels are expected to dip slightly below pre-pandemic levels in January 2025. However, compared to recent months, it should show signs of stabilization. The availability of 2020 and 2021 models might be limited, but a growing influx of 2022 and 2024 models will balance overall availability. This means you’ll likely find a wider selection of newer, potentially more reliable used cars.
Fewer trade-ins from high new car prices
High new car prices could discourage people from trading in their old vehicles, further limiting the supply of used cars.
Prices
Use car prices to see signs of stabilization
Used car prices are likely to remain elevated, although they may stabilize or slightly decrease compared to recent peaks. New car prices have jumped 27% in five years and are still close to the record highs of late 2022. The average selling price for a used car is predicted to remain near $25,500.
Premium for Popular Models
High-demand vehicles, especially SUVs and trucks, could continue to command premium prices.
Why the Cautious Outlook?
Several factors contribute to this cautious outlook:
Supply Chain Issues are Still Lingering
Even as supply chain bottlenecks ease, their lingering effects could impact new car production and, consequently, the availability of used cars.
Dealerships and Automakers are Experiencing Economic Uncertainty
A potential recession could dampen consumer spending, affecting demand for new and used cars. If interest rates remain high, car financing may become more expensive, potentially slowing demand.
Consumer Tastes are Changing
Changing lifestyles, environmental concerns, and the rise of electric vehicles could influence the demand for different types of used cars.
Factors That Could Lower Used Car Prices
- Falling Interest Rates: Post-election lower interest rates on new car loans might entice buyers to opt for new vehicles instead of used ones.
- Increased New Car Incentives: Automakers offering more incentives on new cars could make them more attractive than used cars.
Additional Predictions
- According to Lotlinx predictions, new car prices are expected to decrease slightly (3-5%) by late 2025 due to increased incentives.
- The EV market is predicted to experience steady growth. Watch our past webinar on YouTube on managing EV inventory!
- Economic recessions or political instability could greatly impact the car market.
Tips for Used Car Sellers in 2025
Do Your Market Research
Understand used car inventory trends through the market, compare prices, and research the vehicle’s history. Lotlinx Vincensus offers real-time, data-driven insights for dealerships every quarter. Vincensus helps dealerships optimize inventory, pricing strategies, and marketing efforts by analyzing pricing, sales trends, and market demand. It empowers dealerships to decide on vehicle acquisition, competitive pricing, and effective promotion.
Consider Certified Pre-Owned (CPO) Vehicles
CPO vehicles are outperforming the used car market, with sales growing 6.6% in 2023. However, a shortage of CPO cars is expected due to production delays and people keeping their cars longer. CPO vehicles are newer, have fewer miles, and come with manufacturer-backed inspections and warranties, offering more reliability than regular used cars. While they cost slightly more, buyers value the peace of mind they offer, with fewer issues reported. This makes CPO a smart option for used car sellers in 2025.
Use an All-in-One Dealership Inventory Management System
A dealership inventory management system like Lotlinx helps used car sellers optimize profitability by using data to adjust inventory in real-time, identify market demand shifts, and implement dynamic pricing strategies. Lotlinx’s VIN View Optimizer (VVO) helps adjust prices based on digital engagement, driving faster sales and reducing days on lot. It also mitigates inventory risk, lowering marketing costs and boosting conversions. With tools like SENTINEL, dealerships can track aged inventory, quickly move slower units, and maximize profit per vehicle. Read how this helps drive profitability for used car sellers in more detail.
Success isn’t linear for used car sellers. Dealerships must adapt, stay informed, and build strong ties with customers, communities, and peers. Contact Lotlinx for more.