Many buyers expected used car prices to fall back to normal by 2023 or 2024. Instead, 2025 arrived and used vehicles are still far more expensive than they were before the pandemic. Here’s why the market remains elevated, backed by real data from the past five years.

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The Missing Inventory Problem

The biggest reason used cars remain expensive in 2025 is simple: there are not enough of them.

From 2020 to 2022, new-vehicle production slowed dramatically due to global chip shortages and supply chain disruptions. Fewer new cars sold in those years means fewer 1- to 3-year-old cars available now. This shortage is still affecting the entire used-car market.

Dealers are operating with significantly lower used-car inventory than they had pre-COVID, and low supply continues to keep prices high.

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The Data Behind Today’s Prices

The numbers show that used-car prices have cooled slightly from their 2021 peak, but they are still historically high.

The Federal Reserve’s used-vehicle CPI index was 184.7 in April 2025, far above pre-2020 levels.
Edmunds reported that the average transaction price for a three-year-old used vehicle reached $30,522 in Q1 2025, up from the year prior.
Year-over-year used-car inflation rose about 6.3 percent in mid-2025, reversing some of the earlier declines in 2023–2024.

Even older vehicles are holding value unusually well, something that rarely happens in a normal market cycle.

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New Car Prices Are Anchoring Used Prices

New-car pricing has climbed steadily since 2020. According to Kelley Blue Book, the average new-car transaction price in 2025 is still more than $10,000 higher than it was in 2020.

When new cars become more expensive, used cars naturally follow. Buyers who would normally choose a new vehicle are being pushed into the used market, creating additional demand in a segment that already lacks supply.

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Higher Interest Rates Make Affordability Worse

Even if prices fall slightly, affordability does not automatically improve. Interest rates have remained elevated into 2025, and this keeps monthly payments high. Many buyers who see a used car advertised at a “better” price are still facing large payments once financing is calculated.

This effect makes any small price decline feel insignificant from a buyer’s perspective.

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Conclusion

Used cars remain expensive in 2025 because the market is still dealing with the aftershocks of 2020–2022. Low inventory, elevated new-car prices, and high interest rates continue to support higher-than-normal values. While the market is gradually stabilizing, buyers should not expect a return to pre-pandemic pricing anytime soon.

If you’re unsure which vehicles offer the best value in today’s market, our 60-second quiz can point you toward the right options based on your budget and needs.