According to a new report from Edmunds released May 22, used vehicles are more expensive than they’ve been in years. The average transaction price for used vehicles three years old or newer surpassed $30,000 in Q1 2025, marking the first time it has done so since 2023. The gap between lightly used and new car prices has now narrowed to just $17,000, the smallest margin since 2022.
Behind the price spike is a dwindling supply of gently used vehicles, largely due to the effects of the COVID-era semiconductor shortage and a sharp drop in leasing activity during 2022 and 2023. With fewer new vehicles sold or leased during that period, the pipeline of 3-year-old cars returning to the market has shrunk considerably.
“Leasing penetration rates took a dump. They were like the lowest we had seen in 10 years,” said Ivan Drury, director of insights at Edmunds and author of the report. “Naturally, we are going to see a deficit in this vehicle type from the very get-go.”
The report also noted:
- The average age of vehicles traded in has grown from 7.3 years to 7.6 years in just one year.
- 3-year-old lease return values are coming in higher than automakers originally forecasted, benefiting consumers with expiring leases.
- Some dealers are paying more to acquire gently used vehicles, creating trade-in advantages for recent lessees.
While this creates a tough environment for buyers, it may prove beneficial for drivers turning in vehicles leased in the past three years, as dealers compete for limited inventory.
Looking ahead, Edmunds warns that President Trump’s proposed tariffs could introduce similar disruptions to vehicle supply, pricing, and demand. The report suggests that higher import duties could increase interest in already-imported used vehicles, which may again push resale values higher, especially for near-new foreign models.
In a related trend, American-made vehicles are now the most expensive on the market, according to Cars.com. Through Q1 2025, U.S.-assembled cars carried an average price tag of $53,000—$4,000 higher than the national average for new cars. Drury explained this is due to the types of vehicles assembled domestically, which tend to be larger and more expensive, such as trucks and SUVs.
As a result, shoppers may find little relief by switching to new American-built vehicles, as tariffs and supply issues continue to distort pricing across the board.
