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Used Car Prices Remain High in the US Due to Reduced New Vehicle Supply
The reduced supply of new vehicles during the pandemic continues to keep used car prices high in the US. Experts note strong demand especially for 9- and 10-year-old cars, and say a significant supply improvement in the short term is unlikely.
Production disruptions and supply shortages caused by the Covid-19 pandemic continue to impact the US automotive market years later. The reduced supply of new vehicles has pushed price pressures into the used car market, particularly affecting vehicles up to 10 years old.
Jeremy Robb, chief economist at Cox Automotive, stated that about 8 million vehicles that should have been produced for US buyers during the pandemic years were never made. According to Robb, automakers focused on more profitable upper-segment models during the limited production period, and the effects of this approach are still being felt today.
No Quick Recovery Expected on the Supply Side
Robb emphasized that he does not expect a significant easing on the supply side in the short term. He believes prices are likely to remain at a level that returns to a "new normal" unless there is a major economic shock, and that supply is unlikely to improve noticeably over the next three to four years.
Although US vehicle sales are projected to rise to 16.2 million units in 2025, this figure remains below the record 17.55 million set in 2016. Cox Automotive forecasts 15.8 million sales for 2026, while JD Power predicts 16.3 million.
Tyson Jominy, senior vice president at JD Power, estimated that if sales had continued at the 2016 record level, approximately 16 million more vehicles would have been sold in total. Jominy noted this is equivalent to about one year’s sales volume, with half of the loss occurring after the pandemic.
Weakened Leasing Flow Limits Used Car Supply
The reduction in new vehicle supply has also created a chain reaction in the used car market. Fewer new vehicle sales have limited the supply of used cars, and the number of vehicles returning to the market through leasing has decreased.
Robb explained that leasing is an expensive method for automakers and has been further deprioritized after the pandemic. The leasing rate, which accounted for about 30% of the new vehicle market before the pandemic, dropped to 18% in 2022.
Since leased vehicles typically return to the used market after about three years, the delayed impact of this decline is expected. Experts note that the weakening flow of leased vehicles has become more apparent in the used car market, especially in recent years.
Lower Incentives Shift Demand to Older Models
Manufacturers and dealers have also reduced discounts and incentives due to supply constraints. According to Cox Automotive data, the average incentive rate on new vehicle prices was around 9.5% before the pandemic, dropped sharply during it, and is projected to rise to about 6.5% to 7% in 2026.
However, this level remains below pre-pandemic rates and is unevenly distributed across the industry. Robb said manufacturers have focused on more profitable models such as SUVs, trucks, and higher trim levels, which are more expensive and leased less frequently.
JD Power points out that rising fuel prices, inflation, and overall living costs are also straining consumers’ purchasing power. Jominy noted that prices have increased by about one-third, while wages and incomes have not kept pace, shrinking the segment able to afford new vehicles.
Company data shows demand for 9- and 10-year-old used vehicles has risen above historical averages, indicating many buyers are opting for older, cheaper models instead of newer ones.
Robb said such strong price pressure in the lower market segment is unusual. The data reveals that the pandemic’s impact continues not only on production lines but also in the most affordable segment of the car market.
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