If you’re wondering when will used car prices drop, you’re not alone. In 2025, millions of Americans are holding off on purchasing used vehicles, waiting for the right time to buy. The past few years have been a turbulent ride for car buyers. From pandemic-era shortages to supply chain meltdowns, used car values skyrocketed—and now consumers want to know: is relief on the horizon?
In this comprehensive article, we’ll break down expert insights, current market conditions, and key economic indicators to help answer that vital question. We’ll also examine whether used car prices are dropping, how long this trend may last, and what you can expect if you’re planning to buy or sell a vehicle in 2025.
To understand when will used car prices drop, it’s essential to revisit what caused the surge in the first place.
During the pandemic, factory shutdowns, chip shortages, and labor disruptions severely limited new vehicle production. This shifted demand toward used vehicles, pushing prices to historic highs. At one point in 2022, some used models were selling for more than their new counterparts.
Fleet sales (like rental car companies) also diminished during this time, reducing the supply of future used vehicles. Combine that with inflation and increased interest rates, and you had a perfect storm driving up used car costs.
2025 Outlook: Are Used Car Prices Dropping?
Are used car prices dropping now in 2025? The answer is cautiously optimistic: yes, but the pace is slow, and the impact depends heavily on the vehicle segment.
In Q1 and Q2 of 2025, wholesale used vehicle prices have seen an overall decline of 4.3% year-over-year. High-mileage sedans and compact cars are leading the drop, while pickups and SUVs are more resilient due to ongoing demand.
Luxury vehicles, especially older models, are also seeing steeper price reductions, driven by decreasing consumer appetite for high-cost loans in a high-interest-rate environment.
Economic Forces Driving the Change
So, when will used car prices drop further and return to pre-pandemic levels? Here are the main forces currently influencing this shift:
1. Interest Rates Remain High
The Federal Reserve’s continued tight monetary policy is discouraging consumers from financing vehicles, especially used ones with shorter loan terms and higher rates.
2. New Car Inventory is Rebounding
With chip supply improving and factory production returning to normal, more new cars are available, which eases the pressure on the used market. This is gradually balancing supply and demand.
3. Leasing Returns are Increasing
Lease maturities are returning to the market, increasing the supply of 2-3 year-old used cars—often the most desirable age bracket. This increase contributes to the overall cooling of used prices.
4. Consumer Confidence Is Stabilizing
After years of economic uncertainty, consumer behavior is normalizing. Shoppers are less impulsive, less desperate, and more selective—putting downward pressure on inflated prices.
Expert Predictions: When Will Used Car Prices Drop Significantly?
Most analysts agree that used car prices will continue to drop gradually through the end of 2025, with no dramatic crash expected. Here’s what top industry experts are projecting:
Cox Automotive anticipates an additional 5-7% drop by December 2025.
Edmunds expects prices to normalize in mid-2026 but warns that vehicles under $15,000 may remain scarce.
J.D. Power projects a more noticeable softening in Q3 2025, especially in the midsize and compact SUV segments.
In short, the consensus is that prices are correcting, but not collapsing. This is a market correction, not a bubble burst.
What Types of Used Vehicles Are Dropping the Fastest?
If you’re asking are used car prices going down, the answer depends on what type of vehicle you’re targeting. Here’s a snapshot of where the drops are most pronounced in 2025:
Luxury Sedans (e.g., BMW 5 Series, Audi A6): Down 8–10%
Compact Cars (e.g., Toyota Corolla, Honda Civic): Down 6–7%
Mid-Size SUVs (e.g., Ford Edge, Hyundai Santa Fe): Down 5–6%
Full-Size Pickups (e.g., RAM 1500, Ford F-150): Down 3–5%
Electric Vehicles (e.g., Nissan Leaf, Chevy Bolt): Down 12% due to oversupply and shifting incentives
Vehicles with higher depreciation rates are dropping the fastest, particularly as EV infrastructure concerns and government incentive phase-outs cause hesitancy in the used EV market.
Used Car Prices: Regional Disparities
When asking when will used car prices drop, it’s important to understand that location matters. Price drops are happening unevenly across the country.
California & New York: Larger declines due to regulatory incentives, EV adoption, and urban migration patterns.
Texas & Florida: More stable prices thanks to strong truck and SUV demand.
Midwest States: Moderate declines as buyers remain budget-conscious and rural areas rely on older models.
So depending on where you live, the answer to are used car prices going down may look slightly different.
Will Used Car Prices Return to Pre-Pandemic Levels?
This is the million-dollar question. And for many segments probably not.
Experts suggest that due to structural changes in manufacturing, labor costs, inflation, and interest rates, used car prices are unlikely to fall to 2018-2019 levels. However, significant downward movement is expected in over-inflated segments, especially luxury and compact cars.
A more realistic expectation is a return to historical depreciation curves, where used vehicles lose 15-20% of their value each year after the first 3 years.
Should You Wait to Buy a Used Car in 2025?
If you’re timing the market and wondering when will used car prices drop, it depends on your specific needs:
If you need a vehicle soon: Buy now, but negotiate aggressively. Focus on models where prices are already falling.
If you can wait 6–9 months: Fall or winter 2025 may offer better deals, especially after the release of 2026 models and year-end inventory adjustments.
Patience could pay off—particularly if you’re targeting off-lease vehicles or have flexibility in the model and trim you’re shopping for.
Tips for Buying a Used Car in a Dropping Market
As used car prices are dropping, here are a few strategic tips to make the most of the cooling market:
Use Pre-Purchase Inspection Services: In a declining market, you don’t want to buy a lemon that’ll depreciate further.
Shop Certified Pre-Owned (CPO) Vehicles: Many CPO prices are now competitive with traditional used cars.
Time Your Purchase for Seasonal Lows: November to January tends to be slower for dealerships—good for negotiation.
Leverage Price History Tools: Use platforms like CarGurus and Autotrader to track price drops and market trends.
Negotiate Financing Separately: Especially important in 2025’s high-interest environment—shop around for the best rate.
Will Trade-In Values Also Decrease?
Unfortunately, yes. As used car prices go down, so will the value of your current vehicle if you’re trading in. Sellers who cashed in during the 2021–2023 peak got top dollar, but today’s market is normalizing.
If you’re planning a trade-in, act quickly before your current vehicle’s value erodes further—especially if it’s a model affected by oversupply.
Used Car Leasing in 2025: A Smart Alternative?
Used car leasing is making a comeback in 2025. With used car prices dropping, dealers are crafting more appealing lease programs on 2-4 year old models.
Benefits include:
Lower monthly payments than new cars.
Shorter terms—often 24 to 36 months.
Fewer long-term depreciation concerns.
This can be a smart move if you need a vehicle temporarily and expect used car prices to drop more by 2026 or 2027.
The Bottom Line: When Will Used Car Prices Drop Enough to Matter?
So, when will used car prices drop significantly enough to affect your buying decision?
Most signs point to Q3 and Q4 of 2025 as the periods when supply will outpace demand, particularly for vehicles that were overvalued during the last 3 years. However, don’t expect a crash—just a steady correction.
If you’re shopping in 2025, you’re already in a better position than buyers from 2021 to 2023. Use that leverage to negotiate and stay flexible with your vehicle choices.
About Car Concierge Pro: Your Advantage in a Shifting Market
At Car Concierge Pro, we understand the changing tides of the auto industry. That’s why we offer tailored car concierge services that help buyers like you save time, money, and frustration. Whether you’re buying a new vehicle, navigating the used car market, or trying to sell for top dollar, our expert negotiators handle everything on your behalf.
We analyze real-time market data, compare vehicle options, negotiate with dealerships, and ensure you never overpay—especially in a shifting environment where used car prices are dropping. Our mission is to make car buying smart, stress-free, and financially sound.
Ready to get help from professionals who live and breathe the car market? Trust Car Concierge Pro to guide you confidently through every step of the process.
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