The used car market has now felt the effects of the pandemic supply crisis.

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      The peak of the pandemic was a period of chaos, and it’s returning to affect us again. A recent report indicates that the chip shortage, which previously destabilized the automotive market and frustrated car buyers, is making a comeback. The low supply of new cars back then has now resulted in a reduced supply of used cars, which is pushing prices back up.

      While production levels rebounded in the years following the pandemic, leading to stabilization and even a decrease in used car prices, the shortage of semiconductor chips during the tough years created a limited inventory for the lightly-used car market.

      According to sales data from Edmunds.com, the Detroit Free Press reports that three-year-old used cars are now selling for just $17,000 less than new ones. For the first time since the pandemic, the average transaction price (ATP) of used vehicles from 2022 onward has exceeded $30,000.

      As of the first quarter of 2025, the ATP stands at $30,522, reflecting a year-over-year increase of 2.3%. Moreover, used cars are taking longer to sell, averaging 38 days on lots — four days longer than the same period last year.

      Despite low inventory levels at dealerships, consumers are reluctant to meet these prices. However, waiting for conditions to improve may not be the best strategy. Upcoming tariffs are expected to reduce new car inventory similarly to the chip shortage, resulting in a repeat cycle of high prices, elevated demand, and scarce products. The Edmunds report suggests that “spillover demand could once again inflate values of used vehicles, especially for nearly new models.”

      “We keep experiencing this cycle repeatedly,” stated Ivan Drury, Edmunds Director of Insights, in an interview with the Free Press. “Not only has it decreased volumes, but leasing penetration rates have plummeted to the lowest levels we've seen in a decade.”

      Just as vehicle production sharply declined in 2022 and 2023, lease agreements also declined. Typically a consistent source of additional used car inventory, the volume of vehicles returning from leases has not been impressive. Additionally, trade-ins are slightly older, now averaging 7.6 years, an increase of 0.3 years.

      American-made cars are unlikely to provide the cost savings some might expect, as most vehicles produced in the U.S. are expensive, particularly SUVs and trucks.

      The annual American-Made Index compiled by Cars.com includes two sedans and a minivan in its latest 2024 top ten, complemented by five SUVs and two trucks. Consequently, American-made vehicles tend to have the highest average prices, with $53,000 compared to the overall average for new cars at $49,000.

      However, there is a potential upside for those selling their cars. Individuals leasing may receive higher payouts, and trade-in vehicles could be valued higher. Unfortunately, for anyone looking to purchase a vehicle, whether new or used, the situation is challenging.

      When asked about the ideal time to buy a vehicle, Drury replied to the Free Press, “I’d say that was yesterday.”

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