High Prices in the Used Car Market

Consumers in the U.S. are entering the used car market at a time when prices are the highest they’ve been in almost three years, based on a recent report.

Wholesale used car prices surged in March, reaching levels not seen since the summer of 2023. The Mannheim Used Car Value Index increased by 6.2% compared to last year, now sitting at 215.3.

Data from Manheim, which is the largest wholesale car market in the U.S. and part of Cox Automotive, indicates a robust demand for used vehicles.

While March’s prices saw a 1.4% increase, they remain significantly elevated compared to historical averages and have gone up 2.3% since the beginning of 2026.

“As soon as the year kicked off, Manheim prices began to rise as dealers were anticipating a boost in demand due to increased tax rebates for consumers,” remarked Jeremy Robb, the chief economist at Cox Automotive.

“The sales conversion rates—indicators of demand—were up in nearly every week during the first quarter compared to 2025. Auction trends also show vehicle prices are considerably higher than last year and at levels typically seen during the annual spring rebound for the wholesale market,” Robb added.

There was an expectation that geopolitical events, particularly those in the Middle East, might influence the market. However, for the moment, the data suggests that demand for used cars remains strong, and inventory is somewhat limited.

The report highlighted a rise in buyer activity and increased competition for the available inventory, pushing sales conversion rates to 68.2% in March. This is a noticeable uptick of 4.6 points over the average for the previous three Marches and 5.5 points higher than the revised figure of 62.7% from February.

Used electric vehicles also experienced significant activity during the quarter, attributed to strong pricing and seasonal boosts seen in the first quarter.

Although used EVs offer a more affordable option compared to new models, there is a growing influx of lease-return EVs entering the wholesale market.

Retail sales of used cars also gained traction, with a year-over-year increase of about 2% in the first quarter. Yet, inventory levels remain tight; the standard supply of days in March fell below 40, marking the lowest point this year and lower than the same period last year.

Cox Automotive’s forecast for 2026 suggests that while used car sales might start off strong, they could taper off in the latter half of the year, potentially leading to a 1% decrease in overall sales compared to the previous year.

“Looking ahead to summer, we expect Manheim values to hold up as many consumers have yet to file their tax returns this year,” Robb explained.

“Typically, March marks the peak of price movements in Manheim. The ongoing conflict in the Middle East could eventually affect U.S. consumer sentiment, but we don’t see that impact just yet. Our data reflects a strong economy,” he concluded.