Forget tariffs; used car buyers have another reason to worry about prices

Believe it or not, tariffs aren’t bad for every industry.

Sure, the auto industry will feel the effects of the 25% tariffs the U.S. has placed on most imports. However, this action is also likely to increase the prices of new cars in the U.S significantly. That could easily be a blow to U.S. automakers, as consumers tend to shy away from large-scale purchases in lean economic times.

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With new car prices expected to rise for domestic and foreign vehicles, it’s easy to see why people would be optimistic about the used car market. 

However, rising prices in one sector tend to have a ripple effect across many sectors. Rising new car prices are already starting to cause an upswing in the used car market. 

After years of not rising, used car prices climbed in March. 

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Used car buyers to face higher prices 

Used car prices had been steady or falling for months. 

Related: Popular automaker takes drastic action to combat tariffs

In fact, prices haven’t increased since October 2022. However, that streak came to an end in March. 

Used car prices rose 1%, or $317, year over year in March, according to data from iSeeCars.com. The firm notes this increase was before tariffs went into effect, meaning we could be seeding the start of a bigger increase. 

“Used car prices had been falling by as much as 7.3% in June 2024, but over the past 6 months, used car prices stabilized,” said iSeeCars Executive Analyst Karl Brauer. “Now used car prices are going up, and this is before tariffs have impacted new car pricing, which will add further upward pressure to both new and used car prices.”

iSeeCars analysts calculated the additional 5% and 10% increase in the current pricing of the most popular used models. 

The average price for a Kia Forte would rise by $890 based on a 5% increase. A Chevy Tahoe would cost an additional $5,169 based on a 10% increase. 

“During the pandemic, new car prices spiked when automotive factories closed, and production fell short of demand,” said Brauer. “With tariffs, prices will likely increase regardless of demand, setting up a similar new car price spike that could pull used car prices up.” 

One segment is still seeing prices fall

According to the chart, monthly average prices have been rising all year, the same as the prior year. 

However, one car segment is seeing prices fall: electric vehicles. 

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Average EV prices have declined more than $3,600 in the past year, which iSeeCars notes is a stark contrast to SUV and truck prices, which have averaged increases of $1,000 and $337, respectively. 

“Buyers seeking a used car bargain can still find lower prices on cars and minivans compared to a year ago, while EVs are down over $3,600,” said Brauer.

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But ultimately, the firm is still concerned that we are just seeing the beginning of the rise in used car prices. During the pandemic, rising new car prices increased used car prices. 

In this scenario, popular used cars like the Ford F-150 could cost $4,000 more, while a Ford Explorer could cost $3,000 more. 

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