Relatively low used-vehicle inventory and higher demand for used cars – driven in part by tariff concerns – support higher wholesale used-car prices, according to the latest Manheim Used Vehicle Value Index for July.
Customers who expect tariff-related new-vehicle price increases likely are seeking more-affordable used vehicles, says Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive, the parent company of Manheim.
High used-car values present dealers with a classic business dilemma: keep prices high and sacrifice volume for profit, or pursue volume to make up for lower profits per unit. More on that later.
By the Numbers
The Manheim Index for July is 207.4, an increase of 2.9% vs. July 2024. The July Manheim Index corresponds to a seasonally adjusted, average used-vehicle value of $18,968 at auction.
The Manheim Index is a single measure designed to track used-vehicle wholesale price changes, weighted for a changing mix of product segments and mileage and seasonally adjusted. The index is calculated relative to a starting point, where January 1997 equals 100.
Reports about higher tariffs on imported new autos and imported auto parts are likely driving demand for used vehicles, Robb says.
At the same time, used-vehicle inventory is also in short supply, especially for “nearly new” used vehicles that are 3 years old or younger, analysts say. That reflects a low level of leasing – and lease incentives – since the COVID-19 pandemic. The low level of off-lease returns is expected to last the rest of this year and into 2026.
The days’ supply for used vehicles retailed at new- and used-car-only dealerships is an estimated 46-day supply, vs. 47 days at the end of June 2025, and 48 days in July 2024, Cox Automotive says. Days' supply estimates how long it would take to sell a given amount of inventory at the current monthly sales rate if it were not replenished.
Fork in the Road
A couple of the nation’s big, publicly traded new-car retailers illustrate different responses to relatively low used-car inventory vs. relatively high prices to acquire used vehicles for resale.
In an earnings conference call, Asbury Automotive Group, Duluth, GA, says it intends to sacrifice used-car volume and preserve profit per vehicle. In a separate call the same day, Lithia Motors, Medford, OR, talks more in terms of pursuing volume and market share, with less emphasis on profit per vehicle at the time of sale. To be fair, both retailers say they are flexible in response to market conditions and willing to shift strategies as needed.
“Used-vehicle profitability has remained strong, supported by a constrained supply environment,” says David Hult, Asbury president and CEO. “Based on the limited pool of used vehicles, we have chosen to focus on gross profit, but we’ll continually evaluate that approach based on how the used-vehicle market evolves.”
Asbury reports its used-vehicle retail unit volume is 35,648 in the second quarter, down 4% vs. a year ago, on a same-store basis, with a slim, 37-day supply of used vehicles overall. Used-vehicle retail revenue is $1.1 billion for the quarter, down 1%. At the same time, used-vehicle retail gross profit is $61.6 million, up 11%.
Sell, Sell, Sell
Meanwhile, rival Lithia Motors isn’t shy about pursuing volume, emphasizing what it calls “Value Auto” used cars, which are 9 years old or older.
Used-vehicle unit sales increased 4% year-over-year in the second quarter, Bryan DeBoer, Lithia president and CEO, says in a call. “Our Value Auto sales continued to trend impressively with 50% same-store sales improvement versus last year.” Gross profit per unit flat [what does ‘flat’ mean?] for all used vehicles, not just “Value Autos,” at $1,900.
Lithia’s used-vehicle days’ supply was 48 days at the end of the quarter.
