As the retail auto market continues to face tariffs, lower profits and other upsets, used car sales have become a lifeline for continued revenue.
Retail used-vehicle sales in February increased month-over-month compared to January, according to Cox Automotive’s vAuto Live Market View. Used vehicles sold by both franchised and independent dealers totaled 1.57 million, up 6% year-over-year. That boom has left dealers searching for new acquisitions, as day’s supply of used vehicles at the beginning of March was 42, down eight days from February.
“While the used-vehicle sales pace typically increases from January to February with the influx of tax refunds, this year’s 16% increase is the largest jump seen in recent years,” says Scott Vanner, senior analyst of Economic and Industry Insights at Cox Automotive.
The problem? Wholesale used vehicle prices show a “more modest-than-expected Spring Bounce” so far this month.
According to Cox’s mid-March data wholesale prices (adjusted for mix, mileage, and seasonality) dipped 1.1% from February levels, with the Manheim Used Vehicle Value Index falling to 200.8.
While unadjusted prices climbed 1.7% in the first half of the month versus February, the seasonal adjustment negated the typical “Spring Bounce.” Historically, March sees stronger gains – more than 3 points on average for non-adjusted prices – but this year’s increase is coming in lower than expected.
“In the first half of March, we have seen exactly half of the rise in vehicle appreciation that we typically see for the full month,” says Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. The cause is what other analysts say – fewer off lease vehicles and additional older vehicles in the mix.
The data points leave Cox analysts cautiously optimistic outlook. Higher wholesale prices, a dip in consumer sentiment and retail market uncertainty are among the uncertainties that may keep the market volatile, some analysts say.
Key Takeaways & Actions for Dealers: March 2025
1. Be Selective at Auction:
Wholesale prices are still up slightly, but appreciation is below normal spring levels. With MMR (the average difference in price relative to the current Manheim Market Report value) ,retention slightly above 100%, it’s important to avoid overbidding, especially on older or high-mileage units.
2. Watch Compact and Mid-Size Cars:
These segments are underperforming compared to SUVs and luxury vehicles. Consider moderating inventory levels of compact and mid-size sedans until pricing stabilizes.
3. Lean Into Luxury and SUVs:
Luxury vehicles (+0.2% YoY) and SUVs (-0.8% YoY) are holding value better than the market average. If your customer base supports it, focus on sourcing and retailing these segments.
4. EV Strategy: Stay Cautious
EV depreciation is slowing but still outpaces non-EVs. Monitor local demand and incentive programs closely before expanding your EV inventory.
5. Manage Tight Inventory Wisely:
Wholesale supply is at 24 days, tighter than usual for this time of year. This could support pricing in the near term but could also limit selection. Balance acquisition strategy with your sales pace.
6. Prepare for Uneven Retail Demand:
Tax season is supporting activity, but consumer sentiment is weakening. Watch for volatility in foot traffic and buyer urgency as economic news (tariffs, inflation) unfolds.
7. Reassess Pricing and F&I Offers:
Given lower consumer confidence and heightened price sensitivity, review your pricing strategy and finance offerings. Highlight affordability and payment flexibility to align with today’s cautious buyer mindset.
