What to Know About the Auto Market
There is a lot going on in the marketplace and uncertainty seems to be a theme for 2025. Regarding the Auto Industry, according to the Kelley Blue Book website, the following outlines the concerns for the auto industry for both used and new vehicles.
- Tariffs threaten to push used car prices higher.
- When new car prices rise, would-be new car shoppers head to used car lots looking for something still in their price range.
- More would-be new car shoppers start buying up the available used vehicles, drawing down the inventory.
- Plus, Americans are holding onto their cars longer than ever. The average vehicle on American roads is 12.8 years old.
- Automakers also produced fewer cars for several years after the 2008 recession, leaving fewer higher-mileage, older used vehicles available to sell.
- The most accessible used cars carry prices between $15,000 and $30,000.
In recent years, inexpensive cars have grown scarce. Recent analysis finds that sales of vehicles priced at $25,000 or less have fallen by 78% in just five years. Six years ago, automakers offered 36 new models in that price range. By late 2023, that number was just 10. Automakers have announced plans to cancel most of those 10, including the low-cost Mitsubishi Mirage that was axed after 2024.
Meanwhile, cars priced at $60,000 or higher have grown by 163% during the same period.
Dealers are pushing back, telling automakers they need more mainstream cars to sell, but correcting the problem will take time.
Buying Older, Used Cars in 2025
Vehicle quality studies repeatedly show that today’s new cars suffer fewer problems than those from just a few years earlier. Buyers of higher-priced used cars will likely see the vehicle driving on the road even longer. The same goes for those buying new ones.
With most automakers now building such durable cars, they compete by adding more high-tech features. Features like adaptive cruise control and Apple CarPlay are now more common than ever on entry-level vehicles.
So, what’s really going on with the car market right now? 🚗
Buckle up—things are shifting fast. As we head into the rest of the year, expect some serious shake-ups. Tariffs could drive up the cost of new cars even more, and that ripple effect might hit used cars too, as buyers hunt for more budget-friendly options. Automakers and dealerships will have to rethink their strategies, and in some cases, certain models might even be pulled from the market if importing them becomes too expensive.
Now, this doesn’t mean you need to sprint to the dealership today. But if a new ride is on your horizon, it might be wise to make your move before prices start climbing.
💸 Worried about how rising costs could impact your wallet? Our loan officers are here to help. A quick pre-approval can show you what kind of financing you qualify for—so you can shop with confidence.