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Rising New Vehicle Prices: A Shift Toward Used Cars Amid Tariff Concerns

The landscape of the automotive market in the United States is shifting, with recent reports indicating that high new vehicle prices are driving consumers to consider used cars as a more viable option. A notable report titled "State of the Dealer" from ZeroSum sheds light on the current state of the market and the potential implications of new tariffs on vehicles and automotive parts imported from Canada and Mexico.

According to the latest results, the average price for new vehicles stands at an astounding $48,800, while prices for used vehicles have dropped to approximately $25,400 as of February 2025. This price disparity highlights a growing trend where consumers are increasingly turning to more affordable used vehicles instead of new ones, especially in light of potential tariffs that could raise new vehicle prices to even higher levels.

The report indicates that new vehicle sales are already showing signs of declining momentum; February saw a decrease in vehicle movement, with only 980,000 units sold compared to 1.06 million units in January. This downturn is compounded by a higher number of discounts and incentives that dealerships are offering, which reached an average of $2,000 in February—the highest figure in the previous twelve months. Moreover, the time it takes to sell new vehicles has increased, with the Days-to-Move metric rising to 79 days, up from 63 days the year before.

Josh Stoll, the Senior Director of Dealer Success at ZeroSum, commented on these concerning trends, noting that the new vehicle market is displaying notable fatigue. With vehicle movement on the decline and ongoing challenges, including diminishing pricing power, automotive retailers now face a more competitive landscape. The potential impact of the recently discussed tariffs has introduced additional uncertainty regarding retail prices and profitability for these dealers.

On the other hand, the used vehicle market is demonstrating a strikingly different trajectory, with turnover rates increasing significantly from 61% in January to 69% in February—an eight percentage point jump. ZeroSum forecasts a continued upward trend in used vehicle movement, estimating it will reach around 1.26 million units in March, up from 1.19 million in February. This shift suggests that used vehicles will likely compensate for the declining new vehicle sales, at least in the short term, particularly if tariffs come into effect.

As the new vehicle market softens, it becomes imperative for automotive retailers to refocus their strategies on building and maintaining a robust used vehicle inventory. Stoll emphasizes that ensuring customers have ample choices in used vehicle stock will be crucial as demand shifts among buyers.

ZeroSum is recognized for pioneering advanced, inventory-driven digital marketing solutions designed specifically for automotive dealers. Their "State of the Dealer" report serves as a primary data source for analyzing trends in new, used, and certified pre-owned vehicles within the automotive market.

To gain further insights, industry stakeholders are encouraged to explore the complete "State of the Dealer" report, which includes comprehensive data on vehicle movement, turnover rates, inventory levels, and pricing trends. For those seeking to navigate the current complexities of the automotive market, such resources will prove invaluable.

In summary, as tariffs loom and new car prices remain high, consumers are undoubtedly seeking more budget-friendly alternatives, prompting a pivot towards used vehicles. The implications of these shifts have the potential to reshape the automotive landscape for both consumers and dealers alike moving forward.

For additional information, visit www.zerosum.ai.