With the Donald Trump administration deciding to impose a 25% tariff on all imported cars starting April 3, the used car market across the United States is once again drawing attention. The expectation is that as new car prices rise due to the tariffs, consumers will flock to relatively cheaper used cars.
Economic outlet MarketWatch reported on March 27 that, following the Trump administration’s announcement of a 25% tariff on automobiles starting next month, purchasing used cars might be the smartest choice.
MarketWatch projected that the average selling price of cars could increase by about $5,000 due to the tariffs being passed on to consumers. Bank of America (BOA) estimates that for some SUVs and trucks, prices could surge by more than $10,000. Currently, the average price of a new car is $48,000, while the average used car price stands at $26,000.
Since the COVID-19 pandemic, new car prices have skyrocketed, widening the price gap between new and used cars to over $20,000.
The auto industry points out that the price disparity between new and used cars could persist for some time, and consumers may find better deals in the used car market, which remains unaffected by tariffs. Rajat Gupta, an analyst at JPMorgan, stated, “Used car dealers are currently in the best position.”
He added that even for vehicles manufactured in the U.S., applying tax deductions to loan interest would not fully offset the tariff impact, meaning domestically produced cars are not entirely immune to tariff-driven price hikes.
A Korean resident of Fullerton, identified only as Kim, said, “I wanted to buy my son a new car as he heads to college, but the prices have become too expensive, so I decided to go with a used car instead. Since used car prices are likely to rise too, I’m hurrying to make the purchase.”
Used car dealership representatives have noted, “Since President Trump’s tariff announcement last week, we’ve seen an increase in customers visiting our showrooms.” They added, “To secure sufficient inventory, we’re ramping up marketing efforts targeting not only our usual partners like rental car companies but also individual sellers.”
Indeed, the rising value of used cars from rental companies led to a sharp surge in their stock prices on March 27. Rental car companies are major players in the used car market, regularly channeling large volumes of vehicles into it. Major rental car company Hertz soared 22.6% that day, marking its biggest gain since going public in 2021. Avis also jumped 20.49%, hitting its highest level since 2022.
As new car prices rise, more consumers are turning to used cars. Jeremy Robb, senior director at Cox Automotive, predicted, “The increase in new car prices will drive more consumers to seek used cars instead, which will, in turn, boost the value of used cars.” On the same day, used car retailer CarMax saw its stock rise by 2.55%. Automotive valuation firm Kelley Blue Book noted, “Generally, when new car prices go up, used car prices tend to rise as well.”
According to the online used car marketplace CarGurus, the average price of used cars had been declining for months but began rising over the past month. On March 26, the average used car price reached $27,046, up from February.
In its March 26 auto market outlook report, automotive research firm Cox Automotive initially projected that 16.3 million vehicles would be sold in the U.S. this year. However, due to policy uncertainties surrounding tariffs, it revised its forecast downward by about 700,000 units. Ward’s Intelligence estimates that approximately 16 million new cars will be sold in the U.S. market this year. Some speculate that new car sales could drop to as low as 3 million units—about one-fifth of last year’s 15.9 million—due to the tariff impact.
[Reporter Jo Hwan-dong]