Demand for fuel-efficient used cars rises amid high gas prices

DETROIT — Used vehicle prices are expected to fall more than expected this year as high gas prices and higher inflationary costs hit Americans’ wallets.

Cox Automotive on Wednesday lowered its forecast for the company’s Manheim Used Vehicle Value Index from a 2% increase to a rise of just 0.2% for the year. The slight increase would mark the third consecutive year of relatively stable prices after sharp increases and then declines during the pandemic.

The downward forecast follows a 1.95% decline in the index from July to September, including a 0.6% drop last month from a year earlier. September marks the first time since March 2025 that the monthly index is not higher than a year earlier.

“As we enter the fourth quarter, interest rates are rising, consumer confidence is declining, and yet a wealth effect from strong and sustained growth in financial assets provides some offsetting cushion. Many indicators we are seeing are converging toward pre-pandemic norms, but the path to get there has been anything but easy,” Jeremy Robb, Cox Automotive’s chief economist, said in a statement.

The historical average of the Manheim index is approximately 2.3% over one year. Unadjusted wholesale prices for used vehicles fell 1.2% year over year in September and 1.3% from August, with depreciation accelerating in the third quarter, Cox said.

The index is a closely watched indicator of used vehicle prices that tracks prices of used vehicles sold at Manheim’s wholesale auctions in the United States. Retail prices for consumers traditionally follow changes in wholesale costs.

Cox noted that electric vehicle sales and off-lease vehicle volume continued to grow, reshaping the dynamics of the used vehicle market as the value of electric vehicles and smaller, fuel-efficient vehicles increased during the quarter. That compares to the poor performance of large trucks and SUVs, the company said.

“The first half of the year actually showed more appreciation than usual, even in the face of rising fuel prices. But with the conflict in the Middle East continuing, diesel prices reaching record highs and interest rates rising rapidly, increasingly worrying businesses and consumers, wholesale prices have felt the pinch,” Robb said.

The juxtaposition between smaller, fuel-efficient cars and larger vehicles occurred as the national gasoline average in September was $4.33 per gallon. That’s 50 cents higher than the previous September record of $3.83 set in 2023, according to AAA.

Cox said retail demand for used vehicles is relatively healthy, but the price changes appear to indicate that dealers have reached a ceiling on what they can charge consumers.

The average list price of a used vehicle was $27,239 in August, according to Cox. This compares to new vehicles whose average price exceeds $50,000.

The majority of American consumers buy used vehicles because they are more affordable than new models.