Inflation Alert? Used Car Prices Hit Over A Year's High In US, Echoing Post-COVID Patterns

Prices of used cars in the United States are rising, according to a key gauge, another trend likely related to President Donald Trump's trade tariffs and their impact on businesses.

The Manheim Used Vehicle Value Index rose 1.6% in June from May on a seasonally adjusted basis and surged 6.3% from a year earlier, the largest year-over-year increase in nearly three years, according to a Reuters report.

The index represents the prices of used cars sold at wholesale auctions and has become recognized as an indicator of future inflation trends. The gauge proved predictive ahead of the inflation surge following the COVID-19 pandemic.

At 208.5, it has been trending upward for a year and is now at its highest since October 2023.

"Wholesale appreciation trends have been more volatile over Q2 as tariffs really impacted new sales and supply, which impacted the used marketplace as well," said Jeremy Robb, senior director of economic and industry insights at Cox Automotive, which provides the index.

Trump's tariffs, including additional duties on foreign-made cars and certain auto parts, disrupted the automobile market. According to Reuters, new vehicle sales surged in early spring as consumers sought to front-run anticipated price increases from the levies, but sales fell off substantially in May and dropped again in June.

Consumers are increasingly turning to used cars, a trend reflected in the strong performance of CarMax (KMX) and Carvana (CVNA).

CarMax, which beat Q1 earnings estimates, recorded the fastest growth in used-car sales in the period since the quarter ended November 2021. Meanwhile, Carvana set ambitious long-term targets, including selling 3 million vehicles annually at an adjusted EBITDA margin of 13.5% within the next five to 10 years.

On Stocktwits, the retail sentiment was ‘bearish’ for both Carvana and CarMax.

Carvana shares are up 72% year-to-date and currently trade around a three-year high. CarMax shares are down 17%.

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