⚡ Market Pulse: Used cars are nearing a tipping point—and dealers are placing their bets

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Used Vehicle Segment: March

Used retail sales soared in March—showing resilience in a strained market.

Retail Sales: ↑ 32% MoM | ↑ 11% YoY

March saw 1.53 million used vehicles sold, making it clear that the used market remains a bright spot for dealers and consumers looking for affordable options, according to ZeroSum’s State of the Dealer report.

For dealers—it’s a beacon of opportunity, but only if headed with intentional, real-time inventory and pricing strategies.

Certified Pre-Owned sales were also solid in March—but a slump is likely near.

CPO Sales: ↑ 27% MoM | ↑ 15% YoY

CPO sales were also strong in March, but some say it could be the last major surge for 2025.

Why? Off-lease supply is still down, and acquiring quality CPO units remains a challenge.

But used inventory shrank to 1.8M units—adding to supply concerns.

Used Inventory on Lots: ↓ 4% MoM | ↓ 4% YoY

Used inventory dipped to 1.8 million units in March, according to ZeroSum.

Low supply is typical for this time of year, mainly driven by the spring boost in demand that usually hits the new and used markets in March.

The issue?

Pent-up demand from previous years is boiling over and growing tariff concerns are positioned to add pressure to both prices and availability.

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Used car prices remain level—but could soar just as fast as they cooled.

Average Transaction Prices: ↑ 1.8% MoM | ↓ 1.8% YoY

The average price of a used car was about $27,473 as of April 8—up slightly from February, but still below early 2024 highs, according to CarGurus’ used car price index.

But after stabilizing in 2024, the market is at a crossroads in 2025…

And the outcomes—steady prices or price hikes—are hanging in the balance.

Tariffs bring fierce competition as auction conversion rates hit highest level seen this year

Used Wholesale Values: ↑ 0.25% WoW

Used wholesale auction activity intensified in the first week of April after tariffs were confirmed by President Trump, according to Black Book data citing values recorded for the week ending April 5th.

• Several lanes had 100% conversion rates and “robust sales prices” on Thursday and Friday—driven by highly competitive bidding, according to the report.

• And auction conversion rates hit 66% last week—the highest level seen this year.

The message is clear: there’s a heightened urgency in the market and auction lanes were on fire last week—sparked by 25% auto tariffs taking hold.

A lot of “what if” scenarios are swirling right now:

• What if new car prices climb? What if affordability takes a hit? What if used car demand gets an artificial boost?

So, I asked dealers how they’re navigating used car acquisitions. Here’s what we heard:

Brett Sutherlin, CEO of Sutherlin Automotive Group, shared that his team upped their used car offers by $3,000 over MMR as soon as the tariffs were *first* announced back in March (before any extensions).

So far, the bet seems to be paying off, with the shift leading to:

• A jump in used car acquisitions from 300 to 400 units per month—

• And a strong indication that April could outpace March, which was already a record month.

And his team isn’t the only one…

Consumers also seem to be taking note…

The downside?

As others pointed out, it’s a gamble—and some dealers could end up overpaying on inventory if demand never soars and prices never rise.

But so far, the strategy might be spot-on—based on anecdotal insight from a trusted West Coast insider who shared some of yesterday’s auction values with me.

Smart move—or overpaying? We’ll find out soon.

This tariff madness could blow over in 30 days (give or take a few)—leaving the industry with some tariffs, but likely at more manageable levels.

But right now—it’s a day-by-day guessing game.

I’m cautious about overpaying for used inventory before any tariff-driven price hikes actually take hold. But bold moves like this have paid off in the past (cough cough 2021-22 cough cough).

Thanks for reading everyone.

— CDG