Used-car prices are “falling fast and far” before they’re expected to climb as tax refunds start to lift demand, according to CarFax.
The details: In some segments, used prices are down in January by as much as $1,000 versus December (often an annual low point), per CarFax’s January Used Car Index.
The average price for used luxury SUVs is down more than $1,000 from December.
Prices for used SUVs, pickups, hybrids, and EVs are down by about $600 on average.
Used luxury car prices, after rising in Q3 and Q4 of 2025, have fallen more than $300 on average.
The only segment moving higher in January is vans and minivans, up about $250 on average.
Yes but, as tax refunds roll in, CarFax expects prices to rise across the board.
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Why it matters: For dealers, this is the window where disciplined buying can pay off. Softer wholesale pricing can help stores refresh inventory, protect grosses, and build the right mix ahead of the tax-time surge, when shoppers re-enter the market and competition and prices typically intensify.
Between the lines: This year’s tax refund season could bring a more competitive used market than in years past, with more cash expected to hit consumers’ wallets.
The Federal Treasury is projecting tax refunds will increase by an average of $1,000 this year per household, with the average refund paid out last year being $3,167.
The higher refunds are attributed to several changes such as a tax break on car loan interest, a portion of tips and overtime pay, and a $200 increase per child in the child tax credit, per CNN.
However, the benefit of larger refunds is unlikely to be evenly distributed.
Middle- and lower-income cohorts, who tend to be more active in the used-vehicle market, will probably see smaller increases in refund size compared with higher earners.
That uneven boost could influence which price brackets and vehicle types see the most movement once refunds hit.
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