The used car market is shifting—with buyers finding fewer near-new vehicles available and having to pay higher prices for those later models on dealership lots.
The details: The findings—as detailed in a new Edmunds report—reveal that one of the core factors driving the new era for used cars is the average transaction price for three-year-old vehicles.
In Q2 2025, the ATP for 3-year-old used vehicles increased by 5.2% year-over-year to $31,216, up from $29,685 in Q2 2024.
The average days a used vehicle sat on a dealer lot before selling climbed to 38 days in the second quarter, six days slower than a year ago.
In 2022, those 3-year-old used cars originally cost about $40,314 new, compared to $44,654 today— a nearly $5,000 increase, highlighting what Edmunds notes as the value proposition with 3-year-old used vehicles priced at $30K.
Why it matters: The late-model used car segment remains a high-demand, high-margin space—but affordability pressures and slower turnover signal a market where pricing strategy and inventory management are critical.
Between the lines: Q2 2025 also saw a shift in residual values, with them being stronger than predicted for vehicles coming off lease three years ago—but showing signs of starting to decline.
In the second quarter, vehicles that originally cost more than $100,000 only retained 57% of their value, compared to 68% three years ago.
Models originally priced between $50K–$60K now hold 66% of their value, compared to 74% in 2022.
Vehicles priced in the $10,000 to $20,000 range hold 77% of their value in Q2 2025, down from 95% in Q2 2022.
The Porsche 911 still scores well above most 3-year-old vehicles when it comes to residual values, selling at almost the same cost as it did new—whereas a Nissan Leaf now sells for only half its original cost.
Bottom line: The late-model used car market is still highly profitable. However, it’s entering a more complex phase as ATP for 3-year-old vehicles remains elevated and supply limited—with slower sales, softening residual values, and widening depreciation gaps by vehicle type suggesting the peak in pricing power may be passing.
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