Car shoppers may be worried about tariffs and rising prices, but they're still buying more used vehicles than they did last year.
Why it matters: As student loan collections resume and inflation accelerates, more car shoppers could be priced out of the new car market and forced into used vehicles.
Driving the news: New car buyers rushed purchases before tariffs hit, bringing newer, lower-mileage vehicles as trades-in, according to Cars Commerce's Industry Insights 1H Report.
Used inventory spiked 4.7% year-over-year in Q2 after falling 0.6% in Q1.
Used cars now sell 4.8% faster than last year, averaging just 52 days on lots.
Between the lines: Entry-level new cars have all but vanished. Vehicles under $30,000 represent just 13.6% of new inventory, the third consecutive month of decline. Since 92% of those affordable models are built overseas, tariffs hit them hardest.
The $20,000-$30,000 used vehicle segment has thus become the sweet spot for budget-conscious buyers.
Retail used prices rose 1.6% in Q2 to $28,939 on average.
The credit shift: While demand stays strong, buyers are getting riskier. Super prime customers dropped to 28% of used buyers (down 3 points), while subprime jumped to 30% (up 6 points)—back above pre-pandemic levels, per Cox Auto.
Zoom out: Wholesale values remain elevated, though the Manheim Index shows signs of normalizing with a 0.7% decline in early July.
"Price appreciation trends against last year are starting to moderate as we enter Q3," said Jeremy Robb of Cox Automotive.
Looking ahead: Used car supply remains tight historically despite the trade-in surge, and time will tell if it can keep pace with demand as economic pressures squeeze more buyers.
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