Retail Used Vehicle Sales Jump 8 Percent in January

Used cars are offered for sale at a dealership in Chicago on July 11, 2023. Scott Olson/Getty Images

A higher number of used vehicles were sold across the United States at the retail level last month than a year back, with total sales for 2025 expected to breach 20 million units, according to automotive services company Cox Automotive.

“A total of 1.41 million used vehicles were sold at retail—from both franchised and independent dealers—during January, up 8 percent year-over-year,” the company said in a Feb. 14 statement. Scott Vanner, senior analyst of Economic and Industry Insights at Cox Automotive, said that “used retail vehicle sales usually rise this time of year. Although this year’s sales percentage increase exceeds last year’s, it is still below previous years.”

At the beginning of January, there were 48 days’ worth of supply of used vehicles, down two days from December.

Cox is forecasting retail used vehicle sales to hit 20.1 million units this year, up marginally by around 1.2 percent compared to last year.

“Sales growth is expected to remain muted, as retail and wholesale supply will continue to be constrained in the coming year due to lower production during the pandemic and fewer lease maturities returning to the market,” it said.

According to a Jan. 22 post by vehicle valuation company Kelley Blue Book (KBB), dealers paid “slightly more” for used cars late last year than a year prior. This could translate into “mild price increases” for customers during the earlier part of this year.

KBB expects the nationwide supply of used cars to potentially “remain thin” for multiple years, citing production disruptions suffered by the auto industry during the COVID-19 pandemic period.

As a result of these disruptions, around 8 million fewer cars were manufactured in 2021 and 2022. This loss of millions of cars is expected to keep supply tight in the used car market.

KBB warned that prospective buyers could face difficulties trying to secure older used cars with higher mileage for under $15,000 as supply of these vehicles continues to remain low.

Tariffs

President Donald Trump has announced multiple tariffs that could have an impact on car prices and sales.

Earlier this month, he declared 25 percent tariffs on all imports from Mexico and Canada, which was paused for 30 days after negotiations. Both these countries are key players in the U.S. auto sector.

The president has imposed a 25 percent tariff on aluminum and steel imports, also key inputs for the auto sector. On Thursday, Trump signed off a plan to institute reciprocal tariffs on U.S. trading partners, citing unfair treatment by these nations with regard to trade.

A Jan. 28 report from S&P Global predicts a “massive impact” on the auto industry if the 25 percent tariffs on Mexico and Canada are implemented.

“There are approximately 5.3 million light vehicles built in Canada and Mexico, with about 70 percent of these destined for the US,” the report states. “Further, many US-built vehicles use Canadian or Mexican-sourced propulsion systems and component sets; those components would see a tariff as well, increasing costs for vehicles produced in the US.”

“In 2024, the US imported some 3.6 million light vehicles from Canada and Mexico, representing 22 percent of all vehicles sold in the US. Mexico is currently the largest source of US light-vehicle imports, passing Japan, South Korea, and all of Europe.”

A 25 percent tariff on a $25,000 vehicle from Mexico or Canada is estimated to add $6,250 to the overall cost, according to the report.

S&P assumes that importers will pass the cost to consumers at least partially. With vehicle prices at already high levels, this poses an affordability threat to buyers, the report said.

If these tariffs do come into effect, there is a 60 percent probability that it lasts only for one to two weeks, S&P Global estimated. In such a scenario, all lost production and sales are expected to be regained quickly.

The company estimates a 30 percent probability that tariffs could remain in effect for six to eight weeks before getting resolved, creating an extended disruption.

“In this case, we would expect several high exposure vehicles slow or cease production and for OEMs (original equipment manufacturers) to conserve inventory and be conservative on replenishing with ‘tariffed’ stock,” it said.