Tariff Talk – April 2025
From our friends at Vehicle Remarketing:
The recent spate of automotive-specific tariffs will deeply affect the used-vehicle market regarding sales, inventory and pricing, Cox Automotive reported on April 7.
The new 25% tariffs on all imported vehicles have already disrupted the new vehicle landscape, increasing the urgency among consumers to purchase vehicles before prices increase further. The sudden moves in the new vehicle market will also likely spill into the used vehicle market.
“I think we have officially started our roller coaster ride,” said Cox Automotive chief economist Jonathan Smoke, in a news release. “March used-vehicle values were higher on a non-seasonally adjusted basis, but compared to recent Marches, it did not quite live up to what we’ve seen. And it appeared the “spring bounce” was starting to end. But then suddenly: The tariff announcement. And the most recent activity suggests we will see a sizeable increase in the Index in April.”
Used-vehicle inventory will eventually be affected by new-vehicle tariffs as well. Late in March, used retail inventory trended lower, falling to 2.15 million units, down 1.2% against 2024. Used days’ supply declined by eight days. However, lower supply is mostly typical this time of year, as the used-vehicle market feels its “spring bounce” during tax refund season, resulting in stronger sales and tightening inventory. Inventory will be a key metric to watch in the coming weeks and months.
Expected auto parts and components tariffs will also impact service and reconditioning in the used vehicle market. Skyler Chadwick, director of Product Marketing for Xtime, a Cox Automotive brand devoted to solutions for automotive service departments, noted this: “The typical parts department at a dealership is a United Nations of items, parts from all over the world on the shelves — China, Mexico, Canada, Germany, South Korea, USA. No automaker or brand would be immune to major tariffs at the border. Auto parts are the largest global business. And if auto part prices increase, dealers must manage how much of that added cost can be passed to consumers.”
Manheim Index Declines in March
Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were lower in March compared to February. The Manheim Used Vehicle Value Index (MUVVI) declined to 202.6, which is a decrease of 0.2% from a year ago and also lower than the February levels. The seasonal adjustment caused the index to decline for the month, as non-seasonally adjusted values rose but not enough to account for the normal seasonal move. The non-adjusted price in March increased by 2.7% compared to February, moving the unadjusted average price up 0.4% year over year.
“March is typically the strongest month for wholesale markets, so it’s normal to see values rise. However, this year’s price increases were not enough to meet seasonal expectations, which is why our Index shows a decline,” said Jeremy Robb, senior director of economic and industry insights at Cox Automotive. “Used retail demand remained strong throughout March, with days’ supply ending at low levels, driving healthy activity at Manheim. While we initially thought appreciation trends peaked mid-month, we saw a reacceleration of weekly gains for wholesale values in the last week. Given the impact of tariffs, we may see stronger wholesale prices for the coming weeks as the market decides how to handle new tariffs at the border.”
Major Vehicle Markets See Mixed Trends
Major market segments saw mixed trends for seasonally adjusted prices year over year in March. Compared to March 2024, the luxury segment rose the most for the second month in a row, increasing by 1.1%. SUVs also performed better than the industry, declining only 0.1% over the last year. Underperforming the industry, trucks fell by 0.9%, mid-size sedans were down 4.2%, and compact cars declined the most again, falling by 6.1% against last year.
Compared to the previous month, the luxury segment performed best, moving higher by 0.4%, while SUVs and compact cars were also better than the industry overall, falling by 0.1% and 0.6%, respectively. Faring worse than the industry overall, trucks declined by 0.9% over the month, and mid-size sedans were down the most, falling 1.1%.
Looking at the market by powertrain, electric vehicles (EVs) experienced more depreciation than seen in the last few months as the EV share of all units sold at Manheim hit the highest level on record, at 2.9% of all units. EV values were down 2.3% against February 2025, while non-EVs declined by just 0.4%. For March 2025, EV values are now lower by 3.2% against March 2024, while non-EVs were lower by 0.9% year over year, a bit more than the overall industry average.
As the share of EVs at Manheim grows – a record 2.7% of volume in Q1 – more makes and models of EVs are crossing the lanes at Manheim. There has been an uptick in Tesla volume at auctions, but the share of Teslas sold only made up 39% of the EVs sold at Manheim in the first quarter of 2025, down from 43% in the final quarter of 2024.
