The used market has been in flux all year as consumers concerned with affordability avoid new vehicles that are reaching record prices. However, that shift has led to an increase in demand that is also driving up used prices. Average transaction prices for 3-year-old vehicles hit $31,216 in Q2 2025 according to Edmunds’ Q2 2025 Used Car Report. This is up 5.2 percent from $29,685 a year ago and just shy of the all-time record of $31,628 in Q2 2022. On the surface, that reads as a market that remains expensive no matter where you look, but the cost baseline for new vehicles has moved even higher during this time.
Three-year-old vehicles are still selling despite historic price levels because when you factor in what those cars cost new, the value looks stronger than the sticker might suggest. In Q2 2022, comparable vehicles cost about $40,314 new while today’s equivalents carry an even higher average new MSRP of $44,651, roughly $5,000 higher in just two years.
Even though used prices are high, the gap between used and new has widened enough to make three-year-old vehicles a better value. For shoppers focused on affordability that gap matters.
Selling Pace: Slower, But Stabilizing
Three-year-old vehicles sat on dealer lots for an average of 38 days in Q2, six days slower than a year ago and the highest second-quarter days-to-turn since 2019. That pace is still a touch faster than historic norms for similarly priced vehicles. Pre-2020 $28K–$32K vehicles took about 42 days to turn.
Inventory is tighter for near-new vehicles due to prior new-car production constraints, and buyers are taking more time to price compare and finance shop as monthly payments remain top of mind. For dealers, this rewards disciplined pricing, transparent reconditioning, and marketing that highlights the “value delta” against new MSRPs.
Original MSRP Matters
Sticker shock fades when you anchor the conversation to original MSRP. Vehicles sold new in 2022 and 2023 came with unusually high sticker prices. As those cohorts roll into the used channel, ATPs look elevated in dollars, but relative value improves. For example, the same three-year-old vehicle that cost $40K new in 2022 might be listed around $31K today.
For sales teams, reframing used pricing against original MSRP and today’s new MSRPs clarifies the buyer’s decision. A similar segment vehicle may now be priced near $44.5K further widening the used-vs.-new gap, and reinforcing the used value proposition for a customer.
Residual Value Normalization Underway
Residuals have started to come down from the elevated levels seen in 2022. The market is shedding the anomaly where many vehicles—especially lower-priced models—sold close to their original MSRPs on the used lot. Today, residuals remain above long-term forecasts for some segments but are inching lower. The pace of depreciation is uneven, driven by original prices, powertrain, brand equity, and supply.
Depreciation is hitting the top end the hardest. Edmunds’ Q2 data shows a clear gradient by original MSRP:
- $100K-plus originals: retain about 57% of value (down from 68% in 2022)
- $50K–$60K originals: retain about 66% (down from 74% in 2022)
- $10K–$20K originals: retain about 77% (down from 95% in 2022)
There are few reasons for these trends.
- Demand elasticity: As payments climb, buyers often trade down a segment.
- Feature creep: The premium space has seen rapid tech and content turnover, which can date high-end models faster.
- Policy and tariffs: Luxury imports face price pressure, and new-vehicle incentives can ripple into used comparables.
There have been some interesting exceptions to these rules though. The Porsche 911 has been a standout outlier holding near-new values, thanks to limited supply, brand cachet, and strong global demand. It’s the exception that proves the rule about enthusiast models with durable value. Meanwhile the Nissan Leaf is generally budget-friendly new, but many three-year-old examples now transact at less than half their original price, reflecting broader EV depreciation trends and buyer preference for updated batteries and models.
A Rational Market Outlook
The 2025 used market is not about selling high or buying low. It’s about rationalizing. ATPs for three-year-old vehicles remain high but make more sense when anchored to original MSRPs and today’s new-vehicle pricing. Depreciation is trending back toward normal, with the steepest declines at the high end and in select EV models. Dealers who can tell this story well, price to the market, and manage mix with intent will win share while keeping turn times under control.
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