May 2025 saw a slight softening in wholesale used-vehicle prices, with Cox Automotive’s Manheim Used Vehicle Value Index declining by 1.4 percent from April. It now sits at 205.2. Despite this month-over-month dip, prices remain four percent higher year over year. April’s surge, triggered by tariff-related buying activity, set a high benchmark, and May’s decline is to be expected as the market adjusted.
Retail trends mirrored wholesale but painted a slightly more complex picture. Retail used-vehicle sales dipped by three percent from April but were still up by four percent year-over-year. Listing prices for used vehicles decreased slightly, dropping 0.5 percent over the last four weeks.
“Wholesale appreciation trends were remarkably strong in April, but the market gave some of that strength back in May, though values remain well above last year’s levels,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. “Weekly wholesale depreciation trends were stronger than usual in the middle of the month but slowed down in the last week of May, with values aligning with the long-term run rates.”
Segment Trends
As Robb mentions, one notable trend was week-by-week depreciation. During May, prices declined consistently across all segments every week, though at a slower rate in the final week, where prices fell just 0.2 percent. These moderate declines are what kept costs well above both pre-pandemic baselines and even 2024’s pricing.
The story becomes more nuanced when breaking down vehicle categories. Luxury vehicles saw a price increase of 6.5 percent year-over-year, marking their fourth consecutive month of having the highest year-over-year increases of any segment. They also only saw a small decline of 0.7 percent month over month. SUVs followed the luxury segment closely with a 5.2 percent yearly increase and a 1.3 percent monthly decline. Prices are still elevated for every segment except compact cars, which dropped by 1.5 percent year over year. This continues an ongoing market trend where consumers are targeting SUVs with their purchases instead of the more traditional smaller vehicles.
On the powertrain side, EV values were up 3.1 percent year over year, outperforming compact cars and mid-size sedans. However, on average non-EVs prices are up 3.8 percent year over year, beating out EVs as adoption begins to stall. EV prices also dipped 0.9 percent compared to April, reflecting the broader trends. Non-EVs, did see a larger monthly decline of 1.8 percent though.
Inventory Still Tight
Inventory levels remain a critical factor shaping both wholesale and retail markets. Retail days’ supply ended May at 44 days, up from 43 days in April but lower than last year’s 46 days. Similarly, wholesale days’ supply was down five percent year-over-year.
Much of the volatility in used-vehicle values and supply can be attributed to the continued impact of tariffs. These tariffs have increased costs for manufacturers and dealers, who are now navigating a more complex pricing environment. Recently Kelley Blue Book reported that car shipments to the U.S. have dropped by over 70 percent in May. While the spike in April values was partly tariff-induced, issues will inventory will continue to be dominated by tariffs until a global trade resolution is found.
“The used retail days’ supply remains down 5 percent compared to last year’s levels, which is seasonally tighter than normal, as wholesale days’ supply at Manheim is also currently down 5 percent,” said Robb. “While the market continues to digest the impact of tariffs, we could see a bit higher levels of wholesale depreciation over the summer. However, lower inventory levels may counterbalance those more aggressive depreciation trends in the coming months.”
Consumer Confidence on the Rise
After a few months of decline, consumer confidence saw a notable improvement in May. The Conference Board Consumer Confidence Index jumped 14.4 percent, the largest monthly gain since March 2021. This rebound was attributed to improving perceptions of both present conditions and future outlooks. Specifically, a 31 percent increase in future expectations. Confidence is still down 3.3 percent year over year but if it continues to recover it could signal stronger demand for big-ticket items like vehicles in the months ahead.
While consumers’ views on vehicle prices improved slightly, concerns about interest rates persisted. Inflation expectations also showed mixed signals, with a slight rise in short-term concerns but a modest decline over a five-year span. Interestingly, AAA reported a 5-cent drop in gas prices in May, potentially easing some consumer cost concerns and making vehicular ownership more appealing.
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