Tariffs Could Make You Money On Your Used Car

Hold onto your keys, the used car market just did something that rarely happens (outside of the pandemic). Prices actually went up year-over-year. Experts warn this could just be the beginning, thanks to new tariffs on imported autos kicking in this month that are expected to inflate both new and used vehicle prices further. So get ready to make some money on your old Corolla.

After months of slow declines or stabilizing prices, this upward spike signals a shift. “Used car prices had been falling… but over the past 6 months, used car prices stabilized,” said Karl Brauer, iSeeCars Executive Analyst. “Now used car prices are going up, and this is before tariffs have impacted new car pricing, which will add further upward pressure.” According to iSeeCars, the average price for a 1-to-5-year-old used car ticked up 1 percent, or $317, in March compared to last year. That might not sound huge, but it marks the first annual increase since October 2022.

Deja Vu? Tariff Impact Echoes Pandemic Price Spike

Remember the dramatic price hikes during the pandemic when supply chains were disrupted? Analysts suggest that the recent 25 percent tariffs on imported autos, which took effect on April 3 under President Trump, could trigger a similar situation. Back in 2020, restricted new car production drove prices up sharply (8.2 percent in just 8 months), pulling used car values along for the ride as buyers scrambled for whatever was available.

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Now, these new tariffs could cause a similar bump of 5 percent to 10 percent on popular used models over the next year. “With tariffs, prices will likely increase regardless of demand, setting up a similar new car price spike that could pull used car prices up,” Brauer stated. Even Teslas, which are built domestically but rely on imported components for about 30 percent of their production, could see prices rise, reversing a two-year trend.

Dealers Feeling the Pinch Already

This is not just theoretical, as some dealers are already feeling the heat, leading to some bizarre situations. One Bloomberg writer says that just months after buying a used 2022 Honda CR-V hybrid, he received a panicked call from the dealership manager this week. The manager was not calling about a problem; he desperately wanted to buy the CR-V back, offering “substantially more” than the writer paid. Why? The tariff shock had decimated his used inventory. Their lot, normally stocked with 100 used cars, was now below 40, and he was scrambling to find desirable vehicles, like the recently sold CR-V.

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While tempted by the quick profit, the owner realized that replacing the convenient family hauler with a similar gently used SUV would likely cost even more and declined the offer. If you find yourself in a rare situation where you are comfortable driving a less desirable vehicle or have a project car that requires just a few finishing touches, you can potentially take advantage of the current economic climate. Just remember, most companies are quick to raise prices, but very rarely will prices ever be lowered.

Sources: Bloomberg, iSeeCars, CNBC