The New Reality: Expensive Used Cars and Shrinking Affordability
Used car prices rising refers to a market situation where second-hand vehicles command higher asking prices despite improved supply, driven by constrained late-model inventory, expensive new cars, strong demand, and higher ownership costs that push more price-sensitive buyers into the used market.
The uncomfortable truth is that buying used cars has become expensive, and the old assumption that “used equals cheap” no longer holds. Data from a major retail software provider shows the average used car is now at its highest asking price since mid-2023, with current listings about 6% higher than a year earlier. At the same time, analysts report that used vehicle inventory has reached its highest point in more than three years, up 5.6% versus last year, while demand and prices are both about 4% higher. This is the core contradiction of today’s market: more cars on the lot, but no meaningful relief on price, because buyers priced out of new models are flooding the used side in search of anything remotely affordable.
Why Prices Stay High Even as Used Inventory Climbs
If basic economics says more supply should cool prices, the used market is a glaring exception. Since 2022, the market has lost about a quarter-million used vehicles from its available pool, a structural shortfall that is still shaping prices today. Leasing outside the electric segment has been weak for about five years, which means fewer lease returns feeding the late-model used pipeline, and those newer used cars that do exist are in short supply and carry premium pricing.
At the same time, new vehicle prices have climbed, and the share of new models under a modest price threshold has fallen to just 10.7% of the market. Nearly one in ten new vehicles now sits at the very high end of the price spectrum. As one market intelligence director notes, “used is benefiting from the affordability side of the equation, even with used prices up” because buyers still see used as the lesser of two financial evils. The result is a strange equilibrium: more used inventory on paper, yet enough demand to keep prices elevated and cars leaving the lot faster than last year.
Ownership Costs Are Rewriting What ‘Affordable’ Means
Sticker price is no longer the main shock; the total cost of ownership is. For subprime shoppers, average monthly payments on used vehicles have climbed from around RM equivalent levels of mid-2021 to much higher today, while prime buyers have also seen sizeable increases over the same period. When you layer on insurance premiums that remain above pre-2024 levels, annual ownership costs have jumped from a range of RM-equivalent mid-2021 levels to between RM-equivalent mid-2024 and mid-2026 ranges, a 32–41% surge.
Maintenance and repair costs have risen about 45% since June 2021, and fuel prices remain unpredictable. That means the longer a driver hangs on to an older, less reliable vehicle, the more they bleed in service visits, which in turn changes when they decide to trade in and what they shop for next. Dealers are responding by reframing the conversation away from “price only” to the lifetime cost of keeping a car on the road, often walking customers through how a dependable newer used model may cost more up front but less over several years.
How Cost-Conscious Buyers Are Changing What They Drive
With used car prices rising and new models drifting further into premium territory, buyers on tight budgets are being forced to compromise. Historically, shoppers who found late-model used cars too expensive would cross-shop the cheapest new vehicles; now, the supply of low-priced new options is thin and there is no race to build budget-friendly new cars. That pushes many households into older used vehicles, even as listing prices for cars 15 years and older have surged by 13.9%, compared with a 3% increase for vehicles under five years old.
In practice, this means buyers who might have aimed for a crossover are looking at compact sedans, shoppers who wanted all-wheel drive are settling for front-wheel drive, and features like panoramic roofs or high-end audio are being sacrificed to hit a manageable payment. Rising maintenance costs discourage stretching an old car indefinitely, but ownership budgets now include insurance, fuel, and repairs, not just the monthly note. The silver lining for disciplined shoppers is that there are still ways to land in a car they can afford with all costs considered, if they are willing to be flexible on size, trim, and even brand.
Winners, Losers, and What Comes Next in the Used Market
Today’s used market is punishing and opportunistic at the same time. On one hand, analysts point out that it is harder to afford a used vehicle now, and the usual path back to “normal” pricing conditions has been missing for years. On the other hand, used demand remains high and prices are up, while new-vehicle demand is down less than 1% from last year, with overall sales still holding up strongly. For well-qualified buyers with stable incomes, the expanded inventory of newer used vehicles and the relative softness on the new side can create room to negotiate, especially on higher-priced models that sit longer on lots.
Looking ahead, more off-lease electric vehicles over the next few years should slightly ease price pressure, but analysts warn that the era of abundant, cheap 15-year-old used cars is effectively over. Macroeconomic uncertainty around interest rates, fuel costs, and the labor market could still unsettle sales in the remaining months of the year. For buyers, the takeaway is clear: treat “vehicle affordability 2025” as a moving target, not a promise. Success in this market means planning around total cost of ownership, being flexible about what you drive, and accepting that the bargain-bin used car landscape of the past is not coming back.
