trade war fallout — used car prices rise while overall inventory plummets
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vehicles are shown at a used car sales lot in windsor on friday, july 25, 2025.
dan janisse
/
windsor star
u.s. tariffs — both real and threatened — are being blamed for a decline in north american vehicle production, resulting in a significant decline in vehicle inventory in both the used and new car markets, according to auto trader’s second quarter price index report.
and that means rising prices for those who can’t afford new.
“tariffs are having a direct impact on the car market,” said baris akyurek, auto trader’s vice-president of insights and intelligence.
“normally, the used car market starts higher early in the year and comes down.
“january and february this year started the same as expected but once talk of tariffs became serious, it led to increased demand and prices ticking up.”
used car prices are up 3.6 per cent year-over-year with an average transaction price of $37,664. prices increased by 0.6 per cent from may to june, marking the fourth consecutive monthly rise.
new car prices came down 3.5 per cent year-over-year with an average transaction price of $64,445. prices were down 0.5 per cent month-over-month in june as automakers largely absorbed the tariff costs to this point and relied on a substantial inventory of pre-tariff vehicles.
akyurek said tariffs have also had a psychological impact on consumers that has pushed more purchasers in the market towards used vehicles.
“fifty per cent of consumers in june said tariffs would have an impact on their decision to buy a new or used vehicle,” akyurek said. “thirty-eight per cent said they’d switch to buying a used vehicle.”
but that rising demand is putting pressure on supply and depleting inventory in the market, said akyurek.
used car inventory was down 16.8 per cent while new car inventory contracted by 12 per cent.
“these are not insignificant numbers in an industry that doesn’t see that much change year-over-year,” akyurek said.
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“we’re seeing, at the end of april and may, new car inventory decline per dealership. there’s a supply and demand imbalance.
“new car sales were very strong as consumers pulled forward their purchases to avoid anticipated price increases because of tariffs. the market was up 5.6 (per cent) above expectations, so the high demand depleted inventory.”
north american production is also expected to shrink by at least 500,000 units in 2025.
chrysler pacifica models are shown at the motipark vehicle logistics yard in windsor on friday, july 25, 2025.
dan janisse
/
windsor star
evidence of the impact of tariffs on production can be seen with mazda, bmw and nissan all announcing they aren’t going to ship to canada specific models built in the u.s. that are subject to tariffs.
“in talking to oems and dealers, the marketplace right now is very complex and uncertain,” akyurek told the star. “some dealers didn’t order more cars in 2025 or they choose to order at 2024 levels.
“north american production is forecast to be down six per cent this year. less production means fewer cars on the lot.”
akyurek said a healthy market has on average a 60-day inventory supply and currently that has slipped to a national average of 57 days, but there’s wide variation in inventory depending on the brand.
subaru has the lowest inventory at 27 days while jeep has the highest at 97 days.
the number of days of inventory for some of the detroit three’s other brands are: chrysler (67 days), dodge (93), ram (76), ford (63), gmc (53), chevrolet (57) and buick (92).
akyurek said reduction in new car production eventually surfaces in the used car market with 50 per cent of sales involving a trade-in.
he noted the used market is already struggling with the loss of production of 1.5 million vehicles during the covid pandemic. akyurek said 75 per cent of cars manufactured in north america are sold in north america, so any decline has both short- and long-term impacts.
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another concerning factor is that the weak canadian dollar makes shipping used canadian vehicles to the u.s. attractive. the 25-per-cent tariff on those vehicles is actually helping reduce that flow, but should a trade deal or a lower tariff be agreed that export pipeline could open up again.
while automakers have resisted the temptation to raise prices as they work through pre-tariff inventory, akyurek said price increases are inevitable if a trade deal isn’t reached or if any permanent tariff is put in place.
“assuming there’s a 15-per-cent tariff based on what we’ve been seeing, companies can’t absorb that for good,” akyurek said. “the profit margins in the industry aren’t that big.
“if there’s a permanent tariff, it’s inevitable prices will rise depending on the brand, where it’s made and availability.”
tariffs and the continuing disruption of production also mean there’s no price relief in sight in the used car market.
“the inventory constraints will extend to 2027,” akyurek said. “i don’t see a change resulting in downward prices even if we get trade clarity for a couple more years.”
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