Prices for used vehicles in the U.S. rose sharply last month, posting their largest annual increase in nearly three years, according to the latest industry data.
The Manheim Used Vehicle Value Index climbed 1.6% in June from May on a seasonally adjusted basis and jumped 6.3% compared to a year earlierโthe strongest year-over-year gain since August 2022.
The index, now at 208.5, has been steadily rising over the past year and reached its highest level since October 2023. Analysts attribute the volatility in wholesale prices partly to the lingering effects of auto tariffs imposed by former President Donald Trump, which disrupted new car sales and supply chains, subsequently affecting the used vehicle market.
Jeremy Robb, senior director of economic and industry insights at Cox Automotive, noted that wholesale price trends have been unusually unstable in the second quarter due to these tariffs. While price pressures typically ease in the latter half of the year, Robb pointed to two key factors sustaining higher values: stronger-than-expected retail sales and a decline in the supply of leased vehicles entering the used car market.
Earlier this year, Trumpโs 25% tariff on imported vehicles spurred a temporary surge in new car purchases as buyers rushed to avoid anticipated price hikes. However, sales dropped sharply in May and June, reflecting ongoing market turbulence.
The resurgence in used car prices has drawn attention from economists and Federal Reserve officials, many of whom recall how the Manheim index foreshadowed the broader inflation spike in 2021 and 2022. Back then, the indexโs sharp rise preceded a surge in the Consumer Price Index, which peaked above 9%โthe highest level in four decades.
Fed Governor Christopher Waller, who in 2021 warned against dismissing early inflation signals like used car prices, now appears more cautious about the potential economic fallout from tariffs. While some policymakers initially viewed post-pandemic inflation as temporary, Wallerโrumored to be a potential successor to Fed Chair Jerome Powellโnow seems more concerned that tariff-driven price increases could weaken demand rather than trigger sustained inflation.
Despite these pressures, overall U.S. inflation has remained stubbornly high, keeping Fed officials hesitant to cut interest rates until they are confident price stability is within reach. Meanwhile, industries like airlinesโsuch as Ryanair, which reports strong summer bookingsโshow no immediate signs of consumer pullback, even amid economic uncertainties.
