Used Fires Up, New Faces a Growing Inventory Problem

Tax refund season arrived right on schedule, and used vehicle buyers showed up with it. February's data tells two very different stories depending on which side of the lot you're standing on, with a third playing out quietly in the powertrain race.

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Used: Strongest February Start in Years

The CarGurus Used Vehicle Demand Index jumped over 5% year-over-year (YoY), the best February performance in years. Near-new vehicles (0-2 model years old) posted the biggest YoY demand gain of any age bucket, and the reason isn't hard to find. With new vehicle sales down YoY for the fifth straight month, budget-conscious shoppers may be opting for a lightly used '24 or '25 rather than committing to a new '26, siphoning off buyers who might have otherwise walked into a new vehicle showroom. That demand pulled the CarGurus Used Vehicle Availability Index lower month-over-month (MoM), though used inventory is still running well above 2025 levels, giving dealers a solid supply base heading into spring.

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Used listing prices are firming after bottoming out in 2025. The $15k–$20k segment picked up the most share of any bucket YoY (16.2% to 17.0%), though MDS ticked up half a day (43.3 to 43.8). Supply's building slightly faster than demand can clear it. One tier up tells the tighter story. $20k–$25k share climbed 0.6% while MDS dropped a full day (45.0 to 44.0). Demand is absorbing inventory faster than dealers can restock.

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One nuance in the days-on-market (DoM) data: aggregate DoM is holding steady YoY, but the distribution is polarizing. Fast movers are moving faster. Long-sitters are sitting longer. The middle is shrinking. If you've got aged inventory on the lot, now is the time to move it before it slips further into the 200+ day bucket. 

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New: Slowest February Since 2023

New retail sales declined YoY for the fifth straight month, and February was the slowest since 2023. Current model year demand is lagging supply, and the imbalance is showing up in market days supply (MDS), which has climbed to levels not seen since 2020. Inventory is still running below 2025 levels, so this isn't a supply glut story; it's a demand problem. Some segments feel it more acutely than others. A healthy market typically runs around 60 days of supply (a benchmark that felt like a distant memory during the chip shortage years). The $70k–$80k price band approached 99 days in February, well above even the overall new vehicle MDS of 87 days, which is itself already running hot. That's a number dealers carrying heavy high-ticket new inventory should be watching closely.

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On pricing, the trend is quietly pointing higher. Average new listing prices hit $49,316 in February, up 0.9% YoY and 0.2% MoM, inching back toward $50k as the share of affordable units continues to shrink. Sub-$30k new vehicles are now just 13% of new listings.

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New DoM fell over 7% YoY, partly because aged inventory that had been sitting is finally clearing. But the 100-149 day bucket is picking up share. The oldest units are moving, but a new cohort of aged inventory is quietly building behind them.

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Hybrids Keep Taking Ground

New hybrid inventory is approaching 12% of all new listings, up fivefold since 2020. Consumer appetite is real, and OEM production is following it. Used hybrid inventory is growing too, though it's still just 5% of the used lot.

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Here's a wrinkle: even as hybrid prices drift lower, they're now commanding a premium over used EVs. Strong demand is absorbing the added supply without a price decline, which says something about where consumer demand actually sits right now. Meanwhile, used EV prices have dropped 35% since 2022 and appear to be finding a floor. For dealers who've been cautious about sourcing used EVs, this could be the moment to revisit.

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Ongoing geopolitical tensions are putting upward pressure on gas prices, and fuel-efficient vehicles, both hybrids and EVs, could see a real lift in demand as a result. That kind of demand surge tends to move prices up quickly, so buyers sitting on the fence may want to act sooner rather than later.

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What to Watch Heading into March

Tax season is just getting started, and the used market is well-positioned to ride it. Near-new vehicles are the segment to watch: strong demand, tightening supply, and a price point that resonates with buyers getting priced out of new. On the new side, MDS is the metric to monitor. If demand doesn't accelerate through March and April, the inventory overhang in key segments will get harder to work around. And in the powertrain race, hybrids aren't showing any signs of slowing down.