Used Market: Supply Climbs, Sales Hold Steady

Used vehicle inventory increased again in May, up 4.4% year-over-year (YoY) and marking the highest point in nearly four years. Inventory rose 3.4% month-over-month following a moderation in demand after the early-spring sales rush. As availability improves, dealer lots now offer consumers some of the broadest selection in recent memory.

Despite rising inventories, used demand remains notably resilient. The CarGurus Used Vehicle Demand Index climbed up by 4.4%, marking the strongest May performance since the record levels seen during the 2021 buying frenzy. Average days-on-market fell by 6% compared to last year, driven largely by higher vehicle turnover.

Average used vehicle prices stayed notably stable at $28,721, a modest 0.6% increase YoY. Market Days Supply remained steady at 45.7 days, up slightly from this time last year (+2.1% YoY), signaling balanced supply and consistent buyer interest.

New Market: Navigating the Early Impact of Tariffs

The new vehicle market showed initial signs of normalization in May after the tariff-induced surge in demand during late March and early April, with inventory rising 1.2% from April but still 1.9% below 2024 levels. Despite gains this month, supply continues to run leaner, down nearly 8% from the end of February as demand remains firm and tariffs impact production and imports.

Interestingly, average new vehicle prices continue to defy tariff-related gains. Prices in May averaged $49,858, down 1% YoY and down slightly compared to April (-0.1%). Consumer preferences for more affordable vehicles, coupled with automakers looking to limit tariff impact and recent policy changes, look to be keeping market prices stable... for now. The question becomes how long can the market sustain this momentum.

Demand for new vehicles moderated slightly in May, with the CarGurus New Vehicle Demand Index up 0.9% YoY. Sales volumes have normalized following the April surge in response to the new tariff measures, returning to more typical seasonal patterns and signaling a stabilizing market environment.