Used vehicle prices are expected to decline more than initially predicted in 2026, impacted by rising gas prices and inflationary pressures on consumers. Cox Automotive adjusted its outlook for the Manheim Used Vehicle Value Index, projecting only a 0.2% increase this year, a significant drop from their previous 2% growth estimate. This change follows a 1.95% decrease in third-quarter wholesale used vehicle prices, including a 0.6% annual drop in September—the first time since March 2025 that the index is lower year over year. Jeremy Robb, Cox’s chief economist, noted that while interest rates are climbing and consumer sentiment weakens, financial market gains are providing some resilience amid a return to pre-pandemic market conditions.

Shifts in consumer preferences are notably reshaping the used car market, with electric vehicles (EVs) and fuel-efficient cars gaining value and demand during the quarter. Cox reported an increase in EV sales and off-lease vehicle supply, in contrast to weaker performances from larger trucks and SUVs. The ongoing conflict in the Middle East and record-high diesel prices, combined with rising interest rates, have pressured wholesale prices down, particularly for bigger, less fuel-efficient vehicles. These trends come at a time when the national average gas price reached $4.33 per gallon in September, setting a new record and influencing buyer decisions toward more economical options.

Despite these pricing pressures, retail demand for used vehicles remains relatively strong. The average asking price for a used car was $27,239 in August, significantly lower than the $50,000 average for new vehicles, making used cars a more affordable choice for most Americans. However, the price declines hint that dealers may have reached a limit on what consumers are willing to pay given broader economic uncertainties. This price plateau could signal a market adjustment as dealers navigate the changing consumer landscape and economic conditions.

The Manheim Index, a key indicator tracking wholesale used vehicle prices at auctions, experienced an accelerated depreciation trend in the third quarter with prices falling 1.3% from August and 1.2% year over year in September. Since retail used vehicle prices tend to follow wholesale trends, this decline foreshadows a cooling market. Overall, the used car sector is undergoing a notable transition driven by fuel prices, rising interest rates, and shifting consumer preferences as it moves toward more sustainable and cost-efficient vehicle options.