Critical Shifts:
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Anticipate Tight Inventory and Firmer Pricing: Inventory levels have tightened significantly (dropping below a 40-day supply), which is driving retail prices higher—specifically for popular three-year-old models. Independent dealers should expect to pay more at auction to secure high-demand units and should price their existing inventory to reflect these leaner market conditions.
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Capitalize on "New Vehicle Affordability Pressures": Consumers are increasingly being pushed toward the used market because new vehicles remain unaffordable for many. This creates a steady stream of buyers for independent lots, though dealers must remain mindful of "affordability constraints" that still limit the maximum price many shoppers can pay.
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Prepare for a More Volatile Second Half: While the first quarter was stronger than expected, the outlook for the back half of 2026 is softer. Dealers should be wary of a potential increase in price volatility later this year due to a "higher mix of used EVs" entering the wholesale market and the natural cooling of prices once the tax refund season concludes.
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Retail conditions for used vehicles strengthened in the first quarter of 2026 as the spring selling season arrived with healthy consumer tailwinds, which helped push Manheim values higher, according to the Manheim Used Vehicle Value Index.
Higher–than–average tax refunds helped activate pent–up demand, pushing used-retail sales approximately 2% above year–ago levels during Q1.
At the same time, inventory tightened meaningfully, with days’ supply falling below 40 in March — the lowest point in 2026 and down from year-ago levels. Leaner inventory supported firmer pricing at retail for used vehicles, particularly for high–demand models, with retail list prices for popular three–year–old vehicles running roughly 2% higher than last year and above typical seasonal trends. While affordability constraints remain a limiting factor for many buyers, the combination of steady demand and constrained supply helped keep used vehicle retail pricing firm through the first quarter and buying activity healthy at Manheim.
Cox Automotive’s 2026 used–vehicle outlook remains largely unchanged following the first–quarter update, reflecting a stronger–than–expected start to the year offset by a softer second–half view. Total used–vehicle sales are still forecast to decline 1% year over year; however, the used–vehicle retail sales forecast was revised higher in the Q1 update to 20.4 million units, up from 20.3 million previously. Stronger retail demand continues to be supported by new vehicle affordability pressures that are pushing consumers toward used vehicles, while lower new–vehicle sales are constraining trade–in volumes and limiting supply into the used market.
Wholesale pricing is expected to follow a normal seasonal pattern for the remainder of the year, with the Manheim Used Vehicle Value Index forecast to rise approximately 2% by year–end 2026, consistent with long–term averages. Although the index is currently running strong on a year–over–year basis, values are expected to peak as tax refund season concludes. A higher mix of used EVs in the second half of the year is expected to contribute to increased volatility, but overall wholesale price performance is projected to remain aligned with historical norms.
“As we move towards summer, we expect Manheim values to hold their ground with many more consumers yet to file their tax returns this year,” said Jeremy Robb, chief economist at Cox Automotive. “The end of March typically proves to be the ‘peak’ for price action at Manheim. The Middle East conflict could dampen the spirits of the U.S. consumer, but we just haven’t seen it yet – our data is showing resiliency in the economy.”
