By Ryan Felton | Photographs by Sylvia Jarrus for WSJ

CARLETON, Mich. -- Used cars haven't been in such short supply at such high prices since the days of Covid.

Dealers had a 43-day supply of used cars at the start of May, the lowest level for this time of year since 2021, according to Cox Automotive, an automotive-service business. The average price of the 50 bestselling used cars in the U.S. has increased each week over the past two months to nearly $29,000, according to Cox Automotive data. That compares with an average of more than $48,000 for a new car.

The pricing and inventory changes are fueled by several factors. Americans are holding on to their vehicles longer, and new-car prices are rising. President Trump's tariffs are adding to the upward pressure on prices.

While tariffs don't hit used cars directly, they are causing carmakers to raise prices and are reducing supply. Ford Motor and Subaru have announced price increases. Many automakers have cut back on imported vehicles from Mexico and Canada. North American car factories produced 8% fewer cars and trucks in April compared with a year earlier, mostly as a result of lower output from Mexico, according to a research note from Citi.

"Our expectation is that over the course of the summer used prices are going to rise even more quickly," said Charlie Chesbrough, senior economist at Cox Automotive.

At a used-car auction south of Detroit last week, 17 garage doors slid open a 9 a.m. and used vehicles started rolling out. Jeep Grand Cherokees, Range Rovers, Ford trucks. A Lamborghini Huracan.

At each lane, auctioneers began announcing the current high bids in a lightning-fast, barely intelligible staccato, banging gavels to signify a new offer. Potential buyers quickly looked over late-model Ford Broncos and Chevrolet Silverados, raising their hands to signify a bid.

A television screen behind each auctioneer booth displayed the current price of the vehicle, as well as its mileage and year of production. Every few seconds a flashing green light signified an incoming bid from the internet.

"I think a lot of the stores are short on inventory," said Scott Graham, a buyer for a Michigan-based dealer group who was on the auction floor. He said competition has become more intense in recent weeks: "Everybody's down on cars right now," he added, referring to depleted dealer inventories. Graham won three vehicles at the auction.

With supplies down and prices up, many car buyers are turning to the used-vehicle market for lower prices. Auto retailers are now looking to fill diminished car lots with used vehicles -- and finding their competitors are all trying to do the same thing.

Steven Wolf, a Ford and Jeep dealer in Houston, said he had to travel to Utah to buy pickup trucks, after running low on some models.

"You can't sell out of an empty basket," Wolf said. "You've got to have inventory here."

The shallow pool of available used cars means prices likely will remain high for months, industry analysts and dealers say. Rental-car companies -- historically a crucial source of used vehicles -- reduced their fleet size in recent years. Leased vehicles, another common source of lightly used cars, are also in short supply because so few leasing transactions happened during the pandemic.

Dealers typically replenish their used-car lots when customers return leased cars or sell their old vehicles. They can also go the auction route.

Manheim Detroit, which ran the auction south of the city, holds sales days three times a week. On an average day, 600 vehicles are put up for auction. About 15,000 more vehicles -- including electric vehicles, large pickup trucks and cheap damaged cars sold for scrap metal -- are stored on a 250-acre lot at any given time, before typically being bought in about 10 days.

On Thursday, the auction house hummed along with dealers and their representatives jostling for supply.

"Supply has been constrained, and I think it's particularly constrained for nice cars," said Glenn Gottfried, sales manager at an Ann Arbor dealership that sells Volvo, Lincoln and Mazda models.

"There's lots of stuff that has lived a challenged life, hasn't been maintained well, has accident experience -- those cars are available," he said. "But genuinely nice cars are hard to find."

Write to Ryan Felton at ryan.felton@wsj.com

(END) Dow Jones Newswires

May 26, 2025 09:00 ET (13:00 GMT)

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