Why the Used Car Market Remains Stuck in a Price Squeeze

The automotive industry is currently navigating a long-term supply contraction that experts suggest will persist for at least the next three to four years. While new vehicle sales reached 16.2 million in 2025—an improvement over the 2022 pandemic low of 13.8 million—the industry remains far below the 2016 record of 17.55 million. Cox Automotive and JD Power project sales to hover between 15.8 and 16.3 million units for 2026, signaling that the volume gap is not closing anytime soon.

This shortage is rooted in a strategic pivot by automakers who, faced with constrained capacity during the pandemic, prioritized premium, high-margin vehicles. According to Tyson Jominy of JD Power, the cumulative loss of roughly 16 million vehicle sales compared to 2016 levels has effectively removed a full year’s worth of inventory from the economy. Because new car sales serve as the primary engine for the entire automotive ecosystem, the lack of new units has tightened supply across the secondary market. Buyers looking for decade-old vehicles are now paying the price for a "new normal" where inventory levels remain historically low.