by Terry MacCauley - Posted 1 day ago
The used car market has been unpredictable for years, but as of March 2025, signs point to stabilization rather than continued price drops. This shift has significant implications for both consumers and dealers, especially as the seasonal demand from tax refunds may soon push prices up. With wholesale and retail pricing trends showing mixed signals, dealers need to stay agile and adjust strategies accordingly.
For the past few years, the market has been on a rollercoaster ride, influenced by supply chain disruptions, fluctuating new car production, economic uncertainty, and shifting consumer demand. Now, as we look ahead to the rest of 2025, the landscape is evolving. Some areas still experience price drops, while others are starting to see stabilization, and a few segments are even creeping back up. The key takeaway here is that blanket assumptions about pricing trends can be misleading. This is where data-driven decision-making comes into play—dealers must rely on up-to-date insights to inform their strategies rather than going off industry-wide generalizations.
Retail used car prices have decreased by about 2% year-over-year, with the average price holding steady at $25,128 as of March 2025 (CarEdge). This suggests a leveling off rather than continued declines, a crucial insight for dealers planning inventory and pricing strategies during the critical spring selling season.
What does this mean for marketing? Consumers are still hesitant, especially in a high-interest rate environment, but they also recognize that waiting too long could lead to price increases. Dealers should tailor their messaging to highlight affordability now rather than later. Price-sensitive buyers need reassurance that they’re getting the best deal before seasonal demand pushes prices up. Creating urgency through targeted digital advertising, social media campaigns, and well-placed PPC ads can help move inventory before the spring price hike.
Wholesale prices, tracked by the Manheim Used Vehicle Value Index (MUVVI), show a slight decline of 0.2% year-over-year for February 2025. Month-over-month, prices also dropped slightly, which may still impact retail pricing in the coming weeks. However, with tax season fueling buyer demand, this temporary dip in wholesale pricing could offer an opportunity for dealers to source inventory at a better cost before prices firm up.
Wholesale pricing trends are critical for marketing and advertising strategies. If dealers can secure vehicles at a lower cost now, they can pass savings on to consumers or maintain stronger margins. Highlighting recently acquired inventory in ads—especially vehicles priced competitively against local competitors—can give dealerships an edge. Additionally, marketing messaging should reflect the reality that wholesale costs today determine the deals consumers will see on the lot in the near future. Advertising a limited-time window of opportunity to "lock in lower pricing before spring" could be an effective way to generate leads and traffic.
For Buy Here Pay Here (BHPH) dealers, these trends create a different set of challenges and opportunities. Unlike traditional dealerships, BHPH stores finance their own customers, meaning wholesale pricing impacts them more directly. A slight dip in wholesale prices can mean better profit margins, but it also requires smart inventory management.
With many consumers still struggling with credit challenges, marketing for BHPH dealerships should emphasize approvals over pricing. Ads should focus on ease of access, second-chance financing, and immediate vehicle availability rather than just discounts. Additionally, in a market where inflation has squeezed budgets, BHPH dealers should lean into messaging that highlights affordable payments rather than the overall vehicle cost. "Drive today for just $X per week" resonates far more than listing a total price.
Historically, late March and April bring increased demand due to tax refunds. CarEdge’s spring 2025 buying tips warn that used car prices tend to rise during this period, meaning dealers should act now if they want to capitalize on current pricing before demand drives costs higher.
Spring tax refund season presents a unique opportunity for both sales and marketing. Many buyers who have been waiting for a financial boost will soon be in the market for a vehicle. Dealers should prepare for this surge by ramping up digital marketing campaigns, optimizing website CTAs, and ensuring their inventory listings are current. A proactive strategy now will pay off when buyer demand spikes. It’s also wise to start increasing engagement through organic social media content, like short videos from salespeople explaining why purchasing a used car in early spring is a smart financial move.
There are early signs that deflation may finally be happening, with consumer goods prices beginning to decline, though it’s too soon to confirm. If this trend continues, it could trigger Federal Reserve interest rate cuts, which would be a game-changer for auto sales. The Conference Board reported a drop in consumer confidence in February 2025, which could indicate reduced spending, but a potential rate cut later in the year could boost auto sales significantly.
Lower interest rates could bring buyers back in droves, especially those who have been holding off due to high financing costs. A small drop in rates could mean thousands in savings over the life of a car loan, making vehicle purchases much more attractive. Dealers should keep an eye on economic forecasts and adjust marketing messages accordingly. If rate cuts seem imminent, marketing campaigns should shift to highlight "the lowest rates in years" and "why waiting could cost you more."
Instead of simply listing cars online, use organic videos featuring salespeople discussing each car’s history, previous owner, and unique attributes. In a market where consumers hesitate, making each vehicle feel like a "1 of 1" opportunity can drive conversions.
With wholesale prices still soft but stabilizing, it’s crucial to monitor and adjust advertising based on market shifts. Big Time Advertising provides real-time campaign adjustments that help dealers align with pricing trends and consumer behavior, ensuring marketing dollars are well spent.
High interest rates remain a concern, with used car loan rates averaging over 12% in 2024 (Consumer Reports). Dealers who promote creative financing options or lender partnerships in their ads can make purchases more attractive to hesitant buyers.
While used car prices are still down year-over-year, the trend suggests stabilization rather than continued decline. With tax season demand and potential interest rate cuts later in 2025, there’s a window of opportunity for dealers who adjust their inventory, marketing, and sales strategies accordingly.
Big Time Advertising & Marketing is here to help dealers navigate this complex landscape, ensuring that their advertising speaks directly to today’s cautious consumers while maximizing opportunities in a changing market.
-by Terry MacCauley, Founder & CEO
