Trade-in values are rising for three-year-old vehicles
New Edmunds data shows that the average price for three-year-old used cars has surpassed $30,000 for the first time since 2023. This updated figure narrows the gap between new vehicle prices and three-year-old pre-owned cars to under $17,000 for the first time since 2022. Additionally, three-year-old lease return values are reaching higher than forecasts expected, increasing trade-in advantages. Tariffs on foreign-made models may cause significant differences in resale values, especially by model vs. by brand.
Lease rates dropped through 2022 and 2023, causing fewer cars to return to dealer lots. During this time, supply chain shortages resulted in automakers producing fewer vehicles, driving new prices up. According to Kelley Blue Book, many drivers in 2022 opted for lease buyouts at the end of their term instead of continuing the lease cycle to own a car for less than a new vehicle purchase, resulting in dealers receiving fewer returns in 2025.
The pre-owned inventory’s aging: by the numbers
In Q1 2025, the average age of trade-ins hit 7.6 years, up 0.3 years from the same time last year and representing Edmunds’ highest-recorded trade-in age since Q1 2019. Edmunds’ average age of a used car on its site rose from 5.7 years to 6.1 years from March 2024 to March 2025. The average transaction price for a three-year-old pre-owned vehicle in Q1 2025 reached $30,522—up 2.3% year-over-year from $29,844. A decreasing distance between the cost of new and three-year-old used cars generally makes the actual and projected resale values of vehicles wider since the market is more susceptible to rapid changes from factors like economic policy. For example, tariffs have driven the average transaction prices (ATP) for three-year-old U.S. vehicles up by $6,853 from their previous ATP, Edmunds reports. Different countries’ tariff policies and varying pricing strategies among automakers will likely affect the gap between predicted and actual ATPs.
Still, some may be surprised to learn that a report from Cars.com reflects that American-made vehicles were more expensive on average than their foreign counterparts through Q1 2025 at $53,000, the Detroit Free Press reports. Cars assembled in China were second at $51,000, while Canada and Mexico stood at $46,000 and $40,000, respectively. The U.S.’s #1 spot is primarily attributed to its high production volumes of larger vehicles like trucks and SUVs. Gently used car values are increasing primarily as a ripple effect of recent leasing trends, and tariffs have only brought mild price increases to the market so far. However, experts at Kelley Blue Book are predicting more radical price changes in the next few months.
Final thoughtsÂ
Recent data supports the claim that trade-ins are a good idea right now if you’re driving a gently used vehicle. Besides having the ability to part ways with a new car you got three years ago without taking a significant financial hit, lessees are more likely to see positive equity they can place toward a new lease or purchase. For shoppers with trade-ins, the model’s country of assembly, which has historically been a nonfactor, is playing an increasingly critical role in a vehicle’s resale value.
