Pandemic car shortages are still pushing up new and used car prices

The shockwaves of the Covid-19 pandemic are still hitting the U.S. car market and pushing prices up, even for exceptionally old cars.

The pandemic dealt a severe blow to the total supply of new cars, which has rippled down to the used market.

About 8 million vehicles that would have been made for U.S. buyers during those years never were, largely due to production shutdowns and supply shortages, said Jeremy Robb, chief economist for Cox Automotive. Automakers faced with curtailed production weighted their lineups toward money-making high-end vehicles, a strategy they have largely continued.

These factors have been pushing up prices for everyone — even customers buying decade-old used vehicles.

“I think it’s kind of the new normal outside of a big economic impact,” Robb said. “Supply is not getting a lot better over the next three to four years.”

About 16.2 million cars were sold in 2025, up from the pandemic-era low of 13.8 million in 2022, according to the U.S. Bureau of Economic Analysis. Cox is forecasting about 15.8 million vehicles will be sold in 2026, while JD Power is predicting 16.3 million.

That’s a significant drop from the record 17.55 million vehicles sold in 2016.

Volumes were already dropping before the pandemic set in. The auto market is historically cyclical, so sales go up and down.

But JD Power Senior Vice President Tyson Jominy said the U.S. auto industry has sold roughly 16 million fewer vehicles than it would have if annual sales had held at the 2016 record of 17.5 million. That is about a year’s worth of volume gone — about half of it since the pandemic.

Fewer vehicles coming to the new market have constrained supply in the used one.

“A new vehicle sale is the marble at the top of the mousetrap game,” Jominy said. “And when you drop that marble, it’s going to go through all the chutes and ladders all the way down to the bottom.”

In addition to tighter supply, automakers and dealers have also cut back on industry practices like leasing and incentives because supply was so short.

“Leasing is really expensive for an OEM,” Robb said, referring to the acronym that stands for original equipment manufacturer, another name for automakers.

Typically, payments are lower for leases, there can be lots of upfront costs for the manufacturer and when the car comes back it has to be flipped into the used market, among other things, he said.

“The OEMs really leaned into building more profitable cars like trim levels, trucks, SUVs, things like that,” Robb said. “And those, they’re more expensive. They tend not to get leased as much.”

Off-lease vehicles are a big pipeline for the used market. Prior to the pandemic, leasing was roughly 30% of the new vehicle market, Robb said. In 2022, it hit a low of 18%.

Because most leases are for three years, it has taken that long for the used market to feel…