What's next for the used car market in 2025?

The used car market highly depends on the global economic and political situation, changing vehicle trends, and even environmental regulations. While it can be hard to predict how the market will change in a longer period of time, our experts came up with a market forecast for 2025.

What kind of challenges will used vehicle buyers and sellers face, and what kind of forces will shape the market over the next 12 months? All of this and even more we’ll cover in this blog post.

carVertical’s used car market forecast for 2025 wrapped

• The used car market will face a shortage of vehicles produced in 2021-2022.
• Lower interest rates projected to boost car sales.
• The growth of EV sales will remain modest.
• 1- to 5-year-old diesel cars forecast to remain in high demand in Eastern Europe.
• European car manufacturers will have to navigate a crisis, ignited by stricter emissions regulations, Chinese competition, and low EV sales.

1. Poor supply of 3-to-4-year-old cars

While the global semiconductor crisis may seem like a thing of the past, its effects on the car market are still being felt. In 2021-2022, disruptions in the supply chain resulted in significantly fewer new cars being produced worldwide.

The fluctuations in the new car market directly impact the used car segment. Currently, there’s a noticeable shortage of vehicles produced in 2021-2022, and this issue will persist. The 3- to 4-year-old car category will simply lack options.

This means buyers will have to search for either older or newer cars, adjusting their budget accordingly.

2. Lower interest rates will boost car sales

Both new and used car markets have been hit hard by inflation and rising interest rates. Many drivers have opted for cheaper cars or postponed their purchases for better times. After all, nobody wants to pay higher interest rates when the whole economy is stagnating.

However, with interest rates stabilizing, the car market is expected to pick up in 2025. As rates fall, cars become more affordable, significantly influencing buyer behavior. Drivers who have been tightening their belts recently are likely to loosen their wallets this year.

3. The EV market will grow slowly

While some drivers are interested in electric cars, their prices are discouraging, especially when compared to similar diesel and petrol models. However, this isn’t the only problem causing slow EV market growth.

Many European countries have a high population density, with substantial people living in apartments. Residential areas typically lack parking spaces, not to mention charging access. This means EVs are mainly chosen by those who can charge them at home.

Building comprehensive public charging networks requires massive investment, which many countries can’t afford.

Once a particular country introduces new EV subsidies, EV sales start growing. However, after the subsidies are revoked, the sales plummet. As for now, it seems European countries aren’t ready to go fully electric.

The demand for used EVs could be significantly affected by the growing popularity of cheap Chinese electric cars in Europe. However, it’s unclear if drivers will invest in these models, given the uncertainty around their reliability and after-sales services. Many buyers may stick with well-established brands.

With interest rates stabilizing, the car market is expected to pick up in 2025. As rates fall, cars become more affordable, significantly influencing buyer behavior. Drivers who have been tightening their belts will likely loosen their wallets this year.

4. Diesel cars won’t get cheaper in Eastern Europe

Diesel cars have long dominated the Western European market, but their reign is slowly ending. Buyers are increasingly turning to hybrids and petrol cars, while stricter emissions regulations push diesel vehicles out of the market. The decline in new diesel car production in Western Europe is affecting the supply of used diesels in Eastern Europe.

Diesel vehicles have been historically in high demand in Lithuania, Latvia, Poland, and other Eastern European countries because of their fuel efficiency, especially for long-distance driving. And while car trends in the continent are rapidly changing, some countries still value diesel cars over other engine types.

Due to limited supply, 1-to-5-year-old diesel cars will likely remain in high demand in Eastern Europe, slowing their depreciation significantly. This also means that buyers will face higher prices than they have expected.

5. A year of trials and tribulations for European car manufacturers

In 2025, the EU reduced the allowed CO₂ emissions level for cars from 116 grams per kilometer to 94 grams. If manufacturers fail to comply, they will face huge fines for each vehicle sold.

As the EU tightens emissions regulations, major manufacturers are struggling to survive. Even though EVs are less polluting, buyers are reluctant to abandon traditional vehicles.

Low EV sales and consumer distrust create challenges for the whole car market. Austria, Bulgaria, Poland, Romania, Slovakia, the Czech Republic, and Italy have already expressed concerns over stricter emissions rules, asking the EU to delay them, arguing that fines will harm both manufacturers and national economies.

As the EU tightens emissions regulations, major manufacturers are struggling to survive. Buyers are reluctant to switch to EVs and abandon traditional vehicles.

European car makers are forced to offer vehicles with weak demand. Besides, new cars are getting increasingly expensive, which naturally slows down sales and compromises their unsuccessful attempts to maintain the workforce. There should be a desperate development in the industry next year to steer away from the crisis that seems to be inevitable. Europe must act now or face the consequences of stringent regulations and increased competition from China.