Mid-Year Insights: Vehicle Values, Tariffs & Demand
Our focus on the sustained and specific demand for older, high mileage and end-of-life vehicles is often an interesting combination of competing forces and messages. As the global economy continues to navigate complex forces, 2025 has brought both pockets of stability and emerging signs of stress to our segment. The post-pandemic “bounce back” has matured into a more nuanced recovery. Geopolitical tensions, evolving consumer behaviors, and persistent supply chain challenges are featuring in new and interesting ways. In this July 2025 edition of Wreckonomics™, we delve into the key macroeconomic indicators and specific trends impacting the American automotive markets, with our particular focus on low-value and end of life vehicles.
Wholesale Used Automobile Performance
On the wholesale automotive front, Q2 2025 marked an improvement from previous trends. The Manheim Used Vehicle Value Index increased to 208.5 in June 2025, representing a 6.3% year-over-year increase and a 1.6% rise above May levels. This marks the highest seasonal index since tariffs began influencing market volatility in April. This growth is likely attributed to a 25% tariff on new imported vehicles and parts, pushing up new car prices and consequently increasing demand for used vehicles. While non-adjusted prices saw a slight decrease of 1.1% from May, they remained 5.1% higher than last year. This data is largely consistent with recent observations from the Black Book Used Vehicle Retention Index (below) where year over year paints a rosier picture than month to month performance. Overall, the used-vehicle market has been relatively stable even ‘resilient’ as the broader automotive landscape experiences shifts in pricing and supply.
ARS Low Value Vehicle Index
If we focus on the lowest end of the wholesale marketplace, ARS maintains our own observational price index for vehicles at the lower end of the spectrum. We look at high mileage, high year, and end-of-life vehicles presented at wholesale and monitor the market performance. The data sample that drives our index is from many points of sale throughout the vehicle remarketing industry. Given the downward pressure from new car tariffs, you would expect the low value vehicle demand to follow as vehicle retention amplified and the increased demand for more affordable used vehicles would have correspondingly raised values throughout the segment. While values did improve they did not feature the steady gains of higher value segments.
Source: Advanced Remarketing Services*
Crushed Auto Bodies
Q2 continued a definite softening of scrap values. Our observations of scrap demand in June showed the lowest estimate average values since March of 2023. Protectionist tariffs on foreign steel was expected to drive domestic production and scrap demand but as yet we have not seen that trickle down to the auto scrap segments. This is despite current messaging that demand from construction and manufacturing is increasing. We’ll be watching these forces closely but we further expect the continued increase in new vehicle prices, and potentially longer retention of older vehicles due to these prices, could also influence the flow and value of end-of-life vehicles and effect pricing
Source: Advanced Remarketing Services
Back for More: Vehicle Retention
In this edition of Wreckonomics™ we’re looking more closely at one feature that will significantly influence values and availability of salvage and low value vehicles in the months to come and that is RETENTION. Vehicle retention became a noticeable factor during the COVID-19 Pandemic when transportation independence became an issue of public health. Prior to the pandemic the auto sector wasn’t paying much attention to ‘retention pressure.’ Vehicles in Operation (VIO) was at an all time high and ownership behaviors that had been largely unchanged for a generation were beginning to evolve – turning away from traditional ownership to favor new and different models like fractional ownership, car sharing and ride sharing programs.
However, in the early months of the pandemic, demand for independent transportation created a huge increase in vehicle sales that had been previously lagging. This resulted in an explosion of vehicle values that, for the most part, continues today (see index values above). American drivers are simply holding on to their cars longer rather than competing in an environment of rising purchase costs.
In addition to vehicle prices, recent tariffs are directly contributing to a significant rise in parts and repair costs, and as consumers hold onto their vehicles longer, these aging cars inevitably require more frequent and extensive maintenance and repairs. This surge in demand for parts, particularly for older models, is exacerbating existing supply chain challenges, leading to higher prices. Tariffs imposed on imported auto parts, which took effect in May 2025, are further compounding this issue, as approximately 50% of automotive repair parts are imported, with significant portions coming from Mexico, Canada, and China. This means a direct cost increase for repair shops, which are largely passing these expenses onto consumers.
Beyond the rising cost of physical components, the ongoing shortage of qualified automotive technicians means increased labor rates are being reflected in repair bills. The net effect is that car owners are finding their maintenance and repair expenses notably higher, a trend that is expected to continue as their vehicle fleet ages and remains in service for extended periods. In this same window, vehicle insurance rates and borrowing costs have also skyrocketed.
If we look at all the cost of ownership it paints a pretty grim picture for consumers.
These financial burdens can make both new and even used car purchases increasingly unaffordable, directly contributing to the trend of extended vehicle retention as drivers weigh the prohibitive cost of financing a replacement against the growing expense of maintaining their current, aging vehicle.
Auto Salvage Markets: Demand Outpacing Supply
The prevailing repair and retention trends have continued to shift demand for parts. For our auto recycling partners, tariffs on auto part imports will fuel demand for used parts. However, the market is now experiencing strong competition for raw material (total loss vehicles), driving up acquisition prices for recyclers. This increased competition for supply is a persistent challenge, impacting profitability and requiring adaptive strategies from auto recyclers.
Long-Term Impacts: A Favorable Horizon
While short-term supply issues may fluctuate, the long-term outlook for low-value vehicles remains positive due to one fundamental reason: frequency. The sheer number of high-year, high-mileage, and higher-polluting vehicles in the U.S. fleet is greater than ever and is projected to continue growing for several years.
For ARS, this means our focus and future remain firm. The accelerated digital transformation, and AI applications in particular, positions platforms like our own mBid® to succeed in uncertain times. mBid continues to be the most equitable marketplace for ELV and salvage assets, connecting clients with the lowest fees between buyer and seller in the entire remarketing industry. Unlike many competitors who raised buyer fees during periods of increased demand, our prices have remained steady. We continue to advocate against increased burdens on buyers and work in partnership with leading industry groups to deliver alternative sources of volume through fair exchange.
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About ARS
Advanced Remarketing Services (ARS) works closely with our clients to identify low value vehicles and end of life vehicles (ELV) units in their asset pool. Our focus on older high-mileage and negative equity units helps to reduce fees and deliver the highest possible returns..
If you have a pool of low value vehicles in your portfolio or if you’re looking at ways to maximize recoveries, please reach out to us at ARS. Send us an email: success@arscars.com
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