[2025 Latest] Thorough Explanation of Future Used Car Market Trends - The Truth About Price Drops and Structural Changes

The 2025 used car market continues its growth trend from the previous year, while showing significant fluctuations due to seasonal factors. Used car registrations in April 2025 reached 544,174 units, recording a slight increase of 100.7% compared to the same month last year. This marks the first year-over-year increase in three months, demonstrating the market's underlying stability.

Meanwhile, new car registrations showed a significant increase of 110.5% year-over-year at 342,878 units, which is indirectly affecting the used car market. The increase in new car registrations leads to increased used car supply through trade-ins and purchases, ultimately becoming a factor in declining used car prices.

The used car market has clear seasonality, with demand concentrated at fiscal and semi-annual closings in March and September. March 2025 recorded 776,885 units, the highest level of the year, followed by a significant decline in April as is typical each year. These seasonal variations are influenced by corporate demand during settlement periods and individual demand associated with job transfers and school enrollment.

In the 2025 used car auction market, price declines have become evident. The average contract price at USS Auctions peaked at 1.26 million yen in February and has continuously declined, dropping to 1.184 million yen by May.

This price decline is particularly pronounced for vehicles aged 3-5 years, with prices dropping to the same level as 2023. For vehicles aged 6-10 years, price ranges below 2023 levels are becoming increasingly common.

Parallel to the price decline, contract rates are also showing a downward trend. They have gradually decreased from 66.0% in February 2025 to 61.9% in May, reflecting buyers' cautious attitude. Nevertheless, they remain at high levels, suggesting that vehicle shortages in the overall used car market are gradually being resolved.

Particularly noteworthy is the sharp decline in prices for luxury minivans such as the Alphard and Vellfire. These models maintained high prices supported by overseas export demand, but prices have dropped sharply due to vehicle oversupply in Malaysia, a major export destination.

Japanese used car exports exceeded 950,000 units in 2024, recording a 5.9% increase from the previous year. In the ranking of export destinations, Russia maintained the top position with 199,085 units, while the UAE came in second with 198,944 units, a narrow margin.

Regarding exports to Russia, while there has been a year-over-year decline in the same month due to the impact of ruble depreciation from economic sanctions, recovery is expected within a few months based on past experience. In fact, as of mid-April 2025, figures exceeded pre-sanction levels, demonstrating the strong recovery power of the market.

On the other hand, exports centered on Asian and African countries are showing favorable movement due to declining container shipping costs. However, increased transportation costs due to shipping disruptions at the Suez Canal and Panama Canal remain a concern.

Price disparities by export destination are also significant. Exports to Malaysia average 4.31 million yen per unit, while exports to Chile average 350,000 yen and UAE exports average 440,000 yen, showing large differences. These are influenced by each country's economic level, import regulations, and the presence of re-exports.

The resumption of Toyota's new orders in January 2025 has had a significant impact on the used car market. The normalization of production, which had been temporarily suspended due to certification fraud issues, has increased new car supply and promoted vehicle replacements, leading to increased used car supply.

The semiconductor shortage that had constrained new car production for an extended period is also gradually being resolved. This has led to shortened delivery times for new cars, becoming a factor in reduced alternative demand for used cars.

The adoption of electric vehicles (EVs) is also bringing changes to the used car market. As consumers who purchased EVs as new cars trade them in, the circulation of used EVs is gradually increasing.

However, used EV prices are declining sharply, with used EV prices falling below gasoline vehicles in America. Similar trends are possible in Japan, and battery performance and charging infrastructure development are expected to significantly affect prices.

Due to carbon neutrality policies, new gasoline vehicle sales are expected to be regulated around 2035. However, since hybrid vehicles are positioned as electric vehicles, demand in the used car market is expected to be maintained for the time being.

The global online automotive purchase market was valued at $256 billion in 2021 and is expected to reach $722 billion by 2030. Growing at an annual average growth rate of 12.21%, digitalization is rapidly advancing in Japan's used car market as well.

Resistance to purchasing used cars online is decreasing year by year, with 56% of respondents indicating they have "no resistance to purchasing through online shopping." Particularly due to the COVID-19 pandemic's influence increasing demand for contactless sales, this trend is expected to continue.

According to the latest survey, 19.7% of consumers desire a used car purchase budget of 900,000 to 1 million yen, the highest percentage. This indicates that price consciousness among consumers is strengthening due to rising prices and future concerns.

By body type, light vehicles maintain the top position at 28.8%, but have lost 2.6 percentage points compared to the previous month. Compact/hatchback vehicles rank third at 15.2%, up 0.8 percentage points, showing a strengthening trend toward practicality.

Among women aged 60 and over, 29.8% purchase vehicles without comparison shopping, showing a tendency to value relationships with dealerships. In contrast, women under 30 have the highest percentage at 26.2% who compare three or more models, showing a tendency toward careful consideration.

A paradigm shift from vehicle ownership to usage is progressing, with car subscription services attracting attention. Services available from 29,800 yen per month are meeting the needs of consumers who want to minimize initial costs.

Used car subscriptions enable more reasonable pricing than new car leases, with warranty coverage and mileage limits being key selection points. Teigaku Karumo-kun's used car lease includes a 1-year breakdown warranty and 2-year vehicle inspection for all cars, earning support from consumers who value peace of mind.

In the second half of 2025, adjustment of used car prices is expected to continue due to stabilization of new car supply. Particularly for models with premium pricing, a return to normal price levels is anticipated.

While discussions about the value of used gasoline vehicles are becoming active due to carbon neutrality policies, current vehicles are expected to remain usable until the mid-2030s. Rather, some models may increase in value due to scarcity.

Structural changes in the used car market are expected to accelerate, including further expansion of online sales, advanced AI-powered pricing algorithms, and the spread of subscription models.

The 2025 used car market is entering a price decline phase while maintaining stable market size. Multiple structural changes are occurring simultaneously, including recovery of new car supply, changes in overseas export environment, and advancement of digitalization, showing movements different from traditional market cycles.

For consumers, while the price decline expands purchasing opportunities, the selection of vehicle types and purchase timing becomes more important. Particularly in the 900,000-1 million yen budget segment, options have become abundant, with increasing demand for light vehicles and compact cars.

The future used car market is expected to enter a new stage through multifaceted changes including the shift from ownership to usage, utilization of digital technology, and transition to environmentally friendly vehicles. It will be important for market participants to appropriately understand these changes and take strategic approaches.