- Blog
- How Does the Automotive Supply Chain Impact Used Car Prices?
How does the automotive supply chain impact used car prices?
Discover how supply chain issues impact used car prices and what that means for your dealership. Learn key trends, market shifts, and smart strategies to stay ahead in 2025.
Ever since the pandemic, both automotive businesses and buyers have become aware of the car supply chain. In essence, it refers to the process of sourcing raw materials, manufacturing vehicles, and delivering them to dealerships.
However, you’ll often hear the term car supply chain issues—things like parts or energy shortages, factory shutdowns, and shipping delays. These problems mean fewer new cars are available, which drives up used car prices.
To help you stay informed, we’ll break down how supply chain issues affect the used market and what to expect next, so you can plan smarter for your dealership.
Why are supply chains crucial in the automotive industry?
Ideally, you don’t have to think about supply chains in your day-to-day operations. You only notice them when something goes wrong!
That’s because the automotive industry relies on a network of suppliers of materials and components for vehicle production.
When there’s an efficient supply chain, manufacturers get the parts they need, when they need them. That way, manufacturing, logistics, sales, and the aftermarket can go as planned.
Image source: ITR
But when something disrupts the process, it can cause delays, drive up costs, and make cars harder to get, and this is directly why supply chains are crucial for the industry.
How does the supply chain work in the automotive industry?
Now, let’s clarify how the supply chain moves cars from production to buyers.
The process starts with sourcing raw materials, manufacturing components, and assembling vehicles. Once the cars are made, they go through logistics and distribution. They reach dealerships, where they are sold to businesses or private buyers.
After that, vehicles enter the aftermarket, where they may be resold, repaired, or dismantled for parts—that’s where you enter the scene as a used car trader.
The key thing about supply chain issues is that there’s no isolated problem, as each step depends on the one before it. For example, a delay in parts manufacturing affects vehicle assembly, which then impacts distribution and sales.
So, when there was a shortage of semiconductors starting in 2020, it led to production delays and reduced availability of new cars. This shortage caused used car prices to rise by 9% to 12% in 2021.
How does it impact the used car market?
It was precisely the 2020 semiconductor shortage that affected the European automotive industry, significantly influencing the used car market. Any time that the supply chain issues arise, you can expect the following effects:
- Reduced new car production
- Increased demand for used cars
- Used car prices going up
- Long-term changes in the market
Let’s see how this applies to the semiconductor shortage. After supply disruptions, in 2021, the European Union’s new car registrations declined by 2.4%. With fewer new cars available, consumers turned to the used car market.
As a result of increased demand and limited supply, used car prices increased. And because of all this, the market saw lasting changes, the most important of which is that the demand for used cars stayed high.
What else is driving used car market trends in 2025?
Beyond supply chain issues, there are two additional factors shaping the used car market this year.
First, stricter environmental policies and CO2 restrictions may increase demand for newer, more efficient used vehicles.
For used car traders, this means that low-emission models and fuel-efficient cars will likely be more in demand, making them easier to sell and potentially more profitable.
Second, technological advancements (like improved battery health) also influence buyer preferences. Rapid tech changes can make older models less desirable, which can affect their resale value.
Which supply chain disruptions have recently shaped the car market?
The chip shortage isn’t the only factor that has recently affected the supply chain and car production.
Geopolitical conflicts in Eastern Europe have also played a big role. The 2022 Russia–EU gas dispute has led to reduced natural gas supplies to Europe, causing energy prices to rise, which then increased production costs for car manufacturers.
Additionally, rising energy costs have impacted the automotive industry, with higher manufacturing expenses and factory slowdowns still visible to this day.
For instance, Volkswagen has announced plans to close three factories in Germany. Ford has also closed a German Ford Focus plant because it shifted towards EVs.
Overall, these supply chain disruptions have made it more expensive to build cars, forced manufacturers to scale back production, and pushed them to rethink how they operate. The industry is still adjusting, and businesses are finding ways to keep up in the changing market.
Will the automotive supply chain improve in 2026?
Supply chain conditions have improved compared to the peak of the crisis, but some challenges still remain.
That’s why automakers are working to diversify their supplier networks and invest in better logistics. These changes should help stabilize the supply chain in the long run.
Looking at the predictions for the state of the car market in 2025, supply issues may still keep used car demand high, especially as new car production continues to recover. At the same time, an increasing supply of ex-lease and fleet vehicles could help stabilize prices.
Hopefully, by 2026, supply chain improvements will lead to more stable new car production and a better balance between supply and demand in the used car market. However, factors like production costs and changing consumer trends will still influence overall market conditions.
What can you do as a dealer in 2025?
Even with supply chain challenges, there are plenty of ways to stay ahead and keep your business running smoothly. Here’s how you can adapt:
- Expand your sourcing options: Keep an eye on different channels like ex-lease, fleet vehicles, and online auctions to maintain a steady inventory.
- Prioritize in-demand models: Fuel-efficient cars and low-emission vehicles are becoming more popular, so adjusting your stock accordingly can help sales.
- Use digital sales tools: More buyers are looking online, so optimizing your website, using social media, and listing vehicles on multiple platforms can boost visibility.
- Strengthen supplier relationships: Building strong connections with wholesalers and fleet operators can give you access to better deals and inventory.
The market may be changing, but by staying proactive and adjusting your approach, you can keep your dealership successful in 2025 and beyond.
