Used vehicle prices climbed sharply in February, driven primarily by luxury models, according to the latest Manheim Used Vehicle Value Index. The index, which adjusts for mix, mileage, and seasonality, showed a 4% increase compared with February 2025. On a non-adjusted wholesale basis, prices rose 4.2% year-over-year, following a 2.4% increase in January 2026.
Jeremy Robb, chief economist for Cox Automotive, Manheim’s parent company, cautioned that recent geopolitical developments could introduce economic risks. “A riskier economy could put a damper on consumer appetite in the short run, as people digest the news in the Middle East,” he noted in a March 6 report.
Despite potential headwinds, elevated auction prices are encouraging dealers to focus on self-sourcing used vehicles—acquiring cars directly from trade-ins, lease returns, service lane purchases, and off-the-street deals rather than paying auction premiums.
AutoNation Inc., for instance, reported that more than 90% of its used-vehicle inventory was self-sourced in 2025. CEO Michael Manley highlighted that this strategy helps offset rising costs in other areas, including reduced OEM incentives on new cars. “We’ve been able to offset some of that cost pressure through mix changes as well, in terms of how we source vehicles,” he said during a February earnings call.
Sonic Automotive is taking a similar approach. Chairman and CEO David Smith emphasized that increasing non-auction inventory remains a top priority for 2026 to support affordability, retail sales, and gross profit per unit (GPU). “Going forward, we remain focused on increasing our mix of non-auction sourced inventory to benefit consumer affordability, retail sales volume, and GPU,” he said during a February 18 conference call.
The February Manheim Index highlighted particularly strong growth in the luxury segment, which rose 4.1% year-over-year. Used electric vehicles (EVs) also saw gains, with prices up 1.8% versus February 2025. Analysts suggest this trend reflects softer demand for new luxury cars and EVs, which are facing affordability challenges.
New EV buyers, for example, no longer benefit from the $7,500 federal tax credit for vehicles purchased after September 30, 2025. Some luxury imports are also seeing price increases due to tariffs, compounding cost pressures.
Recent earnings reports confirm the slowdown in new luxury sales. Penske Automotive Group reported U.S. sales of its German luxury brands fell 20% in the fourth quarter compared with the prior year, while Lithia Motors said luxury sales were down 12.7% for the same period.
On the upside, a surge in lease returns—reflecting a rebound in leasing activity three years ago—will provide dealerships with an additional source of desirable used vehicles. Jeff Dyke, president of Sonic Automotive, said the company plans to capitalize on this trend. “We’re planning to leverage the heck out of that, as lease returns begin to come back,” he noted.
As high auction prices continue to push dealers toward self-sourcing, the market for luxury and electric used vehicles is likely to remain strong in the months ahead.
