Why Predictive AI Is Crucial for Used Car Inventory in 2025

Recent reports on the auto industry indicate that a limited supply of pre-owned cars will keep prices high for buyers in 2025 — a trend that likely won't surprise Used Vehicle Managers as we approach the end of the year. 

The number of used vehicles returning through trade-ins and the wholesale market is down, a lingering effect of the inventory shortages caused by supply chain disruptions during the height of the COVID-19 pandemic a few years ago. 

Adding to the challenge, dealers report that a few big retailers are proving especially adept at finding and buying up a lot of pre-owned inventory before these vehicles even reach auction. With prices high and wholesale inventories low, it's essential for dealers to resist the temptation to buy questionable vehicles in order to maintain their used vehicle inventories. 

Auto dealer inventory management software with predictive artificial intelligence capabilities can help maintain competitiveness in these challenging market conditions. Predictive analytics can help identify and confirm the best vehicles to acquire for a specific market and help pre-owned buyers and managers avoid overpaying for vehicles. 

Predictive AI Overcomes the Challenges of Lagging Indicators

While markets rarely move on a dime, they do evolve over time, sometimes faster than expected, due to fuel shocks, economic disruptions and other unexpected events. Successful used car buyers often have years, if not decades, of experience acquiring the most desirable vehicles at wholesale or through trade-ins, but their insights are often anecdotal or limited to recent auction or sales data. In short, it tends to be backward-looking.

Predictive AI embedded into dealership inventory management software, such as the CDK Vehicle Inventory Suite, not only instantly aggregates recent sales trends but can accurately predict or forecast future pricing over the next 30 to 60 days. 

This software can help confirm dealership wholesale buyers’ intuition and anecdotal data. With lower inventories, getting purchasing decisions right is critical. Experienced wholesale buyers know profitability isn't just determined when a vehicle is sold as it's just as much about what and when you buy. 

What’s Next for Used Cars

Today, small, medium and large dealers are intensely focused on acquisition. Many are even creating their own “buy centers” with employees devoted to filling their used car lots. This helps them compete with corporate used car operators and it’s also betting on a future that’s more reliant on used than currently. 

Two factors will drive continued used car growth: 

• New car prices are going to continue to rise. Price increases for the 2026 model year range from 2% to 7% for many automakers. And the Yale BudgetLab recently released a study predicting new car prices to rise on average 13% in the next three years. 
• Automakers are canceling many affordable models entirely, leaving the entry into new car ownership higher than ever. With the new car market increasingly expensive, shoppers will naturally look to the used market, even if its values are also at historic highs. 

The positive point to make is that the industry is coming out of the shadow of the post-pandemic supply chain era and the low output of sales. That should mean next year we’ll see more two- to three-year-old cars coming to the used market whether off lease or in trade. Used sales will have to adapt pricing due to that influx as it comes. 

Simply put, the used market is set to grow and that growth could take dealers by surprise if they’re not using modern inventory technology.