For anyone who's tried to buy a used car in the past four years, the experience has likely ranged from frustrating to financially painful. Prices soared, selection shrank, and dealers held all the leverage. But that dynamic is about to change.

Industry analysts are increasingly calling 2026 "the year of the used car," as a confluence of factors—most notably a significant increase in lease returns—promises to reshape the market in buyers' favor.

Where Did All the Used Cars Go?

Understanding why relief is coming requires understanding what created the shortage in the first place.

During 2021 and 2022, a global semiconductor shortage forced automakers to slash production dramatically. By most estimates, manufacturers built approximately 8 million fewer vehicles than they would have under normal circumstances. Those cars simply don't exist—they'll never enter the used market.

Compounding the problem, leasing activity collapsed during the same period. With new car prices surging and inventory scarce, fewer consumers chose to lease, and automakers had less incentive to subsidize lease deals. That drop in leasing in 2022 meant far fewer vehicles returning to the used market three years later—which is exactly where we are now in late 2025.

The Lease Return Wave Is Coming

Here's the good news: leasing began recovering in 2023, and those vehicles are set to return to the market throughout 2026. This influx of two- and three-year-old, relatively low-mileage vehicles will significantly improve selection—particularly in the near-new segment that has been most scarce.

According to Edmunds analysts, this increase in off-lease inventory represents the most meaningful supply improvement the used market has seen since before the pandemic. For buyers who've been waiting for the right car at the right price, patience is about to pay off.

What About Prices?

Used car prices have already been gradually declining. As of November 2025, the average buyer paid $25,730 for a used vehicle—down $217 from the previous month. Wholesale prices, which lead retail by several weeks, have been falling for 25 consecutive weeks according to Black Book data.

The increased supply from lease returns should accelerate this trend in 2026. While no one expects prices to return to 2019 levels—broader inflation and permanently higher new car prices have reset the baseline—buyers should have meaningfully more negotiating leverage than they've had in years.

The Interest Rate Factor

The Federal Reserve's three rate cuts in late 2025 provide an additional tailwind. Auto loan rates typically lag Fed actions by a few months, so the full benefit of these cuts may not materialize until early 2026—right as increased inventory hits dealer lots.

For buyers financing their purchase, this timing could be ideal. Better selection, softer prices, and improving financing terms is a combination the market hasn't offered since before the pandemic.

The EV Wild Card

One segment facing particular uncertainty is electric vehicles. With federal tax credits for EV purchases expiring at the end of 2025, Edmunds forecasts EV market share will actually decline to about 6% in 2026 from roughly 7.5% in 2025.

This could create interesting dynamics in the used EV market. Vehicles that originally sold with significant tax credits may see steeper depreciation as buyers without access to credits prove less willing to pay premium prices. For used EV shoppers comfortable with the technology, this could represent opportunity.

The K-Shaped Market Remains

One trend that won't change: the automotive market continues to stratify along income lines. Higher-income buyers are driving new vehicle sales, while middle- and lower-income consumers increasingly find themselves priced out of both new and near-new vehicles.

The average new car transaction price exceeded $50,000 for the first time in 2025. Even with improving conditions in the used market, many households will continue stretching budgets or considering older, higher-mileage vehicles than they would have just five years ago.

Strategic Advice for 2026 Buyers

If you're in the market for a used vehicle next year, consider these strategies:

  • Timing matters: Late Q1 and Q2 2026 may offer the sweet spot, as lease returns flow into inventory and interest rate cuts fully filter through to consumer loans.
  • Consider certified pre-owned: The increase in lease returns means more manufacturer-certified vehicles with warranty coverage—often a better value than new cars with similar features.
  • Do your homework on EVs: The loss of tax credits may create used EV bargains, but battery degradation and charging infrastructure remain important considerations.
  • Be ready to act: While overall conditions will improve, specific popular models and configurations may still move quickly. Have financing pre-approved so you can move when the right vehicle appears.

After years of frustration, the used car market is finally shifting in buyers' favor. For those who've been waiting, 2026 may be the year to finally get behind the wheel of the vehicle you actually want—at a price you can actually afford.