CarGurus Q3 2025 Analysis: A Two-Track Market Influencing Growth

In the ever-evolving landscape of the automotive market, CarGurus has unveiled its Q3 2025 analysis, shedding light on a distinct two-track market that is shaping consumer behavior. As affordability pressures continue to influence purchasing decisions, the report highlights a growing divide between budget-conscious buyers opting for older used vehicles and affluent shoppers driving demand for new luxury models.

Strong Demand Amid Affordability Pressures

According to CarGurus, the overall demand for both new and used vehicles remains robust. Kevin Roberts, Director of Economic and Market Intelligence at CarGurus, notes that sales growth data reveals how shoppers are adapting to an evolving market. “Year-over-year sales trends uncover an interesting dynamic between two segments in particular: value-focused buyers targeting older, budget-friendly used cars and higher-income shoppers driving growth in new luxury models,” he explains. This duality in consumer behavior is crucial to monitor as it will likely dictate market trends in the coming months.

The Shift Toward Value in Used Car Sales

The analysis indicates that the majority of used retail sales growth in 2025 has been concentrated in vehicles priced under $30,000. This segment has accounted for approximately 73% of the year-over-year increase in used sales, with a notable focus on vehicles that are seven years or older. Buyers are increasingly willing to trade age and mileage for affordability, reflecting a significant shift in consumer priorities.

Regional Variations in Affordability

The affordability landscape varies significantly across regions. CarGurus data reveals that coastal states, particularly California, Florida, Texas, and Virginia, offer the most options for used vehicles priced under $20,000. In September, these states boasted at least 30% of their listings in this price range, suggesting that shoppers focused on affordability may need to broaden their search horizons to find suitable options.

Luxury Market Growth: A Different Story

While budget-conscious shoppers are gravitating toward older used vehicles, the luxury segment is experiencing a surge in demand. Nearly half of the year-over-year growth in new luxury vehicle sales has occurred in the $70,000 to $90,000 range, with additional strength in models priced at $120,000 and above. European brands are leading this upper-tier growth, although tariff exposure remains a critical factor to monitor. As of September, over 40% of luxury listings were 2026 models, with an average price approximately 6% higher than comparable 2025 models. While consumers have accepted these premiums thus far, any further tariff-related costs could challenge demand.

Electric Vehicles (EVs) and Hybrids: A Mixed Bag

The report also highlights a notable uptick in electric vehicle sales, driven by the impending expiration of federal tax credits. New EV sales surged by 53% quarter-over-quarter, while used EV sales rose by 16%. However, hybrids are also maintaining a strong trajectory in 2025, with new hybrid sales up about 50% year-over-year. The strongest demand for hybrids is found in the $30,000 to $40,000 range. With fewer EV launches anticipated and expectations for muted EV demand, hybrids may gain even greater momentum in the near future.

Conclusion: A Market to Watch

CarGurus’ Q3 2025 analysis paints a complex picture of the automotive market, characterized by a two-track system where budget-focused buyers and affluent shoppers coexist. As affordability pressures continue to shape consumer behavior, the balance between value-driven and premium segments will be critical to monitor in the months ahead. With ongoing shifts in demand, both used and luxury markets will require keen observation to understand how they will evolve in response to economic conditions and consumer preferences.

For deeper insights and a comprehensive overview of the findings, the full Q3 2025 Quarterly Review is available on the CarGurus website.