The overwhelming narrative about the car market seems to be that no one will ever be able to afford a car again unless they’re heirs to the Hy-Vee supermarket fortune. That’s not quite true. Cars are expensive, and the cost of financing cars has gone up with interest rates, but the majority of buyers who trade in cars are sitting on a bit of a superpower.
A rising tide lifts all prices, and the value of trade-ins remains way higher than anyone would have guessed. And, unlike the rest of the market, the best-positioned individuals are normal-car people.
While The Morning Dump will be attacking one bit of conventional wisdom, I can’t help but tap the Decade of the Hybrid sign once more with the news that hybrids are outselling EVs in our most EV-happy state. It’s such a rush that even Audi, eventually, is getting in on the hybrid game.
That doesn’t mean all is doom and gloom in the EV space, either, as Rivian’s move into a lower price tier seems to be paying divid … seems to be aiding the company’s financial position.
The Average Value Of A Trade-In Is $13,330, And That’s Because Of Mainstream Cars
Yesterday, I wrote about how the wealthiest are driving the car market, and asked how people felt about the economy. The general sense seems to be that people are doing okay, but that the increase in the cost of everything hasn’t been matched for everyone in an increase in earnings or wealth. There was also a lot of discussion that reflects the K-shaped economy, where stock market highs don’t seem to benefit everyone.
It’s a common point of reference here that, during the semiconductor shortage, prices of both new and used cars shot up. What most buyers have realized is that, while those new car prices have stabilized, they haven’t exactly come down as inventory has increased. There are various reasons for this, including the introduction of tariffs and costs associated with the EV headfake, but the overall lesson is that prices that go up generally don’t come back down so easily.
While affordability is a serious issue, I do think that the popularity of higher-trim models and large three-row crossovers like the Toyota Grand Highlander has skewed the average transaction price, giving a somewhat misleading view of the market (this is why I prefer to look at The Keating Line as a price reference).
Approximately half of all new car purchases involve a trade-in, and this is where there’s some good news for car buyers. While new car prices have mostly stabilized, the value of trade-ins has continued to increase. According to this Edmunds report, buyers trading in vehicles have a record $13,300 in positive equity.
Because of the pandemic, wild values for used cars led to 83.6% of all trade-ins in Q1 2022 having positive equity. That’s no longer the case, though the market is still above historical norms with 69% of trade-ins above water. The power that buyers with trade-ins have is that the values have never retreated. Why? Edmunds explains:
A big part of the explanation is the timeframe when vehicles were bought — during the pandemic, when inventory was so tight that paying sticker price or above was a reality for many. Those cars depreciated, but used-vehicle demand stayed strong enough that values didn’t fall as far or as fast as they normally would have. Buyers who rode that out are now sitting on more equity than the math would have suggested a few years ago.
Even better, it’s not the high-end models that are driving this value. Luxury cars are still depreciating at mostly normal rates, whereas the most mainstream vehicles are the ones holding high values:
The most frequent and consistent winners in today’s market are owners trading in “normal” vehicles around 7 years old. Drivers who bought mass-market models around 2019 — and signed up for conventional 60-or-72-month financing — have largely cleared the depreciation curve. Because secondary-market values for reliable used vehicles remain historically elevated, these average owners are routinely walking onto dealer lots with about $13,000 in positive equity.
The list of the 20 most commonly traded-in vehicles with positive equity is basically a list of the most popular cars, albeit slightly shuffled (the CR-V tops the F-150 and Silverado 1500). If you’re trading in a roughly 2019 CR-V, you can expect to get $10,545.
This tracks with my experience. While I didn’t do a conventional trade-in (I bought my car from Galpin Honda in LA and shipped it across the country), I was surprised that my 2016 Forester was worth more than $10,000 when I sold it to a dealer back in 2024. Literally every time I go to get my CR-V serviced, they ask if I want to sell them back the car, and because I put the value of my Subaru towards a down payment, I already have positive equity.
Obviously, if you don’t have anything to trade-in, this doesn’t apply to you, but for a large chunk of buyers trading in normal cars and buying normal cars, there’s a real opportunity to reduce the amount that has to be financed.
More California Buyers Are Opting For Hybrids Than EVs
Guess what? People like hybrids. You’ll be shocked to discover this is happening if you’re a regular reader of TMD. Just kidding. I write about it all the time. Maybe too much!
I’m not stopping anytime soon, and a report from the California New Car Dealers Association shows that, for the first half of 2026, hybrids (excluding PHEVs) outsold EVs by a large margin. The market share YTD through June is still primarily gasoline (57.6%), with hybrids (22.1%) and BEVs (15.9%) in second and third place.
“Californians are buying the vehicles that fit their budgets and the way they drive, and right now that means a lot of hybrids,” said Jessie Dosanjh, Owner of Stevens Creek Chevrolet and CNCDA Chairman.
“Every hybrid registered in this state came through a franchised dealership. When a customer needs to compare options, work out financing, and know the vehicle will be serviced for the next ten years, they come to their local dealer. We support any rebates or state incentives that help buyers and move the market forward,” said Dosanjh.
This doesn’t mean EVs are failing. Some of this is just the impact of having so many EV sales pulled forward in Q2 and Q3 by the expiration of the IRA tax credit. California also has a new program focused on first-time EV buyers, and that might help increase sales in the second half of the year. The Model Y also remains the best-selling vehicle in California, followed by the Camry and CR-V Hybrid.
Audi Will Do Hybrids Again, Sort Of, Eventually
It’s hard to remember, but Audi has sold a few plug-in hybrids over the years. Then the brand went full-in on EVs. Now it’s retreating, and Audi of America President Vito Paladino told Automotive News that hybrids are going to happen again:
“We will have hybrids in our lineup,” Paladino told Automotive News at the introduction of the new Q9 crossover here. “We’re looking at which segments, which models do we need to further extend the offering.”
Paladino didn’t specify which models Audi is targeting or which form of hybrid technology ― PHEVs or full hybrids ― are planned for the U.S.
That’s … something.
Rivian Earnings Were Better Than Forecast
David wrote the ultimate Rivian R2 review and came away mostly impressed. The introduction of the model appears to be paying off for Rivian, which saw better-than-expected returns in Q2.
Rivian Automotive Inc. reported better-than-expected earnings as it began deliveries of a new midsize sport-utility vehicle, a positive sign while the company contends with a weakened market for electric vehicles in the US.
The adjusted loss before interest, taxes, depreciation and amortization was $379 million in the second quarter, down from a $667 million loss a year ago, Rivian said Thursday in a statement. The latest figure was smaller than the $548 million deficit anticipated on average in estimates compiled by Bloomberg. Its revenue also topped estimates.
There’s still a lot of work to be done, but the company told Bloomberg TV that the conversion from deposits to purchases remains high.
What I’m Listening To While Writing TMD
Glen Hansard passed away this week after a crash on a motorbike. I think most of us know him (and his creative partner Marketa Irglova) from this song “Falling Slowly” from the surprise hit romance Once.
The Big Question
Have you ever traded in a car? How did it go?
Top graphic images: Honda; Edmunds
In 2021, as used car prices were skyrocketing, and I was offered my current Volvo from a family member for a great price (it had been sitting in their garage for a couple of years), I was getting ads for that KBB trade-in program. I got an offer for my high-mile, ‘00s Acura that sounded too good to be true from a local Toyota dealer, so I figured I’d take it to be checked out. Of course, the salesman took it for a test drive and said it had a “transmission whine“, so my actual offer was barely $1000. Carmax gave me a much better offer of over $3000, and I sold the Acura to them. Yes, I could’ve gotten more from a private sale, but I didn’t have that kind of time at that time in my life. The Volvo itself is now 15 years old and not really the type of car that Carvana/Carmax can easily flip, so I don’t think about its trade-in value.
Not exactly a trade-in, but anyway: In January of 2026 I used the Carvana website to get an offer on my 2013 500 Abarth. The number was laughable: only $1600. I sold it in May at 99,500 miles on Cars & Bids for $6100.
I would have thought that people being so much in the black at swap over time, means ‘for the same low monthly payment’ or ‘only $50pw more’ they can purchase a more expensive car, and that’s what is at least holding new car pricing up a fair way?
The dealer acted like they were doing me a favor when they offered me $2k for my 08 Avenger R/T for trade to buy my 15 Impreza Sport.
I was pretty sour about it since I was expecting closer to $4k based on KBB and Edmunds estimated values, but I’ve never been an expert at negotiating with dealers.
I almost traded my Impreza for a used Bolt before the used EV credit went away, but walked when the dealer lowballed me by $1500 over what I’d been told by Edmunds and Subaru.
I remember small cars being around 50K Francs long ago (or about 7K Euros)…
If we take inflation ito account I’d love to see small city cars in the 10 to 12K Euros range…
They don’t need line assist, emergency braking, cruise control (they are city cars after all), or worse the adaptive cruise control that slow you down when are overtaking a slower vehicle on the motorw They also don’t need most of the electronics…
Really the only electronics that should be installed in a cas is the radio/GPS/Entertainment system. Everything else should me as it has been for decades mechanically controlled.
Gives me a Citroën AX, a First Gen Twingo, a Peugeot 205, a Vauxhall/Opel Astra (First Gen), a First Gen VW Polo, where the only electronic in the car is the radio/tape/cd. Or something similar. ( I’d love how a 650Kg (dry) AX would perform in mpg (or liter/100Km) with a modern engine (carburator, not computer controlled)… I could do 3.6 liter/100Km on mine at 110Km/h on motorway (with the small 650 cubic meter engine)
Since that AX I’ve lived on car rental
(overall it’s cheaper to go that way than own a car for my use cases.
My latest one was a brand new (5Km on the odometer) Moka.. It had the *brand new car smell* )
I’ve traded a vehicle in twice, and I’d say neither is representative of the average experience. The first time my dad was the salesman and the finance guy was a friend of his, and knew someone who was looking for a Blazer just like mine, so I got a bit extra because he knew he had a guaranteed sale.
The second time was during the pandemic and I managed $6k for a car with 131k miles and needed the TCM replaced, because another salesman wanted to pick it up as a first car for their kid and was perfectly happy to wait on the part to arrive. So once again I got a bit extra because they had a guaranteed sale.
I’ve traded I vehicle and sold one to Caravan. All the rest have been sold private party. The trade worked out OK. We traded because I had to get out of the truck and the gas bill that 15 mpg racks up driving 100 miles a day. I also didn’t have the credit to get a new loan while keeling the old loan. It worked out OK and we bought a 50 mpg Jetta wagon TDI.
The Carvana sale was a 2014 Dieselgate Jetta Sportwagen TDI sold for $4,000 more than I paid 3 years earlier.
I have never traded in a car. I have always sold privately, although in very different eras and with different types of buyers . . . classified ads, Craigslist, to strangers, a family friend, and a relative. Only one person requested a pre-purchase inspection. One buyer, who had recently just moved back to the U.S. after an expat stint, had some sort of hiccup getting the money so he had to hit a bunch of ATMs and handed me over $15K in a paper bag. At least that’s the story he told me.
I generally do well on trade ins because I’m never upside down. Last December I bought a 2023 Challenger GT from CarMax. After six months I realized I made a poor choice. Good car, just wasn’t good for me. I sold it back to CarMax for exactly what I paid for it. Blind, silly, luck.
Not a trade in, but bought a base, manual JLU Wrangler in 2019. I drove it sparingly for two years, then sold it to Carmax for a profit in 2021 even accounting for insurance and gas. I only netted a couple hundred bucks out of it all. This is the story of how for a couple years I was paid to drive a Jeep…