A lot of the rising price of used cars is due to the rising price of new cars, which have become more complex and more loaded with features. The percentage of cars with leather interiors, power mirrors, aluminum rims, and other luxury items has increased, while the number of cars you can still buy with crank windows or bench seats have decreased. Then there is the now-ubiquitous infotainment and networking equipment that has replaced the old AM/FM CD player. An economist would call this rising quality, while I would call it lifestyle creep on a nationwide scale.
The shift in demand towards luxury pickups/SUVs and away from basic economy cars would, in itself, raise the average when these vehicles are resold. That is, a luxury truck/SUV that cost $60k new will cost the next person $30k in a few years when it's lost half it's value. A stripped-down Nissan Versa that was $16k new will cost $8k in the same timeframe. Hybrid drivetrains, while a good thing that adds utility to a vehicle, also contribute to higher average used car prices.
All this is an effect of rising income inequality, or if you prefer the hollowing out of the middle class. If the demographic profile of people who can afford to buy new cars shifts away from the lower-to-mid middle class, and toward the upper middle class and upper class, then the rest of us will have to eventually inherit used cars originally bought by people whose income is much higher than ours, rather than perhaps slightly larger than us.
Similarly, the car manufacturers will have to respond to the demand for luxury by making more luxury cars and fewer basic cars. Taken to extremes, most cars on the market in a world of have and have-nots be loaded with features, oversized, and with a cost of ownership (i.e. energy, insurance, taxes, depreciation, and maintenance) unaffordable to blue-collar families. Imagine if your only automotive choice within your budget was 20-year old Mercedes Benzes. You'd have to buy worn-out luxury instead of reliability, efficiency, or durability.
The opponent process to this escalating trend of car fanciness is that when there is a surplus of supply for 3-10 year old luxury vehicles that exceeds demand, then such vehicles would have to sell for lower prices. Thus, the upper middle class buyers of such things would get hit with bigger depreciation losses as they try to sell their used vehicles to financially stretched lower middle class buyers. This is why a Civic depreciates much less than a Range Rover. Five-digit depreciation losses discourage people from buying the loaded Cadillac Escalade in the first place, and encourages them to either buy used themselves or reduce their levels of luxury, e.g. the new Rav4 with cloth seats instead of the new Escalade.
The current imbalance between what the wealthy can afford to buy new and what the working classes can afford to buy used is also apparent in housing. More large houses than small houses are being built because only higher-income people are buying new homes. Thus, the young family with a working-class income who could live an efficient lifestyle in a 1k square foot house does not have the choice to buy that in many cities with tracts full of McMansions and 3-car merchandise storage units. So the young family stretches to buy a house twice as big as they need, and pick up two too-large used luxury vehicles because that's all that is for sale.
In this way, income inequality perpetuates itself. The family described above will be in a permanent state of financial struggle due to being house-poor and car-poor. And yet they can look around and see their lifestyle is completely normal.
