diff --git a/sdk_container/.repo/manifests/version.txt b/sdk_container/.repo/manifests/version.txt
index 986db6783c..e05b7763fc 100644
--- a/sdk_container/.repo/manifests/version.txt
+++ b/sdk_container/.repo/manifests/version.txt
@@ -1,4 +1,4 @@
-FLATCAR_VERSION=3537.0.0+nightly-20230308-2100
-FLATCAR_VERSION_ID=3537.0.0
-FLATCAR_BUILD_ID="nightly-20230308-2100"
-FLATCAR_SDK_VERSION=3537.0.0+nightly-20230308-2100
+FLATCAR_VERSION=3538.0.0+nightly-20230309-2100
+FLATCAR_VERSION_ID=3538.0.0
+FLATCAR_BUILD_ID="nightly-20230309-2100"
+FLATCAR_SDK_VERSION=3538.0.0+nightly-20230309-2100
diff --git a/sdk_container/src/third_party/coreos-overlay b/sdk_container/src/third_party/coreos-overlay
index 858db66ec5..689dfb4b11 160000
--- a/sdk_container/src/third_party/coreos-overlay
+++ b/sdk_container/src/third_party/coreos-overlay
@@ -1 +1 @@
-Subproject commit 858db66ec5660d1cfb0913a4a180a04dddd9f29a
+Subproject commit 689dfb4b11dc322a9112d296de5dc486153b238d