Recent reports indicate that while the general cost of living in Canada – including housing and groceries – has seen a significant climb, the automotive market is showing signs of stabilization, especially in the used car sector. Notably, AutoTrader, Canada’s leading automotive marketplace, has shared promising trends in their latest price index report for the second quarter.
For instance, the average price of used cars has reduced by eight percent from June 2023 to June 2024, positioning the typical price at $36,342. On the other hand, new car prices recorded a marginal increase of 0.8 percent over the same period, with the average price reaching $66,807.
This shift is largely attributed to a decrease in the demand for used vehicles, which began in the latter part of last year. Coupled with a boost in supply from robust new car sales and higher trade-in rates, the pricing pressure on used cars has decreased. Furthermore, enhanced production and availability have redirected some consumer interest back towards new vehicles.
The market has experienced a noteworthy surge in the availability of both new and used vehicles – a 70 percent increase for new cars and 28 percent for used cars compared to last year. This increased stock, along with reduced interest rates, has made car ownership more accessible, with more buyer incentives emerging, including competitive lending rates.
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Interestingly, luxury vehicles have also seen a price dip, approximately 10 percent between June 2023 and June 2024, though prices overall remain above pre-pandemic levels. AutoTrader does not anticipate a return to those lower price points soon.
Despite the general lowering of prices, average monthly payments for used cars are higher compared to pre-COVID rates, currently averaging $624— a 34 percent rise. This increase can be partly alleviated by lower interest rates, which the Bank of Canada seems set to implement further. The average loan term has also stretched to 71 months as of June 2024, up from 68 months in June 2019.
While the consumer focus appears to be shifting slightly back towards new vehicles, it’s worth noting that cars are generally pricier than SUVs, trucks, or minivans. This price difference is fueled by a consumer trend towards smaller, typically less expensive cars—a movement contrasted by manufacturers’ trend towards fewer small cars and an increasing number of costlier electric vehicles.
Regarding vehicle popularity, the new vehicle market is currently dominated by models such as the Ford F-150, Porsche 911, Toyota RAV-4, Ford Mustang, and Honda Civic. In the used market, the Honda CRV, RAM 1500, Ford Escape, Toyota Corolla, and Hyundai Elantra lead in demand.
While returning to 2019 prices may not be feasible in the current market, the present environment does give reason for consumers to be hopeful that prices will, at least, remain stable moving forward.
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The findings and trends outlined in this coverage are based on the information provided by AutoTrader’s recent price index report and reflect developments in the Canadian automotive market as of mid-2024.
Words by: Craig Clowes
Credits
www.insauga.com
