As Canadians gear up for 2024, they should not expect any drop in vehicle costs back to pre-pandemic levels any time soon. Experts in the automotive sector suggest that pricing dynamics from 2023 might continue into the new year.
During the COVID-19 pandemic, shortages of critical components such as semiconductors and automotive computer chips drastically affected supply chains, leading to elevated prices for both new and used vehicles. Baris Akyurek, vice president of insights and intelligence at Autotrader.ca, emphasized this in a discussion with Global News. He noted the direct impact reduced new car sales had on the used car market, pushing prices upward.
However, 2023 showed signs of recovery in vehicle availability, which Akyurek described as “pretty positive.” According to Auto Trader’s trends report from September 2023, there was a noticeable month-over-month increase in new car supplies by the end of the year, and prices began to decline in October due to what might be an oversupply, despite ongoing high demand.
DesRosiers Automotive Consultants reported an 11.8 percent surge in auto sales in 2023 compared to the previous year, marking the most significant increase since 1997. This uptick is attributed to the increased availability of new vehicles, an observation echoed by Brian Kingston, president of the Canadian Vehicle Manufacturers Association (CVMA). He predicts a “return to normalcy” in 2024 with more consistent inventory levels, making vehicle purchases quicker and easier for Canadians.
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Kingston’s insights suggest a shift back from what has been a dominant seller’s market in the used car space due to production shortfalls during the pandemic. AutoTrader data shows that the average price for new cars was reported at $67,817, a 19.4 percent year-on-year increase, whereas used vehicles experienced a smaller price increase of 4.3 percent at $39,155.
Looking further ahead, the CVMA projects a boost in ‘electrification,’ with over 40 additional electric vehicle (EV) models expected to launch this year. This aligns with the federal government’s ambitions to have all new cars sold in Canada by 2035 be zero-emission vehicles. Kingston highlighted the growing accessibility of EVs, noting that electric vehicles made up 12.1 percent of all new vehicle registrations in Q3 2023, a jump from 8.7 percent during the same period in 2022.
Despite the optimism, the Ontario Motor Vehicle Industry Council (OMVIC) advises caution, pointing out that while inventory levels are improving, the market has not fully stabilized, which means vehicle prices remain steep for many consumers. They also warn of potential high-pressure sales tactics, including unnecessary upselling or hidden fees, and urge buyers to be aware of their rights to refuse such conditions.
In essence, while the Canadian automotive market shows signs of recovery and stabilization, consumers and potential car buyers should remain prudent, researching thoroughly and understanding their rights before making any vehicle purchases.
Words by: Craig Clowes
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