Still hovering close to previous week prices and the 2017-2019 average of the same period, the Canadian used wholesale market saw a decline in prices of -0.28% for the period ending on Aug. 17. 

Car and truck/SUV segments prices showed a greater fluctuation from Canadian Black Book’s last report. The car segment fell by -0.44%, compared to -0.20% the prior week. And truck/SUV segment prices slipped -0.14%, versus the -0.26% experienced in the previous CBB report. 

“The Canadian market continues to show a steady gradual decline similar to the previous week,” said CBB in its update. “More than 36% of market segments saw an average value change greater than ±$100, showing an increase compared to the prior week. Among these, car segments saw a decrease 30% larger than that observed in the truck segments.”

In the car category, premium sports cars decreased the least (-0.10%), with sports cars (-0.16%) and near luxury cars (-0.28%) experiencing the next smallest declines. The largest decreases came from luxury cars (-0.92%), prestige luxury cars (-0.89%), and compact cars (-0.73%).

For trucks/SUVs, the largest decline was seen in the minivan (-0.54%) segment, followed by mid-size luxury crossovers/SUVs and full-size vans (-0.33%). Both had the same amount of depreciation. The two segments that reflected were full-size pickups (+0.51%) and full-size luxury crossovers/SUVs (+0.01%).

CBB said the average listing price for used vehicles is stable, with the 14-day moving average at $34,400. The analysis is based on around 220,000 used vehicles listed for sale on Canadian dealer lots.

Dealer, C. auto, & Lefko, P. (2024, August 21). Used vehicle price declines relatively similar at market level. Canadian Auto Dealer. https://canadianautodealer.ca/2024/08/used-vehicle-price-declines-relatively-similar-at-market-level/

If you’ve ever purchased a new car, you probably needed a loan. About 80% of new cars are financed with either a loan or lease in the United States, according to 2023 data from the Federal Reserve. Financing is less prevalent with used cars, but it still applies to more than one-third (38%) of used-car purchases. This means a lot of Americans make monthly car payments — and those payments are similar to the ones you will find across the border in Canada.

Average auto payments vary depending on many different factors, including the type of car, its price, the size of your down payment, the loan terms, your location and your credit history.

The Cost of Auto Payments in the United States as Compared to Canada

For most Americans, the monthly car payment is a major budget item. The average car payment for new vehicles in the U.S. was $735 a month in the first quarter of 2024, according to a recent report from LendingTree, which analyzed Experian data. The average payment on a used car was $523 a month. Both figures were up slightly from the previous year.

Car payments in Canada are pretty close to the U.S. average. Canadians typically spend between $500 and $1,000 a month on their auto payments, according to Finder.com. A lot depends on whether the car is new or used. For example, the average payment on a new car is $1,055.15 a month with a loan amount of about $60,000, a term of 72 months and an average interest rate of 8.24%. The average payment on a used car is $598.28 a month with a loan amount of about $34,000 and the same loan terms.

The Globe and Mail estimated the average new-vehicle loan payment in Canada at about $880 a month. However, nearly 30% of buyers who finance their purchases are paying at least $1,000 a month.

Meanwhile, one trend to keep an eye on in the U.S. is how many Americans are delinquent on loans. As LendingTree noted, 4.4% of outstanding auto debt was at least 90 days late in the first quarter of 2024. That was up 13.4% from the previous year. The percentage of auto loans that fell to 30 days past due was 7.9% in the 2024 first quarter, up 15.4% from 6.9% in the first quarter of last year.

How To Keep Your Monthly Payment Under Control

You can shrink your monthly payment in numerous ways. The most obvious one is to buy a less expensive car, but you can also get a lower payment by stretching the loan out over more years. This isn’t advisable, though, because you’ll end up paying a lot more in interest over the life of the loan.

Robert Frick, corporate economist at Navy Federal Credit Union, advised against taking out a car loan with a term that’s longer than five years

. You’re nearly always better off choosing a cheaper car that can be paid off in less than five years. Doing so will not only lower your overall loan cost — it will also help ensure that you’re not still financing the car long after it passes its prime.

“People have to think differently about buying a car, or they’re going to be trapped in what a lot of people find themselves in right now, which is [having to deal with] grossly expensive repairs [and] higher insurance,” Frick told GOBankingRates in a recent interview. “When you get your next car, get a cheaper, more dependable car, and all of a sudden your costs will be dramatically less.”

Cariaga, V. (2024, August 22). The Average Cost of Auto Payments in 2024: US vs. Canada. MSN. https://www.msn.com/en-us/money/personalfinance/the-average-cost-of-auto-payments-in-2024-us-vs-canada/ar-AA1pgv6Q?ocid=finance-verthp-feeds

Used-car prices skyrocketed after the pandemic upended supply chains for new cars and pushed more people to buy used. But finally, analysts say demand is easing and used-car prices are coming back to earth.

At the same time, the average price of new cars continues to climb. And with a combination of higher theft rates and more expensive parts pushing up the insurance costs for new models, used cars are looking like a better deal for the first time in years.

The changing trend in pricing was noted in two separate studies this month. Autotrader found that the average price of used cars on its site dropped to $36,342 in June, an 8-per-cent year-over-year decrease. At the same time, new-car prices rose by 0.8 per cent year-over year to $66,807.

DesRosiers Automotive Consultants found a similar diverging trend in a study with Statistics Canada, which found the consumer price index for used cars dropped by 4.5 per cent in June, while it rose by 1.8 per cent for new cars.

It’s a departure from the early pandemic years when more consumers looked to used cars as an option because of lengthy delays on new models caused by microchip shortages. Roughly 1.5 million fewer new cars were sold between 2020 and 2023, said Baris Akyurek, vice-president of insights and intelligence at Autotrader, and many of those would-be buyers moved to the used market.

The situation led to used-car prices increasing by around 30 per cent in that period, said Andrew King, a managing partner at Desrosiers Automotive Consultants.

“Now that the new-vehicle shortage has been resolved consumers have returned to the new market and demand for used has dropped – leading to lower prices,” said Mr. King. “Prices will not return to 2020 levels but there will be some modest relief this year.”

For consumers looking for the best overall value, a data study by Ratesdotca also found the insurance costs for new models is increasing faster than for used cars, especially for some of the most commonly stolen cars in Canada, as vehicle theft jumps to historic highs.

For example, the cheapest comprehensive insurance premium that Ratesdotca could find for a 35-year-old male with a clean driving record in Toronto driving a 2024 Honda CR-V (one of the most commonly stolen cars in Canada) was $4,187. That compares to just $2,984 for the 2018 model of the same car.

There were noticeable increases in premiums for cars that aren’t on the list of commonly stolen cars either. The cost of insuring a 2024 Mazda CX-5 was $3,137, compared to $2,826 for the 2016 model.

“The gap does seem to be widening for sure. If you go back into the 90s, 2000s and even the 2010s, models didn’t really evolve as much in terms of technology, more just in structure and design,” said Daniel Ivans, an insurance expert at Ratesdotca.

“But these really large improvements are presenting, in some ways, challenges in cost.”

Those challenges were highlighted in a recent study by Ratesdotca that found car parts such as a front bumper could cost three times more to repair in the 2023 model of the BMW X3 compared to a 2013 model because of extra sensors and technology in the newer vehicle.

In the long term, Autotrader’s Mr. Akyurek said there are more positive signs for consumers looking to buy used. He said that when a consumer buys a new car, they’re trading in a used one 48 per cent of the time. That means the supply of used cars is increasing.

Farooqui, S. (2024, August 13). Used cars are no longer such a bad deal. The Globe and Mail. https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-used-cars-are-no-longer-such-a-bad-deal/

Over the period 2021-23 inflationary pressures were rampant throughout the economy and nowhere more than in the used vehicle market. Now with new vehicle supply shortages resolved, and the Bank of Canada starting a rate cutting cycle the picture has changed dramatically. To be sure, pockets of inflation persist – passenger vehicle insurance premiums remain a key source of price growth, rising 8.1% year-over-year in June 2024. Passenger vehicle parts and maintenance also saw a 3.5% increase as a category with maintenance and repair services themselves seeing a 4.2% increase and parts CPI up 2.9%.

However, used vehicle purchase prices have reversed course and started to decrease, dropping 4.5% compared to June of last year. This is in contrast to new vehicle CPI which remains positive at 1.8% – supported by the twin moves toward SUVs and ZEVs. Gasoline, meanwhile, acting as something of a stabilizing force, came in flat for June. Andrew King, Managing Parter at DAC commented that “It is clear that the automotive market is seeing countervailing forces at play.” He continued, “The new and used markets are heading in different directions as industry dynamics reshuffle the landscape and the market works toward a new equilibrium.”

Azarov, D., & DesRosiers Automotive Consultants Inc., D. (2024, August 7). Auto Industry Prices – Key Areas Diverge.

The most notable difference in the Canadian used vehicle wholesale market, where prices are concerned, came not from the overall market or trucks/SUVs but from the car category.

While prices for the overall market declined -0.28% for the week ending on July 27, on par with the 2017-2019 average of the same week and slightly off from the previous week’s -0.37%, the decline in prices from the car segment was more noticeable when comparing it to the prior week. It dropped -0.21% this week, a visible improvement from the -0.40% last week.The decrease in segment prices for trucks/SUVs remains unchanged.

“The Canadian market continues to show a gradual decline. More than 27% of market segments saw an average value change greater than ±$100, showing a slight decrease compared to the previous week,” said Canadian Black Book in its Market Insights report.

“Among these segments, car segments saw a decrease 13% larger than that observed in the truck segments,”  they continued. “Monitored auction sale rates ranged from 25% to 77%. A continued drop in floor prices highlights the variations in sale rates across different lanes.”

In the car category, the smallest change came from compact cars (-0.02%), followed by full-size cars (-0.10%) and premium sports cars (-0.10%). Sports cars (-0.47%), near-luxury cars (-0.34%), and sub-compact cars (-0.32%) revealed the greatest decreases. 

In the truck/SUV category, the largest depreciations were compact luxury crossovers/SUVs (-0.84%), mid-size luxury crossovers/SUVs (-0.62%), full-size vans (-0.57%), and small pickups (-0.53%). However, full-size crossovers/SUVs managed an increase (+0.03%).

The full report is available here. 

dealer, C. auto, Lefko, P., & Phillips, T. (2024, July 30). Used vehicle market sees notable difference in car segments. Canadian Auto Dealer. https://canadianautodealer.ca/2024/07/used-vehicle-market-sees-notable-difference-in-car-segments/