For two years, the headline number said used car prices in Canada were rising. For most of those two years, the vehicles themselves were quietly getting cheaper.

Both statements are true. The gap between them explains a lot of what dealers have been feeling on the lot without quite being able to name, and in July 2026 that gap finally closed.

Two of the country’s most detailed used vehicle reports landed within five days of each other this August. CARFAX Canada published its Mid-Year Market Update on August 13, covering June. Clutch published its monthly pricing report on August 18, covering July. Together they explain what the headline number was hiding, and what happens now that it has stopped. We covered the early signs of this shift in Why Are Used Car Prices Dropping? Is This a Trend?

Two reasons a price can go up

An average price can rise for two completely different reasons. Either the things got more expensive, or people bought more expensive things. Those are not the same, and treating them as the same has misled most of the commentary on this market since 2024.

Think of the average house sale price in a city. If it rises, maybe housing got more expensive. Or maybe more people bought four-bedrooms and fewer bought condos that month. Same number, opposite stories, opposite implications for what you should do next.

Clutch separates the two, and the result is the most useful figure in either report.

What actually moved the national average used vehicle price, July 2025 to July 2026

Component	Effect on the average
Buyers shifting toward newer, larger, more electrified vehicles	+$548
Newly arrived models entering the market	+$150
Total mix effect	+$698
Same model, same age, actual price change	−$595 (−1.8%)
Net change in the headline average	+$103 (+0.3%)

The headline says prices rose 0.3 percent over the year. The middle line says a comparable vehicle, same model and same age, costs $595 less than it did last July. That is a 1.8 percent decline sitting underneath a number that reads as flat.

Clutch’s own summary: “Canadians are getting more car, not paying more.”

Why July 2026 was the turning point

That like-for-like discount was 1.3 percent in June, and 1.3 percent a year ago. In July it deepened to 1.8 percent and, for the first time, outweighed the mix shift pushing the other way.

The monthly move says it more plainly. The national average fell 1.0 percent in July, the steepest single-month decline since November, and nearly all of that $325 drop came from vehicles getting cheaper rather than buyers choosing different vehicles. The two forces that had been cancelling each other out stopped cancelling.

Step back and the annual figure has been collapsing all year.

Clutch’s conclusion is blunt: used car inflation in Canada is effectively over.

CARFAX Canada arrives at the same place by a different route. Its national average sat 4.7 percent below last year in June, with the last five months holding in a narrow range near $31,000 to $31,500. In its words, “after declining throughout much of 2025, pricing has largely stabilized during 2026.”

One report measures completed sales, the other measures listings. They agree on direction, which is what matters.

A quick note on the two dollar figures, since they differ. CARFAX puts the average at $31,487, Clutch at $33,786. CARFAX includes any vehicle back to model year 2000 with no mileage cap; Clutch covers only 2016 and newer under 200,000 km. Sixteen model years of older, cheaper stock sit inside the CARFAX number and pull it down. Neither is wrong. If you carry late-model inventory, Clutch is closer to your world. If your range runs older, CARFAX is.

What the mix shift actually is

The $698 is not abstract. It is sitting on every lot in the country.

SUVs took a record 64.2 percent of used sales in July. Cars fell to 21.2 percent, the lowest in Clutch’s records. CARFAX confirms the same movement from the inventory side, reporting the SUV segment at another record share of total inventory.

The arithmetic is simple. The average SUV sold for $32,689 against $24,425 for a car, a gap of about $8,300. Every point of sales migrating from cars into SUVs lifts the national average without a single vehicle changing price. Three points of share in two years accounts for roughly $250 of that mix effect on its own.

The abandoned segment shows the consequence. CARFAX finds passenger cars posting the largest year-over-year declines of any segment, with the Toyota Corolla down 6.4 percent and the Honda Civic down 5.8 percent. Clutch has the Civic down 6.2 percent. Sedans are being left behind and their prices say so.

Why prices could soften at all

Inventory finally stopped being the binding constraint.

CARFAX reports used inventory up 15.5 percent month over month in June and 2.5 percent year over year. The second figure is the one that matters. Two months earlier, inventory was up 21.6 percent on the month but essentially flat against the prior year: a seasonal build, not a real one. By June it was genuinely above last year for the first time in this cycle.

CARFAX does not overstate it. Supply “remains influenced by the prolonged effects of vehicle production disruptions and lower lease volumes earlier in the decade,” and stays “sufficiently constrained to prevent significant downward pricing pressure.”

That clause is the entire story of the plateau. Supply improved enough to stop prices rising. Not enough to make them fall hard.

Demand tells a matching story. Used transactions hit 277,361 in June, up 1.3 percent on the month but down 2.9 percent on the year, with the first half finishing 4.2 percent behind 2025. The year-over-year decline has narrowed steadily, from 7.2 percent in April to 2.9 percent in June. Recovery, but from below.

The revealing comparison is against new. New vehicle sales are running about 4 percent below last year while used dealer revenues climbed 6 percent year over year. Buyers are not leaving the market, they are moving from new into used. Rising demand alongside easing prices is unusual, and it only works because supply rebuilt fast enough to absorb both.

The plateau is probably already breaking

Clutch cites Canadian Black Book wholesale data: values fell in every week of July, running 0.3 to 0.4 percent per week by late month, with the softening continuing into August at 0.34 percent in the week ending August 15, steeper than the 0.20 percent average for that week across 2017 to 2019.

Retail follows wholesale by roughly two months. That decline has already reached Clutch’s July sold prices. It has not yet reached the June listing prices CARFAX measured, because listings are a month older and asking prices move slowly.

Which means the plateau CARFAX describes is a photograph of a moment that has likely already passed. Clutch says so directly: if August follows July, the national average will sit below its year-ago level for the first time since March 2025, and the ten-month plateau ends on the way down.

Is now a good time to buy a used car? It depends on your budget

Prices are easing, but Clutch finds the relief concentrated almost entirely in newer vehicles. One-to-six-year-old vehicles are 2.3 to 2.5 percent cheaper on a comparable basis. Vehicles seven years and older have barely budged.

Clutch’s phrasing: “Shoppers with newer-vehicle budgets are finding a friendlier market. Shoppers at the entry level are still waiting for theirs.”

The budget tiers confirm it. About 22 percent of cars sold under $15,000, 21 percent of SUVs under $20,000 and 19 percent of trucks under $30,000, all essentially unchanged from a year ago.

There is a structural reason, and it will not resolve soon. Relief is arriving through lease returns and trade-ins of vehicles bought during the recovery, which lands squarely in that one-to-six-year band. The 2020 to 2023 production shortfall means older used inventory was never created and cannot be conjured now.

Trucks: the most misread number in either report

The average truck sold for $46,951 in July, down 2.5 percent year over year, the largest drop of any body style. Measured like-for-like, trucks eased only about 1.4 percent, the smallest of any body style.

Both figures are correct, and the whole gap is buyer behaviour. Truck shoppers reached for cheaper trucks and several of the priciest models rotated out of the sold mix entirely. The Ford F-150 shows it in one vehicle: average price down 2.0 percent to $44,563, while a same-age F-150 held its value.

Clutch’s line is worth keeping for the next customer who quotes a falling truck average at you: “Trucks didn’t get cheap in July. Truck buyers got disciplined.”

CARFAX says the same from the listing side, reporting truck pricing elevated despite softer demand. A truck taken on trade has not lost the value the headline implies. But the customer walking in has a smaller budget than last year.

Used EVs: a floor, with a hole underneath it

Both reports single out used EVs as the most dynamic segment, and the same mix trap applies here one segment down.

CARFAX puts the average used EV listing at $42,834 in June, up 1.1 percent on the month and rising for a second straight month, though still 1.7 percent below June 2025. Clutch has the average EV sold price at $41,831 in July, higher than a year ago.

But Clutch’s like-for-like measure tells the real story. Used EVs spent two years as the market’s steepest decliners, at times 10 percent cheaper year over year on a comparable basis. In July that stopped: same EV, same age, flat against last July, while comparable gasoline vehicles fell about 2 percent. The segment that led the market down became its most price-stable corner.

The rising average is the same trap as the headline. Clutch notes the lift comes from what is arriving on the shelf rather than appreciation, with the first used six-figure electric trucks and SUVs entering in small numbers while actual buyers moved toward budget models like the Chevrolet Bolt EUV at $25,011.

The clearest single expression of the floor is the Tesla Model Y at minus 0.4 percent year over year, against nearly minus 9 percent a year ago. Comparable used Teslas were falling more than 10 percent as recently as March; in July they crossed back above zero.

Underneath the floor sits a supply problem both reports flag. CARFAX finds EV inventory “heavily concentrated among higher-priced Tesla models,” with affordable entry-level options “relatively limited,” an imbalance supporting prices even as overall supply expands. Clutch, a month later, catches that concentration starting to shift: non-Tesla EV inventory up about 21 percent off its June low against 6 percent for Tesla, with Tesla’s share of the active shelf sliding from nearly 29 percent in April to 23.5 percent in July.

Meanwhile the bargain window is closing. 46.8 percent of used EVs sold below $35,000, down from 48.8 percent a year earlier. The deeply discounted spring EVs sold through and, with like-for-like prices now flat, the cheap end has stopped refilling.

One thing on the lot is moving faster than everything else: used EVs sold in a median 23 days in July, against 31 for gasoline. The widest gap Clutch has measured, and the fourth consecutive monthly improvement.

What falling prices mean for financing a used car

The Bank of Canada held its policy rate at 2.25 percent in July, citing trade uncertainty and inflation running above target. That matters because it locates where the affordability movement is coming from.

Whatever relief exists in this market is coming from vehicle prices, not from borrowing costs. And since a lower purchase price reduces the amount financed, it reduces both the monthly payment and the total interest paid across the term. The size of the loan does as much work as the rate on it, and the size of the loan is the part that moved.

What this looks like in a payment

A 1.8 percent reduction on a $34,000 vehicle is roughly $600 less financed. On a typical used vehicle term that is a modest monthly saving, but it compounds: less principal means less interest across every month of the term, and a smaller gap to cover at trade-in time.

The more consequential shift is at approval. When the vehicle costs less, the loan-to-value ratio improves, and loan-to-value is one of the levers that decides whether a marginal application gets approved at all. Falling prices do not just lower payments for approved buyers. They move some declined applications into approved territory.

Who actually benefits

The segment finding above decides this. A customer shopping recent model years is buying into a market 2.3 to 2.5 percent cheaper on a comparable basis than a year ago, and financing a correspondingly smaller amount. A customer with $12,000 is shopping in the one part of the market where nothing has improved, and their payment math is exactly where it was last summer.

That split is the practical shape of this market. The headline number reads as flat. Underneath it, the deal got easier for some buyers and did not move at all for others.

What used car dealerships should take from this

Three things follow directly from the data.

Buyer traffic is holding up, but price sensitivity is higher

Used sales are growing while new sales decline. The customers are there. But with the first half running 4.2 percent behind last year and affordability named by CARFAX as “the dominant factor influencing vehicle purchasing decisions,” the deals that close are the ones where the payment works. That puts the financing conversation at the centre of the transaction rather than at the end of it.

The average is flat, but the segments are not

Sedans are falling hardest. Trucks look like they fell but held their value. SUVs keep taking share. EVs found a floor while the rest of the market softened. Acquiring on the headline number will lead you wrong in at least one of those segments.

Matching the vehicle to the approval closes more deals

When buyers are price sensitive and the relief is concentrated in one age band, the fastest path to a signed deal is putting the customer in a vehicle their approval actually supports. That is easier when financing is worked out early and when applications go to more than one lender.

As Shawn Vording, President of CARFAX Canada, put it: “Acquiring inventory is harder than ever. Acquiring the right inventory is a full-time job.”

Sources: CARFAX Canada, Used Vehicle Market Insights, Mid-Year Market Update 2026, released August 13, 2026, covering June, with transaction data from S&P Mobility. Clutch Used Car Pricing Report, published August 18, 2026, covering July, based on Clutch Technologies Inc. retail sales of vehicles model year 2016 and newer under 200,000 km. Canadian Black Book weekly Market Insights via Canadian Auto Dealer.

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