Canada exports between 10 and 15% of its used vehicles to the U.S. annually. Our considerably weaker dollar has long made our used stock — especially the highly coveted luxury, SUV, and truck sector — very attractive.
But with the threat (or promise, depending on which side of the fence you’re on, I guess?) of tariffs coming from an unpredictable new administration, shockwaves would be sent through Canada’s auto industry. I spoke with Daniel Ross, senior manager at Canadian Black Book in charge of Industry Insights & Residual Value Strategy about those tariffs in a wide-ranging interview exploring what the coming year holds for Canadians from an automotive perspective.

American tariffs — Trump proposed 25% — would have a devastating impact on the Canadian auto industry at every level. Our supply chains are entwined with American ones, and parts used in the assembly of vehicles produced here often go back and forth across the border multiple times. To subject each of these transactions to tariffs would be crippling. Is there any glimpse of a silver lining for consumers?

Could U.S. tariffs drive down used car prices for Canadian consumers? | driving. (n.d.-a). https://driving.ca/column/lorraine/u-s-tariffs-used-car-prices-canadian-consumers

For the first time in six months, prices in the Canadian wholesale vehicle market dipped.

Canadian Black Book’s Used Vehicle Retention Index dropped to 135.7 in December, down 0.4% from 136.2 the previous month — ending a string of five consecutive months of rising or steady numbers.

In July, the index broke a massive streak of 27 months without an increase.

“The declines seen in the Canadian wholesale market in 2024 were mostly front ended,” CBB senior manager and head of Canadian vehicle valuations David Robins said, “as declines slowed during the fourth quarter of the year. This was mainly linked to the decline of the Canadian dollar and the increase in activity of the export market.”

The index is down 7.6% year-over-year. It peaked at a record 165.0 in March of 2022 after used-car values skyrocketed from a low of 100.5 in June 2020.

The index is calculated using CBB’s published wholesale average value on 2-6-year-old used vehicles as a percentage of original typically equipped MSRP and weighted based on registration volume and adjusted for seasonality, vehicle age, mileage and condition.

Market decline slows as year opens

Looking at activity to start the year, Canadian used-vehicle wholesale values declined 0.14% for the week ending Jan. 4, according to Canadian Black Book’s weekly Market Insights report, as the rate of decline slowed for the third consecutive week during the holiday season.

The previous week’s decrease of 0.21% followed weekly drops of 0.33% and 0.64%.

Trucks/SUVs had a strong showing, down just 0.06% for the week with gains posted by three segments — full-size pickups (up 0.08%), full-size vans (0.07%) and sub-compact crossovers (0.03%). Compact Vans were the only truck segment to lose more than $100, falling $148 (0.76%).

Cars overall were down 0.23%, with sporty cars (down 0.43%, $112) and prestige luxury cars (0.39%, $236) losing the most value. No car segments gained value.

The 14-day moving average retail listing price was $34,950, down slightly from the previous week’s $35,000.

In the U.S., the overall market was down 0.44% for the week. CBB analysts said depreciation remained stable, with auction inventories rising and improved conversion rates following the slower Christmas week.

“Last week’s depreciation trends reflected a balance,” the report said, “with vehicles maintaining their values more steadily as auction activity picked up post-holiday.”

CBB monthly index drops for first time since June. Auto Remarketing. (n.d.). https://www.autoremarketing.com/arcanada/cbb-monthly-index-drops-for-first-time-since-june/

When U.S. President-elect Donald Trump launched the threat of a 25 per cent tariff on all products entering the U.S. from both Canada and Mexico, the automotive industry took notice.

While a lot of the focus has been on the negative impact on new vehicles and the auto parts industry, the damage to the used car supply could be considerable, according to a LinkedIn article from Brian Murphy, Senior Consultant with Clarify Group Inc. and the former Managing Director of Kelly Blue Book in Canada and Vice President Research & Analytics at Canadian Black Book.

The tariff concerns were sparked after Trump wrote on his Truth Social platform that the tariff “will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” He has maintained that position in several media interviews since then.

Based on the Ivey Business School, industries in Canada that are most reliant on cross-border supply chains would experience the most severe impact. “The automotive sector especially, with 20 per cent of its inputs sourced across borders, faces significant cost increases and disruptions,” they said in an article posted on their website.

They also said companies would need to act fast to protect their operations, starting with a supply chain assessment that would help businesses pinpoint risks and prepare for potential disruptions.

Brian Murphy, Senior Consultant with Clarify Group Inc. and the former Senior Director of Kelly Blue Book & Data Solutions (Canada & Brazil) and Vice President Research & Analytics at Canadian Black Book, argued in a LinkedIn article that the impact a 25 per cent tariff could be devastating for the used car market — particularly in Canada.

His article was titled: “Happy New Year: unhappy used car price crash?”

“For those of you who don’t know (and I know many of you do!) about 200,000 to 300,000 used cars are exported every year from Canada to the U.S. This seems like a shockingly large number, and it is,” he wrote, noting that “the shipping of so many used cars out of this market has a major impact on supply, demand and prices here in Canada and the U.S.”

“If a 25 per cent tax is imposed, it would halt the export of used cars from Canada to the U.S. almost instantly,” said Murphy. “Once a 25 per cent tax is applied to a used vehicle, plus a few thousand dollars in shipping and handling fees, to export a car to the U.S. from Canada would likely not be a profitable enterprise.”

Murphy said used vehicle prices at wholesale would plummet, and that vehicles at lease return time would be worth much less.

While a 25 per cent tariff of the nature Trump has declared would likely violate USMCA provisions, the administration has been shown in the past to act on some threats — and use others simply as leverage.

Dealers might be wise to consider their exposure on their used car inventory in the coming weeks, and to keep tabs on whether the tariffs will be imposed.

The Canadian Automobile Dealers Association (CADA) wrote about the auto industry’s response to tariffs and the association’s involvement in an article in its newsletter CADA Newsline this week.

Phillips, T., Lefko, P., Lefko, P., dealer, C. auto, & Phillips, T. (2024, December 11). A 25% U.S. tariff would severely impact used cars. Canadian Auto Dealer. https://canadianautodealer.ca/2024/12/a-25-u-s-tariff-would-severely-impact-used-cars/

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As the gap between new and used car prices widens, coupled with high-interest rates, buyers face a reality check.

A plurality of prospective car buyers say they prefer a new car when auto shopping, but new research shows they’re often unprepared to hand over the money to get one.

The price gap between new and used cars has reached an unprecedented level, with a $20,000 difference in average transaction prices, the largest on record, according to Edmunds. While new car prices continue to climb, the average price of a used car has declined 6.2% year over year to just over $27,000—roughly $20,000 less than the price of a new car, on average.

Despite the inflated prices in the new car market, nearly 50% of prospective buyers say they’re still more interested in buying new cars over used ones. Just over a quarter of buyers said they were more interested in a used vehicle, while less than a quarter of buyers said it “depends on the price/deal.”

New-car buyer expectations at odds with reality

Many shoppers would prefer to get behind the wheel of a new car, but that preference often butts heads with reality when faced with real-world price tags. The average price of a new vehicle hit $47,542 in Q3 2024, a price point that puts new cars out of reach for many.

This trend is particularly striking given that 14% of new-car shoppers say they want to spend $20,000 or less—a price that’s virtually nonexistent in the current new-car market, according to Edmunds. Just under half of new-car buyers surveyed said they want to spend $35,000 or less, which is more realistic but still significantly below the average new car price, meaning that options will be limited.

Modest discounts aren’t enough to lure buyers

Though discounts on new cars are beginning to return, they’re modest at best. In Q3, the average discount on a new car rose to $1,744, doubling last year’s $828 average. However, these savings barely make a dent when considering the overall high prices and interest rates. Shoppers who remember deeper incentives and zero-percent financing from pre-pandemic times may be in for a disappointment, especially as dealers face longer turnover times and are reluctant to discount further.

With new vehicles now spending an average of 57 days on dealer lots—the longest since 2021—dealers are seeing clear signs that new car prices may have surpassed what many buyers are willing or able to pay.

Used cars aren’t the deal they used to be

With the gap between new and used car prices wider than ever, over half of buyers surveyed said they’re interested in or would consider a used car depending on the deal. But even with declining prices, used cars don’t offer the same value they did before the pandemic.

Since 2019, monthly payments, down payments, and interest rates on used vehicles have all increased sharply. A significant portion of used-car buyers still expect monthly payments in the $200-$300 range, a target that today’s higher financing rates make increasingly unrealistic. For used cars, the average monthly payment now sits at $548, a sharp rise from $413 in 2019, and far above what most budget-conscious shoppers are prepared to pay.

Buyers can still find used cars in the $200-$300 monthly payment bracket, but they’re now significantly older and higher mileage compared to those purchased at similar prices just a few years ago.

Less car for more money

In 2019, a used car with a $200-300 monthly payment would require a down payment of about $2,800. For your money, you’d get a car that’s about four and a half years old with 55,000 miles. In 2024, cars in that monthly payment bracket not only require much larger down payments—just over $6,000—but they are also six and a half years old with 71,000 miles, on average.

One factor driving that change is used car loan interest rates. For our hypothetical 2024 used car, you’d be paying 10.5% interest on the car, about 2.5% higher than for a similarly priced car in 2019. This combination of inflated prices and higher interest rates has made it tougher for consumers to find desirable vehicles with affordable monthly payments even in the used market.

Final thoughts

Today’s car buyers face an uphill battle in their search for affordability. While the desire for a new car remains strong among many, the harsh reality of inflated prices and financing costs is pushing buyers toward used options. But in 2024, even used cars don’t offer the value that they used to, with buyers having to hand over more money for worse cars compared to before the pandemic.

CARFAX Canada’s Vehicle History Reports Revealed Essential Information to Help Protect Canadians This Year.

LONDON, Ontario — CARFAX Canada has released its highly anticipated, Year in Rear View 2024 report, showcasing key insights from millions of its Vehicle History Reports conducted over the past year. By utilizing a vast network of billions of data records from many trusted sources across North America, this comprehensive report highlights vehicle thefts, accident claims, liens, and other crucial data points impacting vehicle ownership in Canada.

Vehicle theft remains an increasing concern for Canadians this year. According to the Canadian Police Information Centre (CPIC), 152,622 vehicles have been identified as actively stolen in Canada, half of which are SUVs. This year, the number of vehicles reported as stolen on CARFAX Canada Vehicle History Reports increased by 25%. VIN Cloning has also emerged as a significant fraudulent issue this year. Shawn Vording, President of CARFAX Canada explains, “VIN Cloning is the act of stealing a VIN (Vehicle Identification Number) from a legitimate vehicle and attaching this VIN onto another similar year, make, model, trim vehicle, typically stolen, essentially giving it a fake ID. Our insights suggest that there are 141,260 potential VIN Clones in operation in Canada.” Vording emphasizes, “This is a major issue for dealers, consumers, banks, and insurance companies as it allows scammers to sell a stolen vehicle to an unsuspecting party.” A CARFAX Canada Vehicle History Report can help Canadians, as the report not only flags actively stolen cars but also equips buyers with ways to detect cloned VINs and inaccurate vehicle data. CARFAX Canada works with many law enforcement organizations across the country to help identify stolen vehicles and protect millions of Canadians.

The total amount of accident claim damage found on CARFAX Canada Vehicle History Reports this year was more than $7.6 billion. Alberta leads the country in hail damage claims with $140 million, which is 300% more total damage claims than the next highest province, Ontario. Ontario saw an increase in extreme weather this year with over $12 million in damages due to wind-related occurrences.

Liens (money owed on a vehicle) continue to be a concern for used car buyers, with 42% of lien checks conducted revealing outstanding debt on vehicles. Year after year, this issue highlights the importance of knowing the history before you buy or sell your vehicle.

Lastly, the highest odometer reading recorded on CARFAX Canada reports this year was an impressive 999,998 kilometres on a 2010 Lincoln MKS.

Vording reminds everyone “It’s a critical starting point to use Canada’s most comprehensive vehicle History Report to help protect yourself when buying, selling or owning used vehicles.”

Carfax canada presents: 2023 year in Rear View | Financial Post. (n.d.). https://financialpost.com/pmn/business-wire-news-releases-pmn/carfax-canada-presents-2023-year-in-rear-view

The decline of the Canadian dollar, combined with falling interest rates and increasing vehicle supply, is reshaping the Canadian used car market. These trends are driving down prices and sparking increased interest from American buyers, who are finding cross-border opportunities irresistible.

The Canadian dollar’s consistent value around $0.74 USD has made Canadian goods, including vehicles, significantly cheaper for American buyers. This economic disparity has turned Canada into an attractive market for U.S. consumers looking to capitalize on favourable exchange rates​

​
The Canadian used car market has seen an 8% decrease in prices year-over-year, with the average cost of a vehicle now at $36,342 CAD. Increased inventory levels, which have risen by 28%, are a key factor in this decline. This surplus stems from improved supply chains and a renewed consumer interest in new vehicles. Luxury cars have experienced the steepest price drops, declining by 10% during the same period​

The affordability of Canadian vehicles has caught the attention of American buyers, leading to a rise in cross-border transactions. While this influx of demand is advantageous for sellers, it raises concerns about the availability of high-quality used cars for Canadian consumers. Many fear that this trend could lead to a diminished local supply, making it more challenging for Canadians to find affordable and reliable vehicles​

The Bank of Canada’s decision to cut interest rates is another factor influencing the automotive market. Lower borrowing costs have increased accessibility for Canadian buyers, driving up domestic demand even as cross-border interest rises. However, this balance is delicate, as the market must meet both local and international demand without exhausting its resources​

The interplay between a weakened Canadian dollar, falling used car prices, and declining interest rates has created a dynamic shift in Canada’s automotive market. While the conditions are ripe for cross-border trade and local affordability, the long-term effects could pose challenges for maintaining a sustainable supply for Canadians. Policymakers and market stakeholders must find ways to navigate these trends, ensuring that the market benefits both domestic and international participants without sacrificing stability.

This evolving scenario highlights how global economic forces can shape local markets, underscoring the need for careful management to ensure long-term balance.

Lord, C. (2024, July 23). New and used vehicle supply is surging. here’s how prices are reacting – national. Global News. https://globalnews.ca/news/10638775/used-car-prices-june-2024-autotrader/

Phillips, T., dealer, C. auto, & dealer, C. auto. (2024, February 16). Canadian used vehicle market sees price declines increase slightly. Canadian Auto Dealer. https://canadianautodealer.ca/2024/02/canadian-used-vehicle-market-sees-price-declines-increase-slightly/

Economic forecast 2024: A cross-border outlook on interest rates, inflation, housing and more. RBC Royal Bank. (2024, January 22). https://www.rbcroyalbank.com/en-ca/my-money-matters/goals-aspirations/travel-and-cross-border/economic-forecast-2024-a-cross-border-outlook-on-interest-rates-inflation-housing-and-more/

This week dealers will find the Canadian used wholesale market experienced a decline of -0.31% in pricing for the period ending on November 2. Canadian Black Book’s latest update shows the market slipped further from the prior week’s  -0.13% to near the 2017-2019 average of -0.29% for the same period.

Car segment prices were down -0.46% compared to last week’s -0.09%, while truck/SUV segments dropped -0.17% — similar to the prior week. The largest decline in the car segments came from near luxury cars, and compact luxury crossovers/SUVs for the truck/SUV category.

“The Canadian market continues a downward trend, with a decline slightly more pronounced than in its previous week,” said CBB in its Market Insights report. “Just over 45% of market segments experienced an average value change of more than ±$100, a significant increase from last week. Among these, the decline in car segments was 36% more than last week.”

In the car categories compact cars (-0.20%) decreased the least, followed by sub-compact cars (-0.21%) and mid-size cars (-0.23%). The largest decreases came from near luxury cars (-0.63%), prestige luxury cars (-0.56%), and sports cars (-0.53%).

For trucks/SUVs, 12 of the 13 segments reflected the decline seen in the overall category. For example, the largest declines were seen coming from compact luxury crossovers/SUVs (-0.65%), along with both mid-size luxury crossovers/SUVs and minivans — sharing the same decrease of -0.58%. However, one segment did experience an increase and that was full-size pickups (+1.18%).

CBB said the average listing price for used vehicles is up slightly, as the 14-day moving average was at $34,250. They said the analysis is based on approximately 220,000 used vehicles listed for sale on Canadian dealer lots.

dealer, C. auto, Cote, M.-E., dealer, C. auto, & Phillips, T. (2024, November 7). Used wholesale market sees slightly more pronounced decline in pricing. Canadian Auto Dealer. https://canadianautodealer.ca/2024/11/used-wholesale-market-sees-slightly-more-pronounced-decline-in-pricing/

The Canadian used wholesale market saw a decline of -0.26% in pricing for the week ending on October 19, according to Canadian Black Book’s latest market update. Last time that decline was -0.31%, while the 2017-2019 average for that same period was -0.37%.

Car segment prices were down -0.27% (similar to the prior week), while the truck/SUV segments slipped -0.25% (versus the -0.34% from a week earlier). The largest decline in the car segment came from sports cars, whereas the largest decrease from truck/SUV segments came from full-size crossovers/SUVs.

The Canadian used wholesale market saw a decline of -0.26% in pricing for the week ending on October 19, according to Canadian Black Book’s latest market update. Last time that decline was -0.31%, while the 2017-2019 average for that same period was -0.37%.

Car segment prices were down -0.27% (similar to the prior week), while the truck/SUV segments slipped -0.25% (versus the -0.34% from a week earlier). The largest decline in the car segment came from sports cars, whereas the largest decrease from truck/SUV segments came from full-size crossovers/SUVs.

“The Canadian market continues on a downward trend, with a decline slightly less pronounced than in its previous week,” said CBB in its update. “Just over 27% of market segments experienced an average value change of more than ±$100, almost mirroring the previous week’s activity. Among these, the decline in truck segments was 9% less than last week.”

In the car category, sub-compact cars (+0.03%), mid-size cars (-0.06%), and full-size cars (-0.07%) experienced the smallest decrease. On the other end, the largest decreases came from sports cars (-0.47%), prestige luxury cars (-0.36%), and luxury cars (-0.25%).

For trucks/SUVs, the largest declines were seen in the full-size crossover/SUV segment (-0.57%), compact crossovers/SUVs (-0.39%), and full-size luxury crossovers/SUVs (-0.37%). Full-size pickups (+0.21%) and minivans (+0.10%) showed increases.

As for used retail pricing and listing volume, CBB said the average listing price for used vehicles increased slightly, with the 14-day moving average sitting at $34,400. The analysis is based on around 220,000 used vehicles listed for sale on Canadian dealer lots.

Phillips, T., dealer, C. auto, dealer, C. auto, & Lefko, P. (2024, October 25). Canadian used vehicle market continues downward trend. Canadian Auto Dealer. https://canadianautodealer.ca/2024/10/canadian-used-vehicle-market-continues-downward-trend/

TORONTO — Equifax Inc. is launching a program to allow newcomers to transfer their foreign credit history to Canada.

The credit reporting company said Thursday that the Global Consumer Credit File will make it easier for immigrants to access services like loans and cellphone plans in Canada by providing the additional data.

“It’s really important when newcomers land that they get access to the financial services ecosystem, and without credit history that’s very difficult to do,” said Sue Hutchison, head of Equifax Canada.

“They’re typically looking to, you know, rent an apartment, get a mobile phone, probably a credit card, and all of those things require credit history. So not having it makes it very difficult for newcomers.”

Equifax isn’t the first to launch such a program in Canada. San Francisco-based Nova Credit, which launched in 2016 to provide global credit score access, expanded into Canada last year in a partnership with Scotiabank.

The company has since expanded with partnerships at RBC, BMO and Rogers Communications Inc., among others.

Nova Credit partners with several credit bureaus, including Equifax, to provide data from more than 20 countries. With Equifax becoming a competitor in the space, Hutchison said conversations are underway around data access going forward.

Equifax, which has operations or investment in 24 countries, will have the advantage of being the direct provider of data from its foreign bureaus, said Hutchison.

“It’s going be coming directly from us. So that’s, I think, very attractive to the lenders themselves that they’ll be dealing directly with the credit bureau.”

The program will initially provide data from India, but the plan is to extend it to Brazil, Argentina and Chile over the coming months. Longer-term, it plans to include 18 countries in total.

Equifax will use both the data from its own operations and source from other bureaus to provide the data.

Because countries have different ways of creating credit scores, Equifax plans to provide lenders a Canadian score, a global score and a calibrated blend of both.

The program comes as Canada has seen elevated immigration in recent years, while Hutchison said Equifax’s now cloud-based platform also makes it easier to share the data securely.

This report by The Canadian Press was first published Oct. 24, 2024.

Ian Bickis, T. C. P. (2024, October 24). Equifax launches Foreign Credit Score Sourcing Program for newcomers. BNN Bloomberg. https://www.bnnbloomberg.ca/business/company-news/2024/10/24/equifax-launches-foreign-credit-score-sourcing-program-for-newcomers