Used car prices continue to decline as availability increases and new car prices have stabilized in the Canadian automotive market, according to analysis from AutoTrader.
The Canadian automotive market has experienced notable shifts in both the used and new car segments as used car prices continue to soften and new car prices eased their upward trend over the last few months.
Starting in the third quarter of 2023, the demand for used cars began to soften year-over-year, the AutoTrader Price Index for June reported. Along with the decrease in demand, an increase in used car supply — credited to strong new car sales and trade-ins — has led to a decline in used car prices. In June 2024, the average used car price dipped by 1.1 per cent from the previous month, settling at $36,342, an 8.3 per cent decrease compared to the same period last year.
That’s a higher decrease than reported by DesRosiers Automotive Consultants, which reported a 4.5 per cent drop in purchase price of passenger vehicles in June 2024 compared to June 2023.
New car prices, meanwhile, have shown stability since the beginning of the second quarter of 2024. Average new car prices in June were $66,807, a 0.8 per cent increase year-over-year.
AutoTrader noted that the stabilization of new car prices is thanks to manufacturers bringing back incentives, including more competitive interest rates, making new vehicles more affordable. In June, AutoTrader reported, interest rates on new car loans dropped to 5.3 per cent, down from 6.2 per cent in November 2023.
And interest rate cuts have helped as well. As more cuts are expected — two or three more before the end of the year — AutoTrader expects to see a boost in sales in the second half of 2024.
Demand for new vehicles should be met by adequate supply, AutoTrader expects. The group noted that ongoing pent-up demand from the pandemic will lead to gains in subsequent months.
AutoTrader’s Vehicle Affordability Index, which measures affordability in relation to average weekly wages, showed improvements in both new and used car segments. As of June 2024, it takes 29 weeks of average earnings to purchase a used vehicle and 54 weeks for a new one. It noted that these figures are higher than what was seen pre-pandemic, they’re down from 34 weeks for used cars and 56 weeks for new vehicles
BEV update
Prices for battery electric vehicles (BEVs) continued to drop, down year-over-year 14.7 per cent for new BEVs and 13.7 per cent for used ones.
That’s being driven by greater BEV inventory — AutoTrader reported that its website has seen a combined 109.4 per cent year-over-year growth for new and used BEVs. But there’s been a decline in demand, with EV purchase consideration dropping from 68 per cent in 2022 to 46 per cent in 2024.
Looking forward, used car prices are expected to continue normalizing, while new car prices are likely to remain stable, AutoTrader reported. The group believes vehicle prices for both new and used cars likely peaked in 2023 and a return to pre-pandemic levels is not anticipated in the near future due to various factors.
How new, used vehicle prices are trending. Auto Service World. (2024, August 29). https://www.autoserviceworld.com/how-new-used-vehicle-prices-are-trending/