Increasing Number of Canadians Exploring Vehicle Purchase Options Amid Decreasing Prices and Rising Supply

July 24, 2024 TruthUSA

The cost of purchasing a vehicle in Canada has been decreasing, leading to more Canadians contemplating a purchase, as per a recent report.

Used cars, in particular, have witnessed an eight percent price drop over the last year, according to AutoTrader, an online platform for buying and selling vehicles.

“Starting in the third quarter of the previous year, demand for used cars slightly softened on a year-over-year basis,” mentioned the June 2024 report. “This trend, combined with increased supply of used cars resulting from robust new car sales and subsequent trade-ins, as well as a shift in demand towards new cars due to enhanced production and availability, has led to a decline in used car prices.”

In May, 26 percent of Canadians expressed interest in buying a vehicle, according to the report, slightly up from 24 percent in February.

AutoTrader noted that prices for new vehicles have remained stable. It also mentioned that car and minivan prices have “significantly increased,” while prices for SUVs and trucks remained constant in June.

“The average price of new cars was $66,807, marking a 0.8 percent increase from the same period last year,” as per the report.

All types of vehicles experienced an increase in supply in the second quarter of 2024, according to AutoTrader, with no foreseen changes in availability in the coming years.

Monthly Payments

Auto loans witnessed a drop in interest rates from 6.2 percent in November 2023 to 5.3 percent in June 2024, as mentioned in the report. The Bank of Canada reduced its key interest rate by 0.25 percent in June and lowered rates another 0.25 percent on July 24.

AutoTrader’s report indicated that car buyers are still facing “historically high” monthly payments, with Canadians now paying an average of 34 percent more each month compared to pre-COVID-19 times.

“However, the positive news is that this figure has been progressively decreasing in the first half of the year, and with these interest rate reductions, it is expected to continue declining in the second half of the year,” stated AutoTrader.

The average monthly payment for purchasing a used vehicle is $624, according to the report.

“We believe that vehicle prices for both new and used cars likely peaked in 2023, at least in the short term, although a return to pre-pandemic prices is not expected anytime soon,” AutoTrader mentioned in its report.

Among used vehicles, truck prices decreased by five percent, car prices saw a six percent drop, and the cost of purchasing a pre-owned SUV decreased by 10 percent in June.

Other vehicles like used minivans did not see as significant of a decline, dropping by about 0.8 percent compared to June 2023.

“In June 2024, the average price of a used car decreased by 1.1 percent to $36,342 compared to the previous month, marking an 8.3 percent year-over-year decline,” the report disclosed.

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