Potential car buyers have likely noticed a dramatic change at dealerships of late: Vehicle prices are much higher today than just a few years ago.
The average price of a new vehicle on AutoTrader.ca was nearly $68,000 in October, based on thousands of listings on the website. For used cars, the average price was close to $39,000. (AutoTrader makes adjustments for vehicle make and age, so that fluctuations in inventory don’t affect the average price too greatly.)
While those prices appear to have levelled off, they are way up from recent years. For new vehicles, the average price has risen by 39 per cent – or $19,000 – over the past two years alone. Used car prices have jumped 25 per cent over the same span.
For much of the COVID-19 pandemic, vehicle production was hampered by supply chain disruptions, resulting in minimal supply on car lots – and putting loads of upward pressure on prices. Inventories are improving, but remain nowhere close to prepandemic levels.
This suggests there is still plenty of pent-up demand for vehicles that is going unsatisfied. Hopeful buyers may need to wait even longer, given a deterioration in affordability. Not only have prices risen sharply, so too have interest rates for auto loans.
Through October, auto sales in Canada are up 10 per cent from the same period last year, but are down 14 per cent from 2019.
Canadian and U.S. inflation reports point to a slightly different trend. Over the past year, prices for all vehicles (new and used) in Canada have risen 1.4 per cent, according to Statistics Canada. The U.S. Bureau of Labor Statistics says used car prices peaked early in 2022, and that over the past year, they have fallen 8 per cent. Even so, cars are much more expensive than before the pandemic – a frustration for those in search of new wheels.
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