It’s been a seller’s market for both new and used vehicles due to low inventory levels and surging demand. However, there are signs that used vehicle prices may have finally peaked, while the cost of new cars continues to climb steadily.
A recent survey by AutoTrader found new and used car prices in Canada remain high due to supply chain issues and microchip shortages. After 18 months of steady monthly increases, used car prices have consecutively dropped for two months in a row, but only by less than half a per cent.
In this current market, anyone who finds a vehicle they like may want to purchase it before someone else does.
“If you’re looking for a car and you find the car you’re looking for, we suggest you pull the trigger relatively soon,” Baris Akyurek, Director of Marketing Intelligence with AutoTrader said.
AutoTrader crunched the numbers and found the average price of a new vehicle in August was $56,078. That’s an increase of 18.3 per cent over the same period last year.
The average used vehicle price in August was $37,768, an increase of 28.6 per cent higher year over year.
While new car prices continue to rise, Akyurek said there are signs the cost of used cars may have peaked and could start to trend downwards.
“We expect that prices have plateaued and they will soon start to go down slowly over the next while,” he said.
The survey also found that 23 per cent of car shoppers are willing to pay more for a vehicle and 61 per cent are willing to drive farther away to find a vehicle they want to buy.
Forty-three per cent would purchase a different brand than what they were originally searching for and 36 per cent are willing to switch from new to used just to get a vehicle without having to wait.
While cars are selling twice as fast as they used to, buyers of used vehicles are still advised to go for a test drive, get an inspection and view a Carfax Report, which can inform buyers about the vehicle’s history.
“Our Carfax report include the odometer records, maintenance records, has that vehicle been involved in an accident, if the vehicle is currently reported stolen and if the vehicle has any open safety recalls,” Shawn Vording, Vice President of Product and Sales at Carfax Canada said.
Vording said the vast majority of car dealerships provide a Carfax report to buyers, but those who are buying a car privately can purchase one through the company’s website for a fee of $43.95 plus tax.
The automotive industry says inventory levels are starting to increase as manufacturers ramp up production and demand is dropping slightly as rising interest rates make car loans more expensive.
Even with fewer vehicles to choose from buyers should not be rushed into a buying decision. There is no cooling off period when buying a vehicle in Ontario, so don’t sign any contract unless you’re sure you want to follow through with the purchase.