Canadian used car prices beginning to drop: report

FILE - Vehicles drive along Broadway in Vancouver in 2016. (Dustin Godfrey/ CityNews photo)

By Mike Lloyd

Posted September 15, 2022 9:42 am.

You’ve probably heard the sales pitch… “There’s never been a better time to buy a used car!”

While that’s not the experience for most car-buyers right now, a new report suggests prices are starting to come down.

According to Carpages.ca, used vehicle prices are on the decline across Canada, dropping more than six per cent after peaking during the first half of this year.

The data suggests some types of vehicle are seeing steeper drops than others — sedans the most, minivans the least.

But CityNews Automotive Specialist Tim Dimopoulos points out this is all relative — used car prices are still way above what they were pre-pandemic.

“I’ve seen various studies that show a downward trend, but that downward trend is pretty minute,” he said. “The market is still very high comparative to pre-pandemic levels.”

Dimopoulos attributes the decline in used vehicle prices to financially squeezed drivers putting off major purchases.

“It’s largely due to interest rates. We’ve seen the housing market slow down and car purchases, even on the used side, can be very expensive. Most of the time they are financed, so going to the bank to borrow money or using dealer financing is getting more expensive,” he added.

The report also points to new car production ramping up, as a global chip shortage begins to ease, suggesting an increase in the availability of used cars is also bringing prices down.

“The new car production is increasing — it’s getting better, certainly, than it was at the height of the slowdown. However, most people who are buying new cars today, it is build-to-order.” Dimopoulos told CityNews. “That essentially means if you go into a dealership, you are not walking out with keys the next day. You’re placing an order, putting down a deposit, and you wait, and you wait, and you wait. For people who need a car right now, a used car still represents a more immediate purchase. That’s why there is still a bit of strength in the used car market.”

According to the Carpages.ca data, the average price of a used vehicle in Canada has increased every year since 2020, until June of this year, when prices across four segments — sedan, minivan, pickup truck, and SUV — all started to fall.

“Pre-owned sedans have experienced the largest drop in average price point. Between June and July, the average Carpages.ca listing price for a used sedan dipped 6% from the first two quarters of the year, from $30,475 to $28,553,” reads the report.

“Meanwhile, the average cost of a used pickup truck and SUV both dropped by only about 2% in the same time frame. The average price of a used pickup truck decreased from $42,684 to $42,042, and the average price of a used SUV dipped from $35,159 to $34,303. Minivans, however, declined the least in price at the turn of the third quarter, seeing only a 1% drop in average price ($36,850 from $37,266).”

But as Dimopoulos mentions, the declines are small compared to the previous run-up in prices.

The report finds pickup trucks still cost 35 per cent more than they did in the first two quarters of 2020, SUVs cost 43 per cent more, sedans cost 51 per cent more, and those family-toting minivans cost a whopping 93 per cent more.

“It still hurts if you’re in the market for a used car, or even a new car, with prices at fairly historic highs,” Dimopoulos added.

“And the most expensive category, from the research I’ve seen, is older stock. Cars five years and older have seen the greatest appreciation through the pandemic. So that $5,000 or $8,000 beater, you’ve seen very sharp increases in prices there. They are very expensive and they are hard to find.”

His advice to anyone shopping for a used car, who absolutely needs one right now, is not to wait.

“If it’s there, the price is the price. It’s not going to get better quickly, that’s for sure.”

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