New and used vehicle supply is surging. Here’s how prices are reacting

Used car prices successful Canada are coming down from past year’s peaks acknowledgment to a surge successful inventory and buyers shifting backmost to nan caller conveyance market, according to a caller report.

AutoTrader released its 2nd 4th Price Index study connected Tuesday showing that Canada’s mean utilized car value dropped 8 per cent year-over-year to $36,342. That comes arsenic banal for utilized vehicles jumped 28 per cent complete nan aforesaid period.

Luxury utilized vehicles are peculiarly seeing prices ease, declining 10 per cent from past year’s levels.

Prices are holding dependable for caller vehicles astatine an mean of $66,807, up little than a percent constituent year-over-year. But nan disposable banal of caller vehicles surged successful that time, jumping up 70 per cent annually.

AutoTrader said car prices successful some nan caller and utilized markets person receded from their peaks successful 2023 now that semiconductor shortages and different proviso concatenation snarls that delayed conveyance accumulation are successful nan rear position mirror.

While motorists were relying connected nan utilized car marketplace to acquisition vehicles successful a timely manner, that request is now shifting backmost towards caller cars, AutoTrader noted. Drivers are now trading successful their aged vehicles arsenic they acquisition new, helping to build up nan banal of utilized cars successful Canada.

AutoTrader warned that caller and utilized conveyance prices are “unlikely” to return to pre-pandemic levels anytime soon, though nan automotive marketplace forecast “steady” pricing for nan remainder of nan year.

Even if caller car prices aren’t shifting into reverse, AutoTrader notes that affordability is improving successful nan conception acknowledgment to declining liking rates.

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Average lending rates offered straight from automakers dropped to 5.3 per cent past month, down from 6.2 per cent successful November of past year, AutoTrader said.

“As caller car proviso returns to normal, prices flatten, and liking rates drop, affordability improves,” nan study said.

The Bank of Canada delivered an first 25-basis-point liking complaint trim successful June pinch many economists expecting nan cardinal slope to present much complaint relief astatine its adjacent determination connected Wednesday.

AutoTrader expects that pinch further complaint cuts successful nan cards for nan remainder of 2024 and 2025, activity successful nan utilized car marketplace successful peculiar should prime up, arsenic lower-income consumers are peculiarly delicate to changes successful borrowing costs.