A 2022 Volkswagen ID. 4 EV is shown at a charging station at a Scarborough, Ont., Canadian Tire on June 14, 2023.Doug Ives/The Canadian Press
There’s some relief in sight for car shoppers. Inventory is up and prices for new and used vehicles are dropping in Canada, especially for electric vehicles and used luxury vehicles, according to AutoTrader’s latest price index report.
“For the first time in over three years, we’re seeing a decline in new car prices on a year-over-year basis,” said Baris Akyurek, vice-president of insights and intelligence at AutoTrader, an online marketplace for new and used vehicles. In July, 2024, the average price for a new car was $66,812 – that’s a 0.7-per-cent decline. On the used side, the average price dropped to $36,075 – an 8.7-per-cent decrease.
The second-quarter report also shows a significant rise in vehicle inventory, which has helped to stabilize new vehicle prices. “Although we’re still below 2019 levels, [new car inventory is] up 70 per cent on a year-over-year basis. We are somewhat normalized in terms of overall new inventory figures,” Akyurek said.
With the increase of new vehicle availability, stabilizing prices and two recent interest rate cuts from the Bank of Canada, affordability is improving for Canadian consumers. The cost of borrowing and average monthly car loan payments are coming down slowly. The average monthly car payment was $624 in June, 2024. Even though that figure is still 34-per-cent higher than in 2019 – it has been decreasing gradually, falling by about $30 since it peaked at $652 in October, 2023.
Faced with higher prices for the previous four years, consumers have been forced to extend their loan terms, Akyurek said. But there, too, things are slowly improving. In December, 2023, the average loan term peaked at 72 months, or six years, up from 68 months in June, 2019. This June, it declined to 71 months.
Akyurek hopes more anticipated rate cuts will further improve matters. “The market consensus is two or three more [rate] cuts before the end of the year. Obviously, when that happens, we should be able to see the impact on these average interest rates and loan terms as well. So it’s good news.”
The average price of a used luxury vehicle in July was $57,592 – a 10-per-cent year-over-year decline. “Luxury brands are declining at a faster rate. Everybody is a bit more sensitive when it comes to financial matters and the demand is shifting from luxury to mainstream.” The average price of a used mainstream brand was $29,679.
EV prices are also dropping, by double digits. In July, 2024, the average price of a new fully electric car, or battery electric vehicle (BEV), was $74,043, which is nearly a 15-per-cent decline from around $87,000. The average price of a used BEV was $46,985, which is also a 15-per-cent decline.
“BEV inventory has been skyrocketing in the last while. It’s not surprising because more and more cars are coming into the market,” said Akyurek. By the end of 2024, approximately 145 BEV models are expected to be on sale in Canada.
While more BEVs are being produced, the demand for EVs has been declining. According to AutoTrader research, 46 per cent of Canadians who don’t own an EV were considering an EV in 2024 versus 68 per cent in 2022. The main reasons for the drop in interest – range anxiety, lack of charging infrastructure and higher prices compared to gas-powered vehicles. As a result, drivers are opting for less expensive hybrids and plug-in hybrids.
While prices are coming down, Akyurek said he doesn’t believe the market will ever return to prepandemic new and used car prices. In July, 2019, the average price of a new vehicle was $45,230; a used vehicle cost an average of $25,930.
“We don’t expect to go back to those levels any time soon and forever, most likely.” He blames high inflation, the introduction of more expensive BEVs and the consumer’s love affair with larger vehicles, which are pricier to build and more expensive to buy.
For now, however, he sees a short reprieve. “Prices are going down and interest rates are coming down – that’s obviously good news. But on the other hand, when these things happen, usually demand picks up. When demand picks up, prices will react accordingly,” Akyurek said.
If you’re shopping for a car, Akyurek suggests now might be an good time to buy. “If there is a particular car and you have the budget and the means for it, I would suggest you go for it. I’m not too sure I would recommend waiting it out.”
Shopping for a new car? Check out the new Globe Drive Build and Price Tool to see the latest discounts, rebates and rates on new cars, trucks and SUVs. Click here to get your price.