A significant increase in new car inventories is cooling the heated used car market across the country.
In British Columbia, new car prices have increased by 1.4 per cent year-over-year from an average of $67,827 to $68,776, according to a second-quarter report from AutoTrader released late last month.
In comparison, the average price of a used car in the province has decreased by a whopping 7.5 per cent year over year – the third-lowest decline in Canada – from $43,946 to $40,651.
This comes as inventory of new vehicles has ramped up by 70 per cent. The Bank of Canada, meanwhile, has been cutting its overnight rate in recent months, allowing for lower interest rates on car loans.
New car interest rates from manufacturers have decreased from 6.2 per cent by the end of last year, to 5.3 per cent this past quarter.
The cost of a new car in Canada is now averaging $66,807, an increase of 0.8 per cent year over year.
A boost in new car sales and trade-ins have led buyers away from purchasing used cars, triggering an accumulation of used car supply, decreasing average prices of used cars by 8.3 per cent annually to $36,342 nationwide.
This has opened up opportunities for buyers, especially for luxury used vehicles, which saw a 10.4-per-cent drop since the second quarter of 2023.
In Canada, the three most-searched vehicles were the Ford F-150 at the top, selling new for $73,902 and used for $41,889; the Porsche 911, selling new for an unreported amount and used for $185,873; and at third spot, the Toyota RAV4 selling new for $41,385 and used for $31,280.
New and used car prices peaked in 2023 and are unlikely to return to pre-pandemic pricing in the near future, the AutoTrader report stated.
Some of the factors driving higher prices include inflation, the preference for larger and more expensive vehicles in Canada, and the higher cost of electric vehicles.
Looking towards the second half of 2024, prices for new cars are expected to remain stable, according to the report.
