Comparing Used and New Cars: Which Market Offers the Better Deal?

Experts Indicate Improved Vehicle Inventory and Pricing Conditions for Canadian Consumers

The outlook for Canadians seeking a new vehicle this spring and summer appears promising, as recent years of constrained supply and elevated prices may be easing, according to experts.

The disruptions caused by pandemic-related supply chain challenges, notably semiconductor shortages, created significant delays in new car production, resulting in limited vehicle availability and inflated prices in both the new and used car markets.

However, industry analysts suggest signs of normalization are emerging, with dealership lots showing improved inventory levels. While some models may offer discounts due to increased supply, certain vehicles continue to face strong demand, leading to competition and limited availability.

Despite overall improvements, inventory disparities persist across manufacturers and models. Domestic automakers tend to have better inventory levels, while popular international brands like Toyota may still experience shortages.

Shari Prymak, Executive Director of Car Help Canada, notes incremental improvements in new vehicle inventory. However, high-demand vehicles, particularly hybrid models, may still entail lengthy waiting periods and minimal negotiation flexibility due to persistent shortages.

While the North American production of light vehicles rebounded in 2023, with inventory levels reaching a three-year high, Prymak suggests that the recovery in supply has been more pronounced in the United States than in Canada.

The used car market also shows signs of easing prices, with the AutoTrader.ca Price Index reporting a slight decline in average prices for both new and used vehicles. However, used car prices remain elevated compared to pre-pandemic levels, prompting consumers to reconsider their options.

Interest rates for used vehicles tend to be higher, offsetting potential savings compared to new models. Therefore, experts caution buyers to assess whether the marginal savings of purchasing a used vehicle justify potential quality trade-offs.

Despite the challenges, Canadian auto sales have remained resilient, fueled by pent-up demand and robust population growth. However, upcoming mortgage renewals may impact consumer spending, potentially moderating vehicle sales growth.

Looking ahead, dealerships may offer incentives and discounts on overbuilt vehicle categories, such as luxury and electric vehicles, and larger vehicles like pickup trucks. Buyers are advised to remain flexible and explore less prominent brands with ample inventory and negotiation room for better deals.