Prices in the automobile market are showing some slowdown, according to recent data. Still, average prices for new and used vehicles remain several thousand dollars higher than they were before the pandemic, forcing some buyers to spread their loan repayments over a longer period.
In recent months, the average price of new vehicles has stabilized in Canada. In November, it stood at around $67,500, according to the latest data from AutoHebdo.net, an online vehicle sales platform. However, this is a much higher sum than it was four years earlier. The average price for a new vehicle actually increased by more than $21,000 (45%) over this period.
That of used vehicles has been in slight decline since this summer. Also in November, it stood at around $37,800. But as in the case of new, it still recorded a strong increase over four years, an increase of almost $12,700 (50%).
Electricity pushes the average upwards
The slowdown in recent months is not unusual for this period. “Often, when we reach the end of the year, we see a decrease in prices because of the arrival of new models the following year. And then, towards spring, we see slight increases,” indicates the general director of AutoHebdo.net, Benoit Laforce.
Prices still seem to have stabilized for two quarters, observes the president and CEO of the Corporation of Quebec Automobile Dealers, Ian P. Sam Yue Chi. The latter adds that “prices reached a certain peak during the summer”, which was maintained as stock shortages subsided.
If dealers offer occasional promotions, however, we should not expect a significant drop in prices over the coming months. Current prices are the “new standard,” believes Mr. Laforce, who notes that “people continue to buy cars, even if the current economic context is tense.”
The increase in vehicle prices in recent years, combined with the increase in interest rates, is still being felt by consumers.
According to data from Equifax, the delinquency rate of 90 days or more for auto loans was up 23% in Canada in the third quarter compared to the same period a year earlier. In Quebec, it recorded an increase of 36%.
In addition, the duration of amortization of automobile loans is increasing, as evidenced by statistics compiled by the firm JD Power. In Canada, for the popular compact car and sport utility vehicle segments, the average loan term increased from 73 to 76 months between 2019 and 2023, which corresponds to an extension of approximately 4%. In particular, car loans spread over 84 months are increasingly contracted and are pushing the average upwards.
The current context also forces consumers to make choices that are “more rational than choices of the heart,” maintains Mr. Sam Yue Chi. “Depending on their ability to pay, they will move to a vehicle that is less equipped or look at a used vehicle,” he says.
Less waiting and enthusiasm for electric
Concerning the waiting times for the delivery of electric models, these “have improved considerably”, relates Mr. Sam Yue Chi. “We started from a situation where it sometimes took more than a year for the delivery of the vehicle. There, with the current delivery capacity of manufacturers, even for a very popular model, we are able to have it within three months,” he notes.
Although sales of electric vehicles have experienced strong growth in recent years, demand could however experience a “slight decline”, believes Mr. Sam Yue Chi.
Same observation from AutoHebdo.net, which conducted a survey of its users during the year 2023. The platform noted that “only 56% of current drivers of combustion vehicles say they are ready to consider a electric vehicle on their next purchase, down from 68% the previous year.” The main reason given: the price, still considered too high.