Canada's economy gained a net 100 jobs in December, entirely in part-time work, and the jobless rate held at 5.8%, Statistics Canada data showed on Friday.
As Canadians step into the new year, the landscape for purchasing new or used cars doesn't foresee a drastic change in prices compared to 2023. Industry specialists caution that the cost of vehicles might persist at the elevated levels experienced during the pandemic, indicating a delay in returning to pre-pandemic rates.
The significant factor contributing to this scenario remains the impact of supply chain disruptions, notably affecting semiconductors and automotive computer chips during the COVID-19 pandemic. Consequently, this shortage resulted in fewer new and used cars available in the market, leading to inflated prices due to limited inventory.
Baris Akyurek, Autotrader.ca's Vice President of Insights and Intelligence, highlighted the correlation between diminished sales and its direct impact on the used car market. This reduction in sales volume directly contributed to inflated prices witnessed in recent times.
However, Akyurek noted that as 2023 concluded, there was a positive shift in terms of vehicle availability. Auto Trader's 2023 trends report indicated a rise in new car supply from the previous month, with expectations for a gradual increase in inventory over the upcoming years. Additionally, the report observed a decline in new car prices in October, indicating a possible stabilization in prices due to an oversupply of vehicles, despite sustained demand.
DesRosiers Automotive Consultants reported a remarkable 11.8% surge in auto sales in 2023 compared to the previous year, marking the most substantial year-over-year increase since 1997. Brian Kingston, President of the Canadian Vehicle Manufacturers Association (CVMA), expressed optimism about the expected sales growth, predicting a return to regular inventory levels.
Nevertheless, the burgeoning demand for newer car models might affect the used car market, where prices have witnessed a decline since the end of summer. Despite this decline, there remains an increased preference for late-model used cars, driven more by their availability than the pricing factor, as suggested by George Iny from the Automobile Protection Association.
Regarding price comparisons, the average new car price currently sits at $67,817, indicating a 19.4% increase year-over-year, while the Canadian Black Book reports used vehicle prices at $39,155, marking a modest 4.3% rise.
Looking ahead to 2024, the industry expects a surge in electric vehicle (EV) sales, with more than 40 additional EV models anticipated to debut. Kingston emphasized the increasing adoption of EVs among Canadians, pointing out the significant rise in EV registrations according to Statistics Canada.
While the market shows signs of improvement with increased inventory for both new and used cars, the Ontario Motor Vehicle Industry Council (OMVIC) advises caution, highlighting that prices may not significantly drop due to lingering supply chain challenges. Additionally, OMVIC warns buyers about potentially deceptive sales tactics, urging them to be aware of their rights and make informed decisions while making vehicle purchases.
The landscape for the automotive market in 2024 indicates a mix of optimism and caution, with lingering effects of the pandemic and supply chain disruptions impacting price trends and consumer choices.
Contributions from Global News' Kyle Benning and The Canadian Press were used in this report.
