The used car market demonstrated robust performance in the final quarter of 2024, with estimated sales surging 5.3% year-over-year*, driven by declining interest rates and vehicle prices, which bolstered demand against the backdrop of a slower sales period in the previous year.
Supply dynamics mirrored pre-pandemic patterns, with quarter-over-quarter inventory growth. However, year-over-year inventory levels remain slightly constrained, a lingering effect of COVID-era production challenges that resulted in approximately 1.5 million fewer vehicles sold. This supply shortage is expected to persist, particularly for younger used vehicles, due to a reduction in lease returns. The situation is further complicated by Canada’s weakened currency, potentially leading to increased vehicle exports to the United States.
In the new car segment, prices have experienced a slight downturn while inventory levels continue to rise. Interest rates for new vehicles have decreased, aligning with the Bank of Canada’s rate cuts. Sales data indicates strong performance in the quarter, surpassing both year-over-year and 2019 figures. However, uncertainties loom regarding potential tariffs under the new U.S. administration, clouding the 2025 outlook. Barring any significant macroeconomic shifts, current sales momentum is anticipated to continue.
December 2024 saw average used car prices fall to $34,445, a 6.6% year-over-year decline, while new car prices averaged $65,219, down 3.0% from the previous year. Notably, used vehicle prices recorded a 12.1% annual decline, the largest ever observed. New car interest rates (for subvented loans) dropped to 4.6% from a peak of 6.2%, reflecting increased vehicle availability and the Bank of Canada’s rate reductions. These factors collectively contribute to improved affordability for Canadian consumers in the automotive market.
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