After a strong start to 2023, the demand for used cars has gradually softened since Q3 of last year. This shift combined with the rise in used inventory resulting from robust growth in new car sales and the ramp up in trade-ins of used vehicles, in addition to demand pivoting from used to new cars, has resulted in used vehicle price declines since mid-2023. New car prices have also dipped since the final quarter of last year. We believe vehicle prices, for both new and used, likely peaked in 2023 and are now receding, at least in the short term.
In March 2024, the average price of a used vehicle decreased by -2.1% compared to February, settling in at $37,662, representing a -4.0% year-over- year dip. New vehicle prices averaged $66,422, indicating a 7.4% increase from the same period last year but experiencing a -0.8% drop on a month-over- month basis. Furthermore, interest rates offered by captive lenders for new vehicles have also decreased, softening from their peak of 6.2% in November 2023 to 5.3% in March*, making new vehicle ownership more accessible for Canadians.
Looking ahead to April, we anticipate the trend of used car price normalization to continue, however, as noted in the previous AutoTrader Price Index, we do not expect a return to pre-pandemic prices anytime soon.
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