The AutoTrader Price Index is showing a drop in car prices, signifying the first time new car prices have declined month-over-month since February 2021, while used car prices continue to decline as well.
In December 2023, the average price of a new vehicle stood at $67,259. That's up a substantial 14.2 per cent from the same month a year before, but the figure has been slowly and steadily falling. Prices were down 0.4 per cent in October, 0.1 in November, and 0.3 per cent in December after reaching record highs in September.
The slow price decline is a result of a new-car market still trying to catch up with pent-up demand from 2020 to 2022, said Baris Akyurek, AutoTrader VP of Insights & Intelligence. AutoTrader estimates that 1.3 million fewer new vehicles were sold during that period. But, Akyurek said, new car inventory levels are now trending upward. This is resulting in softened pricing for new and used models.
"There are a lot of great deals to be had in the market," he said in his report.
Used vehicle pricing reached an average of $36,863. That's up 1.7 per cent from December 2022 but down 2.4 per cent from November 2023. Used car pricing has been declining for six consecutive months, the report found, as used vehicle inventory has increased. Akyurek said that AutoTrader expects used car prices to fall this month to lower than they were in the previous year for the first time in 3.5 years.
Despite declines, prices are still high. Mix that with high interest rates, and monthly payments are also up. Vehicle payments have climbed by 37.2 per cent compared with pre-pandemic payments, with the average used vehicle payment now $647. Akyurek said that AutoTrader expects payments to decrease as both lower prices and expected interest rate cuts take effect.
Cars (as opposed to SUVs, minivans, and trucks) are seeing the highest price increases, according to the report. That's attributed to buyers looking for more affordable and more fuel-efficient vehicles combined with fewer new compact car models being produced by automakers. The report also notes that there are more EVs in the compact car segment, and with the high-tech new models comes an approximate price bump of 20 per cent.
The AutoTrader Price Index offers a monthly view of the Canadian automotive market by analyzing vehicle pricing associated with hundreds of thousands of new and used vehicle listings, bringing you the latest in pricing shifts and trends over time.