Here’s how much used car prices have dropped in Ontario

While much attention has been paid to the rising cost of living in Canada–particularly housing and food–the rising price of used and new vehicles has also made headlines.

Fortunately for those hoping to purchase a new car, prices have stabilized or, in the case of used vehicles, decreased. 

AutoTrader, Canada’s largest automotive marketplace, recently released its latest price index report. The second-quarter report comes with some good news for drivers–there are more vehicles available for sale and with increased inventory comes less upward pressure on prices. 

According to the report, the average price of a used vehicle in Canada has dropped eight per cent from June 2023 to June 2024 to sit at $36,342. The situation for those seeking new cars isn’t quite the same. According to the report, the average price of a new car hit $66,807 in June, a slight increase of 0.8 per cent year-over-year. 

“Starting in the third quarter of last year, used car demand softened slightly on a year-over-year basis,” the report reads. 

“This trend, coupled with increased used car supply, resulting from strong new car sales and subsequent trade-ins, as well as a pivot in demand to new cars due to a ramp up in production and availability, has brought about declining used car prices.” 

The increase in inventory is significant, with a 70 per cent increase in new cars available for sale in Canada. The inventory for used cars climbed 28 per cent year-over-year. The increase in options coupled with declining interest rates has, according to Auto Trader, made vehicles more affordable. The report also notes that buyers are starting to see more incentives again, such as even more competitive interest rates from lenders. 

According to the report, luxury vehicles are becoming less expensive, with the average price dropping about 10 per cent between June 2023 and June 2024. 

But while prices are dropping or stabilizing, they’re still elevated–and Auto Trader doesn’t see them returning to pre-pandemic levels any time soon.

As far as monthly payments go, used car owners are paying an average of $624 a month–34 per cent more than the average payment pre-COVID. That said, the report says Bank of Canada rate cuts (of which more are expected) could provide more relief for drivers going forward. As of now, car owners are seeking relief through longer lending periods. The report indicates that in June 2024, loan terms averaged 71 months, more than the 68-month average reported in June 2019. 

While the report notes that people are starting to shift back to eyeing new vehicles over used ones, new cars are more costly than trucks, SUVs and mini-vans. 

“Aligned to observations from our past few reports, the largest year-over-year new vehicle price increases by body type can be seen in cars, (as opposed to trucks, SUVs, or minivans),” the report says, attributing the discrepancy to the push among consumers to buy smaller cars (which tend to be more affordable than larger ones on average), the trend amongst manufacturers to produce fewer small cars and the rise of electric vehicles, which tend to be more expensive. 

As far as popular vehicles go, the report says the most in-demand new vehicles include the Ford F-150, the Porsche 911, the Toyota RAV-4, the Ford Mustang and the Honda Civic. More popular used vehicles include the Honda CRV, the RAM 1500, the Ford Escape, the Toyota Corolla and the Hyundai Elantra, to name a few. 

But while 2019 prices might not be a realistic expectation amongst shoppers, the report says the current environment should leave consumers optimistic that prices are, at the very least, holding steady.