For over a year and a half, car buyers have faced high prices and a lack of inventory at dealerships thanks to the global microchip shortage. But there are finally signs that prices in the used car market may have peaked.
The average price for a used car declined 0.4 per cent for two consecutive months after peaking in June at $38,097. These declines also marked the first time in 18 months that used car prices went down.
"Based on what's happening in the market, we believe that peak has been reached and then going forward, (prices are) going to plateau and soften in next few months," Baris Akyurek, director of marketing intelligence at AutoTrader.ca, told CTVNews.ca on Friday.
Used vehicle inventory has also been rebounding, AutoTrader's data shows. Although sedans and hatchbacks saw a slight decrease in inventory in the second quarter of 2022, inventory for SUVs is up 35.7 per cent compared to the previous quarter, while truck inventory is up 123.8 per cent.
"Used inventory has been improving pretty much since the beginning of the year," Akyurek explained. "Compared to last year's levels, we have more used car inventory on a year over year basis."
But on the other hand, prices for new cars have continued to climb and haven't showed any signs of slowing down. In July 2022, the average new car listed on AutoTrader.ca was $55,469, up 1.5 per cent from the previous month and 18 per cent from the previous year. On top of that, new car inventory has continued to slide.
"I think the stories are somewhat different between new and used. So new prices keep going up, because when you look at the market, the inventory is still limited. But on the other hand, when you look at the used side of things, things have started to plateau a little bit," said Akyurek.
CANADIANS ADJUSTING TO HIGHER CAR PRICES: SURVEY
Akyurek said the ongoing high prices and low availability have forced consumers to change their buying habits. In a survey conducted by AutoTrader, 61 per cent of consumers indicated that they would travel more than 400 kilometres to get a desired vehicle, compared to 41 per cent in last year's survey.
"I think the more and more you're in the market looking for a car, the more you realize that there's certain limitations in the market," he said.
In addition, last year's survey found that 27 per cent of respondents who were looking for a new vehicle were willing to switch to purchasing a used vehicle, given the long wait times and low inventory at many dealerships. This year, 36 per cent of respondents answered "yes" to that question.
In this current car market, Akyurek said it's more important than ever for car buyers to do their research.
"I highly recommend that you do your research, know your budget," he said. "Then once you find the car, you got to pull the trigger because that car might not be there when you check it next week."
