Canadian Black Book predicts four more years of high prices for used vehicles
Canadians struggling with high used car prices shouldn’t expect a value bubble to burst. High prices will be around until 2026, according to the Canadian Black Book.
The organization’s Director of OEM Strategy and Analytics, James Hancock, spoke with Automotive News Canada recently and predicted that the new inventory crisis stemming from the shortage of semiconductors will continue until mid-2023 at the earliest. And that will have ripple effects.
With fewer vehicles sold so far, there will be fewer used vehicles, whether lease returns or trade-ins, coming to market in 2024, 2025 and 2026. Dealerships will therefore need to continue to buy these cars at inflated values.
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“To be honest, I’ve never seen anything like it,” Hancock said. “I’ve been in the automotive business for 15 years, and it’s been an incredible time.”
Fortunately, even though used vehicle prices have been rising in Canada, up 4.1% this year, the data suggests the peak in prices actually took place in 2021 and on average it has come down. from. That, Hancock said, suggests it’s not a bubble that’s about to burst. Instead, prices are expected to slowly decline over the next four years.
High used vehicle prices, among other factors, are forcing Canadian dealerships to adapt their strategies. Physical dealerships are actually at a disadvantage in this market because vehicle owners shop around for the best prices for their trade-ins so they can afford a better vehicle.
“Consumers are smart, well-aware, well-informed, and they’re looking to maximize the value of this car and their equity position on this car,” Hancock said. “So they also buy their cars from other dealerships to see if anyone is willing to pay more.”
This has given online-only dealerships an edge and could change the landscape of car buying for years to come.