Toronto, Ontario — Vehicle prices in Canada have hit an all-time high, with the average vehicle selling for more than $40,000.
If you’re looking to buy a new or used vehicle you may have thought prices would be lower due to the COVID-19 pandemic but there are several factors that are making them cost more.
“Vehicle pricing is rising in Canada. We have actually hit record pricing this year,” said Robert Karwel, an automotive senior manager with J.D.Power.
Due to the lack of supply, incentives being held back and because Canadians want to drive more expensive vehicles. There has been an ongoing trend with Canadians trading in their passenger cars to buy SUVs, crossovers, and pick-up trucks, which are generally more expensive.
As vehicles cost more Canadians are taking out longer loans to pay for them. According to J.D.Power the most popular loan term in Canada is now 84-months.
That’s seven years to pay off a car loan…
“The rate over which people take the 84-month financing has accelerated under the pandemic situation right now,” said Karwel.
J.D.Power found that in Canada last year 80 per cent of vehicles purchased were SUVs. crossover, and pick-up trucks while only 20 per cent were passenger cars.
In 2021, the number of cars sold is expected to shrink to just 16 per cent. Brian Murphy said the supply of vehicles has been impacted by the pandemic as some factories had to shut down or wait for parts, and it may not be until later this year that supply catches up with demand.
‘All around the world, there are different interruptions with factories being closed either for short or long periods of time. So they are just making as many vehicles right now,” said Murphy.
Prices are also higher due to fewer vehicles on lots for sale manufacturers have seated back cash incentives and financing offers.
There may still be deeds to be found but you might have to search harder to find them.