Earlier this year, I celebrated my 10-year anniversary at AutoTrader, Canada’s leading online automotive marketplace. During the first half of my tenure, until the pandemic, we didn’t experience many “macro” changes in the automotive market. Prices went up or down by a few percentage points here and there, vehicle availability didn’t change materially, there were no government mandates on electric vehicles and demand remained relatively steady – boring stuff.
When it comes to used vehicles, our data show that cars priced below $40,000 now sell at a much faster rate compared with their more expensive counterparts, which indicates an increased level of demand for cheaper vehicles. The result has been larger price reductions for luxury brands. Additionally, consumers lengthened loan terms to keep a lid on their monthly payments. Before the pandemic, the average monthly payment for a used vehicle was $466; now it sits at $629. To adjust to these increases, used car loan terms grew to an average of almost 72 months in 2023 from 67 months.