As we enter 2024, Canadians hoping to purchase a new or used car may be wondering if prices will return to pre-pandemic levels. Unfortunately, automotive experts suggest that it’s unlikely prices will drop significantly anytime soon. The COVID-19 pandemic disrupted the automotive industry, causing supply chain issues that resulted in higher prices due to a shortage of new and used cars available for purchase.

The Impact of Supply Chain Issues

During the pandemic, the shortage of semiconductors and automotive computer chips greatly affected the availability of cars. With fewer cars being sold, both new and used, there has been a direct impact on the used car market. This scarcity of vehicles has led to inflated prices.

Increasing Availability and Inventory

Although the availability of cars has improved throughout 2023, experts predict that it will take time for prices to stabilize. According to Auto Trader’s 2023 trends report, new car supply has increased, and prices have seen a decline in October. This signals that there may be a peak in prices due to an oversupply of vehicles, despite the demand for new cars.

However, it’s important to note that the new car supply is still catching up with the pent-up demand caused by the pandemic. Between 2020 and 2022, there were 1.3 million fewer vehicles sold. As a result, the demand for more recent models may affect the used car market, leading to a decrease in prices.

A Return to Normalcy

DesRosiers Automotive Consultants reported an 11.8% increase in auto sales in 2023 compared to the previous year. This significant rise in sales is expected to continue, with a “return to normalcy” predicted by Brian Kingston, president of the Canadian Vehicle Manufacturers Association (CVMA). Kingston believes that inventories will stabilize, allowing Canadians to buy vehicles more easily and quickly.

The Attraction of Used Cars

Despite the availability of new cars, many Canadians still gravitate towards the used car market. This preference is often due to the availability of late-model used cars rather than their price. Buying a three-year-old vehicle for a similar price as a new one allows consumers to have immediate access to the car they desire.

However, experts suggest that as the automotive industry recovers from the pandemic and production issues, the used car market will return to its normal function. This means that prices for used cars may decrease as new car inventories stabilize.

The Rise of Electric Vehicles

In addition to the increase in sales of gas-powered vehicles, there is a growing interest in electric vehicles (EVs). Kingston predicts that over 40 additional EV models will be introduced in Canada in 2024. This growth in options will provide Canadians with more choices to meet their needs.

Statistics Canada reveals that the adoption of electric vehicles is increasing. In the third quarter of 2023, electric vehicles accounted for 12.1% of all new motor vehicles registered in Canada, compared to 8.7% during the same period in 2022. This trend is expected to continue as the federal government aims for 100% of cars sold in Canada to emit zero emissions by 2035.

Looking Ahead: Buyers Beware

While there has been some improvement in inventory and availability, the Ontario Motor Vehicle Industry Council (OMVIC) advises caution. Prices have not dropped substantially, and the market has not fully recovered. Additionally, supply chain challenges have led to unethical sales tactics. Car buyers should be aware of their rights and protect themselves from being pressured into purchasing unnecessary products or paying additional fees.

As we move forward, it’s important for Canadians to consider the future of the automotive industry. The focus on electrification and the government’s plans for zero emissions by 2035 indicate that electric vehicles will play a significant role. Canadians are encouraged to start thinking about adopting electric vehicles and to consider factors such as charging infrastructure.

For all your automotive needs, visit MMSPLAY. Join us as we navigate the ever-changing world of cars and find the best deals on new and used vehicles.

— With files from Global News’ Kyle Benning and The Canadian Press