Will car prices come down in 2024? Industry experts share their outlook

As Canadians enter 2024, those hoping to pick up a new or used car may see similar prices to what was seen in 2023, with automotive experts saying not to expect the cost for a vehicle to return to pre-pandemic levels anytime soon.

During the COVID-19 pandemic, inventory became a big factor due to supply chain issues impacting semiconductors and automotive computer chips, and with it came higher prices due to fewer new and used cars available for purchase.

“So when there (are) fewer cars sold and new cars sold, obviously it has a direct impact on the used market,” Baris Akyurek, vice-president of insights and intelligence at Autotrader.ca, told Global News in an interview. “That’s why we have been seeing inflated prices.”

As 2023 came to a close, however, Akyurek said it has been a “pretty positive” year in terms of availability.

According to Auto Trader’s 2023 trends report released in September, the new car supply had increased from the month prior, with the organization predicting modest increases to inventory in the coming years. New car prices also saw a decline in October, signalling there could finally be a peak in price due to an oversupply of vehicles even with the demand for new cars.

In fact, it notes the new car supply is at its highest level since the middle of 2021, though it still is trying to catch up with “pent-up demand,” with Akyurek explaining there were still 1.3 million fewer vehicles sold between 2020 and 2022.

This week, DesRosiers Automotive Consultants reported that auto sales jumped 11.8 per cent in 2023 compared to the year prior because of that increased supply. That marks the biggest year-over-year increase since 1997.

Brian Kingston, president of the Canadian Vehicle Manufacturers Association (CVMA), said that an increase in sales will continue this year with a “return to normalcy” expected.

“You’re going to see inventories at regular levels and as a result, Canadians who want to buy a vehicle should be able to go and do so with relative ease and get what they want quickly,” he told Global News.

“It’s been a long and challenging recovery for the industry to come out of this COVID pandemic shock and all the supply chain issues, but I think we are hopefully seeing that in the rearview mirror, finally.”

That jump in demand for more recent models, however, means there may be less of a demand for used cars, for which prices have been declining since the end of summer. In just December, AutoTrader saw a 2.4-per cent month-over-month decrease, something Akyurek said hasn’t happened before.

But the increased availability may have Canadians still gravitating to the used car market, according to George Iny with the Automobile Protection Association.

He says people are often turning to late-model used cars for their availability, as opposed to the price.

“A typical case would be something like a Volkswagen GTI or a Toyota RAV4 hybrid, that’s a vehicle that someone might be waiting six to nine months to receive a delivery on in 2024, if not longer,” he said. “So the advantage of buying a three-year-old one for roughly the same price as a brand new one is you get it right away.”

Kingston adds during the pandemic it was a “seller’s market” for used cars because of the production issues, but in 2024 he expects with Canadians having much more access to new vehicles they desire, the used market will return more to its normal function.

New car prices are still the higher number, with AutoTrader reporting the average sitting at $67,817, a 19.4-per cent increase year-over-year, while the Canadian Black Book reports used vehicle are at $39,155 which is just a 4.3-per cent rise.

The sales of gas-powered vehicles won’t be the only rise in 2024, with Kingston saying there will be continuing “electrification” with more than 40 additional electric vehicle (EV) models rolling out this year.

“If a Canadian wants an EV, there will be something available that will meet their needs,” he said.

He adds there will likely be more adoption of the vehicles by Canadians this year, pointing out that electric vehicles accounted for 12.1 per cent of all new motor vehicles registered in the third quarter of 2023 — according to Statistics Canada. That’s an increase from 8.7 per cent at the same period in 2022.

In light of the federal government’s recently-announced roadmap to have 100 per cent of cars sold in Canada emitting zero emissions by 2035, Kingston said electrification is going to become more of a focus for Canadians.

“Canadians need to start thinking about an electric vehicle for their next car,” he said. “And starting to look at charging infrastructure, can they install a charger at their home, is there charging available at their place of work, will there be public charging available for the road trips they take, this is going to become increasingly important for all Canadians as we move into this new technology.”

And while inventory is seeing a boost for both the new and used cars, the Ontario Motor Vehicle Industry Council (OMVIC) cautions the market still hasn’t fully recovered to the point where prices will drop substantially.

“Although there has been some alleviation, the expense of acquiring a vehicle remains high for many Canadians, especially when combined with the currently elevated interest rates,” a spokesperson for OMVIC told Global News in an email.

The organization also warns as Canadians look into a potential vehicle purchase, they should also be sure to know how to protect themselves as supply chain challenges and the resulting inventory issues have led to “nefarious” sales tactics. It said this has included pressuring car buyers to purchase additional products with their vehicle, with it sometimes being presented as mandatory.

The spokesperson said car buyers should recognize they have the right to decline sales arrangements, such as charging a market adjustment fee, and if the dealer refuses, Canadians can walk away and buy elsewhere.

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