Across the border, the situation in the United States appears comparatively tamer. The data released by Kelly Blue Book (KBB) for June 2023 indicates a mere 1.6 percent increase in American new vehicle prices over the past year, bringing the average price to $48,808 USD (approximately $64,379 CAD). While the American market seems less affected, it still falls slightly below Canada's soaring $66,288 CAD average.
Examining individual segments within Canada's automotive market reveals varying degrees of price fluctuations. Surprisingly, trucks, with an average price of $75,072 CAD, experienced the smallest year-on-year increase at just 7 percent. On the other hand, SUVs and minivans saw more substantial price jumps, soaring by 16 percent and 18.4 percent, respectively. However, the most significant surge was observed in car prices, which spiked by a whopping 39.6 percent to reach an average of $56,264 CAD.
Despite a recovery in inventory levels from the lows of the previous year, the supply of SUVs and cars remains below 2021 levels. Meanwhile, consumer demand has remained robust, at least for now, contributing to the soaring prices. Consequently, buyers are finding themselves in need of longer loan terms to afford their new vehicles. The average loan term has increased to 72 months, compared to 68 months in 2019, as reported by Toronto's CTV News.
For budget-conscious Canadian car shoppers, the best advice is to consider the used car market. AutoTrader's figures reveal that the average price of used vehicles has risen by a modest 4.1 percent in the year leading up to June, significantly lower than the jaw-dropping 21.3 percent increase observed for new cars.