Canadian Used Car Market Overview
Market Trends and Pricing
Used car price decline in Canada during 2024 compared to the previous year
Source: AutoTrader.ca
The Canadian used car market had been showing signs of normalization throughout 2024:
- Canadian Black Book (CBB) observed a 12-14% retail used price correction in the second half of 2024
- The average price of a used car in the US is $25,128 as of March 2025, providing a reference point for North American market trends
- Used car prices have risen 0.4% in March 2025, breaking the typical pattern of price declines early in the year
- This recent price increase is likely in anticipation of the tariff impacts
Recent Market Signal:
Sellers have stopped dropping their prices as often, with a 22% year-over-year decline in the number of price drops amongst all vehicles listed on AutoTrader.
Supply and Demand Factors
| Year | Projected Supply (millions) | Year-over-Year Change |
|---|---|---|
| 2025 | 1.57 | -3% |
| 2026 | 1.55 | -1.3% |
| 2027 | 1.54 | -0.6% |
| 2028 | 1.65 | +7.1% |
Key supply factors affecting the market:
- CBB forecasts used-car supply in Canada to decline 3% annually to 1.57 million units in 2025
- Supply is expected to continue falling in 2026 and 2027, bottoming out at 1.54 million units before rebounding to 1.65 million in 2028
- Leasing hit a low of 18% between 2021 and 2022, which will drag down used supply in 2025
- The lack of off-lease vehicles will hit the certified pre-owned market especially hard
Financing Environment
Bank of Canada Rate Cuts
The Bank of Canada began cutting interest rates in 2024, and rate cuts are expected to continue through 2025
Used Car Loan Rates
Despite central bank rate cuts, used car loan rates remain high, averaging around 14% APR
The financing environment presents challenges for the used car market:
- Central bank rate cuts haven't had a large impact on used-car loans
- High interest rates for used car financing continue to be a challenge for the market
- Financing costs are offsetting some of the price decreases seen in 2024
- Lenders have been cautious about used vehicle values, maintaining higher rates than for new vehicles
Current Dealer Strategies
Canadian dealerships are already adapting to the anticipated tariff impacts:
- Some Canadian dealerships are building up inventory now to provide a cushion against price increases
- Vehicles imported before tariffs go into effect won't be affected by the new duties
- Dealers are becoming more selective about the used vehicles they acquire
- There's increased focus on domestic models that may be less affected by tariff complications