Best way to ride out the NAFTA storm? Buy used
Whether tariffs come in or not, new car prices are sure to rise in coming years
Quick: which is scarier? Being told there is a shark in the water, or being told there “might” be a shark in the water? Doesn’t matter, does it? They’ll both keep you out of the water. It’s a similar issue when the White House threatens to place huge tariffs on Canadian vehicles; nobody has ever seen even the threat of such a thing bring about lower prices. Which means it’s time to consider your next car purchase in earnest.
Manufacturers are going to keep their powder dry, trying to figure out what will happen next.
The rest of us are finally being faced with something we’ve been able to dodge for a long time: what if replacing my current car isn’t going to be as simple as it’s always been?
Record sales, year over year, couldn’t continue forever and are now levelling off. But cheap fuel costs, low interest rates and extended loan periods mean many of us have forgotten that treating a vehicle like a disposable razor was only ever good for the people making and selling them. Consumers have been spoiled and lazy and willing to have a car payment in their budget seemingly forever.
So, with the possibility of huge increases in prices, and the certainty of disruption with the government that runs our biggest trading partner, what should you do?
If you already know you’re in the market for a car and pushing the sale up a month or two won’t matter, fill your boots. If you’re a gambling sort, know that if proposed tariffs hit (and some affecting the industry already have, because content percentages and steel tariffs will also impact price), the cost of many new vehicles will jack, but the cost of used ones might return to Earth.
How so? Right now, many of our used vehicles are shipped to the U.S. That has led to fewer used here, so prices have held high. If tariffs are slapped on those used vehicles, most will stay here, driving down prices.
Those buying used might be the only winners in this scenario.
It took years for the leasing business to return to form after the collapse in 2008. People love leasing because too many of us buy a car a month at a time, and leasing makes it seem cheaper.
Same with 84-month loans, which are the work of the devil. If used car prices plunge, leasing rates will head up to counter that lost value at the end of the lease. And that car with the long-term loan, that you’re sick of, that is out of warranty and you’re still paying on, will be worth less still. So what do you do?
You start thinking differently when you look at your car. Cars have never been better built and safer than they are now.
If you’re currently in a lease, take a look at your agreement and rethink casting if off when the term is up. Start thinking of it as your car, not a long-term rental you can scratch or put off replacing tires. Think of it as something you’re going to keep.
There’s a joke among my colleagues whenever we get track time. Somebody will always yell, “Drive it like you stole it.” In this case, however, be smart, and drive it like you own it.