Buying a new car this year? Here’s what you need to know
With weakened loonie, it pays to be prudent
With more Canadians buying new vehicles in 2015 than ever before, we expect this year’s Canadian International Auto Show to be a busy place for new- vehicle shoppers. And as we break out our crystal ball and try to look into the future of the market, the question arises: What can buyers expect when they head into dealer showrooms this year?
Like most economic forecasting (how are your RRSPs doing these days?) the answer to that question is not a simple or easy one. Taking into account the complexities of the global auto industry, and how that trickles down to your local dealer, speculating on where Canadian new- vehicle prices will be in 2016 is not a onedimensional exercise. In the end, estimating how much or how little you will save on a new- vehicle purchase really depends on the make and model, where the vehicle was made, and the time of year you intend to buy.
To recap: 2015 was another record- smashing year for the sales of new passenger cars and trucks in Canada. The 1.9 million vehicles that moved off dealer lots represented a 2.5 per cent gain over 2014, which itself was a record year. That said, the Canadian automotive retail market continues to be one of the most competitive in the world, with many of those 2015 sales coming with heavy incentives from automakers, either through large factory rebates or subsidized financing rates. And some industry analysts don’t expect 2016 to be as flush for the automakers as the previous 12 months.
According to a Scotiabank report, Canadian new car and truck sales this year will be around the same 1.9 million- unit number as last year. That could be good news for buyers, as lower demand could force automakers to increase their purchase incentives even more than in 2015. However, the other tricky financial issue new vehicle buyers need to contend with is the dropping value of the Canadian dollar. Depending on the vehicle you are considering, the weak loonie could make your next new vehicle more expensive — or not.
If you’re in the market for a low- volume, high- end vehicle, there has never been a better time to buy Canadian. Take for instance a new Porsche 911 GT3 RS. With the Canadian dollar at US71 cents at the time of this writing, the Porsche super- car’s $ 200,700 Canadian price is a saving of more than $ 47,000 compared to what U. S. buyers pay. However, at the other end of the new-car market, in which the majority of Canadians buy, the low dollar may see some vehicle prices increase.
Keen shoppers will have noticed the slow- but- steady i ncrease in new- vehicle freight and pre- delivery inspection fees. From what was once only a few hundred dollars, these hidden fees can now add more than 10 per cent to the cost of a new vehicle. “Freight and PDI” has also become a great place on a vehicle’s final bill for automakers to add a few hundred dollars without af- fecting a vehicle’s advertised retail price. As an example, look at a 2016 Hyundai Accent Sedan. Its advertised starting price is $13,899, but it has a $ 1,595 “delivery and destination” fee.
Another factor to look for in projecting new- vehicle pricing for 2016 is the automotive brand you are be considering. New cars and trucks that are in high demand in the U. S. — such as popular utility- vehicle brands such as GMC, Jeep or Subaru — may see price increases over the course of the year because of limited availability in Canada.
The other supply/demand criteria to keep in mind is the type of vehicle you are consid- ering. Last year, buyers made a definitive move from cars to crossovers, SUVs and trucks. Seven of the top-10 sellers in Canada last year were classified as “light trucks”. However, if you don’t need the utility, there could be some big savings if you’re looking for a mainstream sedan.
As the desire for crossovers, SUVs and trucks continues to grow, the traditional four- door family sedan is finding fewer fans. In fact, Fiat Chrysler recently announced that it plans to stop making Chrysler 200 and Dodge Dart four-doors so the automaker can add capacity to build more Jeep and Ram utility vehicles. Four- doors, like these Chryslers, may see added purchase incentives in the year ahead.
The final factor to consider if you are interested in saving some money when buying a popular vehicle could be when you make the purchase.
The top- selling vehicle in 2015 was the Ford F- series pickup truck, which also managed to keep the title of best- selling light truck. The Honda Civic remained the best- selling passenger car in 2015. As the calendar moves toward the end of the model year, expect both Ford and Honda t o add cash on the hoods of these popular models, if only to keep their respective sales crowns intact.