Signs the automotive industry is now making a recovery
Inventory is up and the used-car market is settling down, writes Lorraine Sommerfeld.
Remember back in 2020 and 2021 (and into 2022) when auto inventories began to dry up, and anyone looking to purchase a vehicle was advised, essentially, don't? Prices were pushing up seemingly every day, the goods were of the take-it-or-leave it variety, many of you ended up with something other than the car of your dreams that you likely paid more for than intended.
A recent report from Autotrader is letting us know we are finally turning a corner. According to Baris Akyurek, vice-president of insights and intelligence with Autotrader, consumers are finally finding the good news they've been waiting years to hear.
“More availability means we're finally normalizing,” he said. “Year-over-year, the inventory for new cars is up 78 per cent as an aggregate.”
He notes the situation is best reflected in the domestic and European inventories, with Asian sectors still lagging. The Autotrader marketplace in February “reached a record high with over 168,000 new vehicles listed — the highest inventory numbers seen on the marketplace since September 2021.” The site listed 202,521 used units, the highest since 2020.
The best news for many consumers is that the used car market is finally settling down. When shortages erased new product from dealer showrooms as a global pandemic brought everything to its knees, people were buying whatever they could find. This sent used car prices escalating, often beyond the price of what the vehicle would have cost if new.
This report addresses inventory, and while it's indeed good news to see showrooms once again sporting a full stock, consumers won't soon forget the parts of the market that dealers and manufacturers hope we'll develop amnesia over: the prices.
HOW CRAZY HAS THE RIDE BEEN?
Akyurek delivers the numbers — the reasons for Autotrader's optimism.
Consider this trajectory of average new car prices beginning in February 2019:
2019: $45,255;
2020: $47,066, up four per cent;
2021: $45,368, down 3.6 per cent;
2022: $51,812, up 14.2 per cent;
2023: $60,532, up 16.8 per cent;
2024: $66,979, up 10.7 per cent, but showing six month-over-month declines. This is the sign of recovery the industry has been waiting for.
Average used car prices have been even more turbulent. Consider:
2019: $26,331;
2020: $26,759, up 1.6 per cent;
2021: $27,140, up 1.4 per cent;
2022: $36,927, up 36.1 per cent;
2023: $39,268, up 6.3 per cent;
2024: $38,451, down 2.1 per cent.
HIGH VEHICLE PRICES ARE THE NEW NORMAL
You are forgiven if this recent news, with its slight declines in some sectors over recent months, really doesn't feel much like things returning to normal. Either that, or it's time for consumers to stop looking for average vehicle prices that have skyrocketed in three years to settle back into reasonable territory.
“In February 2024, the average price of a used vehicle was $38,451,” reports Autotrader. Just three years previous, the average price of a new vehicle in Canada was $45,368. New. It's like we fell through a looking glass and landed on our heads. Marketplace history was made with the first-ever drop in used car pricing because used cars can't cost the same as the new version of themselves.
And yet they did.