How to spend your money wisely in a booming used-vehicle market

Canada’s used-vehicle market is hotter than ever. According to data from the Canadian Black Book, the average listing price for used cars and trucks is currently $29,500—up from about $25,000 at the start of 2021. Meanwhile, the number of used vehicles listed for sale has fallen to a three-year low.

The pandemic is playing a major role in these difficult market conditions. An ongoing microchip shortage is hurting new model availability, so many buyers are opting for used vehicles instead. With fewer older cars and trucks being traded in—and fewer leased vehicles being returned—used-car inventories aren’t keeping up with demand.

For Canadian car-buyers, the shortage is compounded by the sale of used vehicles to dealers south of the border. American dealers take advantage of a favourable exchange rate to buy up large numbers of cars and, notably, pickup trucks.

High demand and a supply squeeze are inevitably raising prices. “Used vehicles are a commodity that changes in value,” says Nick Roberts, executive director of the Manitoba Used Car Dealers Association (MUCDA). “It’s a perfect storm right now, and it could last another couple of years.”

But while prices have risen, the advice about buying a used car remains unchanged. First, set your budget up front and be realistic about what you might get—and not get—in return. Not everything on the wish list may be attainable for your desired price.

The good news is that vehicles are better built than ever, which should lead to fewer issues in older cars and trucks. But keep in mind: Preconceptions about the most reliable models might not apply in the used market, depending on how a specific vehicle has been used.

“Every used vehicle is as unique as a fingerprint,” Roberts explains. “Everybody uses their vehicle differently. Depending on use, a higher-mileage car might be in better condition than a lower-mileage, city-driven one. And prices might reflect that.”

Whether you’re buying privately or from a dealer, a detailed pre-purchase inspection is a sound investment. Swing by your local AARS facility for CAA’s Vehicle Inspection Service; it’s just $129.95 for Members (or $149.95 for non-members). And don’t forget to get a vehicle history report from a company like Carfax. It can uncover a sordid past, such as crash repairs or outstanding liens. This should be provided by a dealer, but is not required of private sellers.

Still not sure about a potential purchase? CAA experts are standing by to answer your questions about used vehicles, maintenance and other inquiries. Call the free Auto Advice line at 1-866-464-6448 or email autoadvice@caasco.ca.