Canada’s used-vehicle market faced a renewed supply squeeze in late 2024 because fewer cars sold or leased during the pandemic were returning to dealer lots. Inventory was tightening even as prices eased from their peaks, leaving buyers with a market that was improving slowly but remained far more expensive than before 2020.
The missing vehicles from pandemic years
Canadian Black Book analyst Daniel Ross said Canada normally recorded about two million new-vehicle sales a year before the pandemic. Annual sales fell to roughly 1.5 million to 1.6 million between 2020 and 2023 as factory disruptions and semiconductor shortages constrained supply.
A vehicle often enters the used market about four years after its first sale. The cars that were never sold new during the disrupted years could not return later as trade-ins or lease maturities, creating a delayed shortage.
Drivers kept their lease vehicles
Some motorists bought their vehicles when leases ended because replacement models were unavailable or expensive. Those owners then held the cars while paying off higher purchase prices, reducing the flow of relatively young vehicles into the second-hand market.
Ross estimated leased vehicles accounted for about 35 per cent of the market and expected supply effects to persist until 2028. That was an industry forecast, not a guarantee: new sales, economic conditions and consumer behaviour could change the timeline.
Prices were falling but still elevated
AutoTrader data put the average used-vehicle price at $35,754 in September 2024, compared with about $18,900 in December 2019. The September figure was 8.7 per cent lower than one year earlier, showing that normalization and affordability are not the same thing.
The average new-vehicle price was about $66,000, compared with roughly $40,000 in 2019. Average prices describe the listed mix and do not tell a shopper what a specific model, age, mileage or condition should cost.
Financing could erase the apparent saving
Car Help Canada executive director Shari Prymak said used-car borrowing rates could reach eight to ten per cent, while some manufacturers offered financing near five per cent on selected new vehicles. A cheaper sticker price can therefore produce a surprisingly high monthly payment.
Buyers should compare total borrowing cost, term length, fees, insurance, fuel and likely maintenance. Extending a loan to reduce the monthly figure can leave a borrower owing more than the car is worth for longer.
A practical comparison
Prymak suggested a lightly used two- or three-year-old vehicle should generally cost 20 to 30 per cent less than the equivalent new model to make the trade-off compelling. The appropriate discount depends on warranty, kilometres, accident history and expected repairs.
A pre-purchase inspection by an independent mechanic, a verified vehicle-history report and a check for liens can uncover risks. Shoppers should confirm the final all-in price in writing and be wary of pressure to sign before reviewing financing terms.
What lower interest rates could change
The Bank of Canada reduced its policy rate by half a percentage point in October 2024. Market borrowing rates do not all fall immediately or equally, and a central-bank cut does not force a dealer to offer a particular loan.
Lower financing costs could bring more buyers into the market, supporting demand at the same time that supply remained constrained. The direction of vehicle prices therefore depended on more than the interest-rate announcement.
The buyer’s conclusion
The frenzy of the earlier shortage had eased, but the market had not returned to 2019. Buyers gained negotiating room while facing fewer late-model used vehicles and high financing costs.
The safest approach was to compare equivalent vehicles on total cost, obtain an independent inspection and be willing to walk away. A used car could still be the better value, but age alone did not make it a bargain.
