Inflation, inflation, inflation; it’s all we seem to hear about these days. It’s all for good reason, as rising inflation rates are straining many Canadians as businesses in Canada have regular price increases. Inflation impacts everything, including grocery store prices and owning a car. When we say owning a car, we don’t just mean the cost of purchasing a vehicle but the cost of ownership, including rising gas prices, plus the cost of repairs and maintenance. If the cost of one thing rises, so does the cost of everything else.
Used Cars And Inflation
Up until recently, Statistics Canada never tracked used car prices on the consumer price index (CPI) to calculate inflation; they only used new vehicle pricing. Even though new cars are more expensive, the price of new and used vehicles both change and typically mirror each other. According to CTV, the CPI doesn't measure the cost of things; it measures the rate of increase.
It's no secret that new vehicle inventory was at an all-time low during the pandemic. Although dealerships are slowly regaining stock, the demand is still there, which warrants (in their minds) the continued rise in pricing year-over-year. With new inventory being so low, naturally, the demand for used vehicles has increased, leading to resale or trade-in value increasing exponentially. So, if you have a vehicle you want to sell or trade in, now is the time!
Before the vehicle shortage, used cars is what car buyers would look to when they didn't have the credit score to purchase a new one or when they wanted something more affordable. Unfortunately, the price of used vehicles has also risen and dealerships are having a hard time stocking up on those as well. Good news, if it's a used vehicle you're after, FFUN Cars has loads of them. Not to mention, we make the process stress-free. With lenders cracking down and interest rates rising, sitting at a dealership waiting to be approved for financing can be crazy stressful. We make getting car financing easy, and you don't have to sit in front of some finance guy in a fancy suit to do it. You can get approved online from anywhere you want. Sadly we don't have any control over the rate hikes, but we do have control over making car buying convenient; it's what we're all about.
Consumers Transportation Habits
Between the rising gas prices and the lack of availability of vehicles, driving habits are changing. According to Automotive News half of the respondents to a survey said they are using their vehicles less in order to save money, while 20% plan to do the same. Out of those same respondents, close to 33% are looking to purchase an electric vehicle. (Insider tip, we've got plenty of those to browse through). Yes, driving less will help some households save money, but as companies continue to re-open offices and demand employees to be back in the office, the amount some households spend on fuel will rise compared to the last years.
Let's not forget that the expensive cost of living isn't the only thing on Canadian's minds. For many, the fear of COVID-19 is still very much there. Many people, despite fuel costs, will still opt to drive over using public transportation, simply out of fear of infection.
Are Consumers Still Buying Cars?
As Canada's inflation continues to rise, does that mean people won't buy vehicles anymore in an attempt to save money? Whether inflation has risen or dropped, spending money means you aren't saving money. The only way to save money is to not spend it. The issue is that many Canadians were saving and budgeting to purchase a new car, but that was based on the previous average price of a vehicle. Sasktoday.ca states that AutoTrader says 2021 had a continuous upward slope on the price of new and used cars as a result of the high demand. In fact, according to this source, the average price of a used vehicle increased 34.5% year-over-year ending at $33,240 which is a record high. In the new vehicle sector, there was a 12.7% increase making the average price of a new vehicle hit over $50k for the first time ever. We aren't ones to make assumptions, nor are we economists, but with no decrease in the cost of living in sight, we can only imagine next year will also bring an increase.
Are these prices alarming enough to bring car sales to a driving (no pun intended) halt? Well, they say numbers don't lie and BNN Bloomberg conducted a survey amongst Canadians and 12% of those involved said they did change or will change their choice of vehicle as a result of the cost of fuel and cars. They say 9% are changing their choice due to the availability of vehicles - makes sense. But, maybe that 9% haven't looked at FFUN cars to see if we have their top choice. Tell your friends we got the goods! From the survey, the biggest shock was that 25% of respondents have decided to delay their purchase because of both the cost and options available.
How Car Buyers Are Saving Money
Aside from avoiding buying a vehicle to save money, car buyers are spending a lot more time researching their next vehicle purchase before pulling the trigger. Yes, you could argue that research should have always been done on vehicles, and it was; it's just different types of research now. For example, as part of the research process, car buyers are looking at replacement costs and maintenance and repairs on vehicles to determine the cost of car insurance. Certain makes and models cost more to replace and repair, making the insurance rates higher, which for those high-end automakers and dealerships that sell them, isn't great.
If you are looking to purchase a new vehicle, select a make that is known to have a high resale value, such as Jeep, Honda, and Toyota. According to Kelley Blue Book, some of the top vehicles for resale recently were:
- Chevrolet Corvette
- Jeep Gladiator
- Ford F-Series
- Tesla Model X
- Ford Maverick
- Toyota 4Runner
- Ford Ranger
- Toyota Tacoma
- GMC Sierra
- Toyota Tundra
As hard as it is, try not to be discouraged by inflation rates. We don’t have a magic wand to make it stop, but we can make car buying easy and fun, and you don’t have to deal with people while buying your car. Well, just one - that’s right, part of the convenience of buying a car with FFUN Cars is that you only deal with ONE person from the beginning to end. When you shop at FFUN, Cars you’re shopping where and when it’s convenient for you. If that means buying your car online, in-store, or a combination of the two, so be it; it’s up to you. We don’t mean to brag but we have some other sweet benefits, too, like 30-day money-back and 24-hour test-drives. Read all about the other benefits here, or just stop on by; we’d love to meet you.
