It’s always been said that the value of a new vehicle drops the moment it leaves the dealer’s lot. But that wasn’t the case in 2021, though that trend is starting to reverse.
Used vehicles appreciated nearly 19 per cent last year, on the back of new vehicle shortages. Used vehicles were in high demand across Canada, raising prices like never before, according to a report from Canadian Black Book and Fitch Ratings.
“In fact, it was common for consumers trading in their vehicle to have equity in their used vehicle, opposed to prior years, when consumers mostly had negative equity in their trade-in,” the Vehicle Depreciation Report2022 said.
With production restrained on new vehicles, dealers’ abilities to acquire used inventory became increasingly difficult. They couldn’t go their traditional routes of acquiring used vehicles either, be it from rental/fleet companies, lease returns, and trade-ins.
“Additionally, any vehicle making it to the auction lanes were met with a flurry of bidding activity by known exporters,” the report added.
Some consumers took notice, shopping their used vehicles for higher prices. But others hung on to their cars, taking road trips as travel restrictions were in place.
This year showed movement back to vehicle depreciation — 2022’s data show a 6.1 per cent depreciation on average for used vehicles. If that holds for the rest of the year, it would be the lowest mark in the last 12 years (apart from last year’s appreciation). From 2011-2020, double-digit depreciation was seen in all but two years (2015 and 2020).
“However, uncertainties remain around the impact that the war in Ukraine will continue to have on the supply chain, fuel prices and consumer confidence,” the report said.