Thinking of buying a new set of wheels in 2014? A used car may be the way to go: price and selection are finally set to improve, following a four-year-long shortage of pre-loved cars on both sides of the border.
Leasing all but dried up during the fallout of the 2008 economic crisis. Big auto manufacturers only got back into the leasing business in 2010, explains Bob Pierce, Director of Member Services at the Used Car Dealers Association of Ontario. When car leases are finished, the vehicles hit the used car market, so the lack of leasing and general slowdown in new car purchases during the recession was followed by shortages of used cars.
In 2014, however, dealers will receive the first large cohort of used cars from makers such as General Motors and Chrysler. Carlos Gomes, Scotiabank’s senior economist and auto industry specialist, says the increase in supply will start slowly, but will climb in the years to come. “A lot of those 2009-2010 leases are coming to an end now, so the bottom of the cycle was really in 2013,” Gomes says.
Expect price easing as inventory climbs back toward normal. “I would expect probably somewhere in the range of 4% to 5% moderation in used car prices,” Gomes says.