2019 used car prices in Canada are close to a record high

While few people would say that Canada’s economy is currently flourishing, there's one industry that's still on the up and up: the used cars industry.

In March, the value of used cars in the country climbed to 105.1 on the Canadian Black Book (CBB) Used Vehicle Retention Index — a tenth of a point away from an all-time high. An index works by setting 100 as its benchmark level. A decrease below that means prices are falling, while moving above that means they are increasing.

The index tracks the prices of used vehicles between two and six-years-old and is adjusted for age, seasonality, mileage, condition and inflation.

The cars that saw the biggest price gains were compact luxury SUVs and CUVs (crossover SUVs), which grew by 23 points compared to last March.

The value of subcompact cars grew by 7.4 points. Mid-sized cars also saw a price jump, increasing by 3.6 points on the index.

Meanwhile, the cars that saw the biggest drop in value were luxury vehicles, which saw a 6.6 point drop in the index year-over-year, and prestige luxury cars, which declined by 5.9 points.

In terms of month-over-month advances, premium sports cars and full-sized vans performed the best, likely due to the approaching spring weather — both saw their value increase by 1.5 points.

Canadian drivers accounted for much of this growth, buoyed by low unemployment rates and healthy demand, Brian Murphy, vice president of research and editorial at CBB, told Automotive News Canada.

But U.S. consumers have been interested, too, as the recent weakness of the Canadian dollar makes their own currency comparatively stronger. Murphy said that exports and American buyers who come seeking a deal north of the border help keep used car values high in Canada.

“People have jobs, and that’s always good. We’re in very good shape. Everybody’s nervous about the future even in good times,” Murphy said. “I think most people recognize we’re in a very good period right now, and economies are cyclical. I think people are looking at the economy and kind of just waiting for the trend to shift.”

Still, Murphy thinks that used vehicle prices will decline in the coming months. The industry anticipates seeing 30,000 to 40,000 off-lease cars return to the market each month through 2021 — a significant increase from the 20,000 that had typically been returned per month.

“That additional supply, all things being equal, that always puts downward pressure on prices,” Murphy said. “That’s what we’re expecting: that with more vehicles coming off lease that the prices they’ll get at auction are a little bit lower.”