The cost of new and used vehicles hit all time highs during the COVID-19 pandemic, but prices have been coming down in recent months.
Last year, the price of used cars dropped about 12 per cent.
However, that’s expected to change once U.S. auto tariffs come into effect.
Car sales were up almost 14 per cent in the U.S. in March, as American consumers worried about the impact of tariffs.
Canadian consumers however, have been taking a more cautious approach.
“If anything, buying is down because consumers are uneasy and they are sitting on their wallets right now because they don’t know what is coming,” said James Hamilton, Executive Director of the Used Car Dealers Association of Ontario (UCDA).
The UCDA told CTV News it appears the cost of new vehicles will be going up as a result of the 25 per cent tariff on all automotive imports U.S. President Donald Trump is imposing.
That’s not good news for the association’s 5,000 members, most of whom are dealers.
They say the cost of used cars won’t be far behind, making it bad for both the industry and consumers.
“All the experts say new vehicles prices are going to go up and that will trickle down to the used vehicle market and by 2026 used vehicle prices will go up,” said Hamilton.
“It seems automakers are taking a ‘wait and see’ approach,” said Shari Prymak with Car Help Canada, a non-profit group that helps buyers with car purchases.
According to Car Help Canada, they don’t expect to see massive price hikes in new cars right away, but feel dealers may reduce incentives and look at cost cutting measures.
The group is advising buyers to wait and see how manufacturers deal with the tariffs.
“We are not advising consumers to panic and go out and buy a new car tomorrow,” said Prymak.
“Prices have already started a bit of an uptick,” added Baris Akyurek, Vice President of Insights and Intelligence at AutoTrader.
According to the online vehicle seller, used car prices had been dropping year over year, but if tariffs drive up the cost of new cars, buyers will turn to the used car market and reverse the trend.
“There is definitely going to be an impact on the used car market and prices are going to go up,” said Akyurek.
Auto parts are also subject to the U.S. tariffs which will make vehicles more expensive to build and repair, leading to further higher prices for both new and used vehicles.
If repair costs go up, it could also lead to increases in the cost of car insurance, meaning premiums may also rise.
