Readers are likely aware of the hot real estate market in major Ontario cities and some rural areas. Properties are selling at well above market value because of low interest rates and high consumer demand.
What readers may not be aware of is that a similar situation is occurring with pre-owned vehicles. According to Canadian Black Book, pre-owned vehicle prices rose 0.35 per cent for the week ending June 15, extending the positive weekly increase to 15 straight weeks. The price increases have affected the car and the truck and SUV segments.
Several reasons account for the steadily rising prices: Some auto manufacturers are experiencing computer chip shortages, which has reduced the number of new vehicles being built; a greater demand for vehicles in general as buyers (citing personal health and safety concerns) want to avoid public transit and ride sharing services; and many used vehicles are shipped to the U.S., which further reduces the supply and drives prices up.
When it comes to buying a pre-owned vehicle, during the pandemic or at any time, consumers should study the market carefully and understand all of their options. It’s important to establish a budget and understand payment obligations. Check with your dealer for financing options so you can stay within your budget.
Be sure to consider fuel economy, safety ratings, insurance costs, cost of borrowing, vehicle reviews, dealerships reviews and customer satisfaction rankings.
Once you’ve chosen a make and model, you’ll need to decide where to purchase the vehicle. For maximum value and peace of mind, I recommend a registered dealer because used cars sold by registered dealers are solid, reliable and competitively priced. Plus, consumer protection is available on used vehicles when you buy from a registered dealership, but no such protections are available if you buy privately.
Many car dealers use sophisticated software to establish fair, market-based pricing for their pre-owned vehicles, which means vehicles are priced according to the data and research available so that consumers do not overpay.
With registered dealers, the risk associated with buying a used car is eliminated. Registered dealers ensure that their vehicles are in top condition – mechanically and physically. The ownership and mechanical histories of vehicles offered for sale are checked with services like CARFAX Canada (formerly CarProof), which is the only vehicle history report recognized and endorsed by the Trillium Automobile Dealers Association.
Most new car dealers and manufacturers offer certified, pre-owned programs that provide features such as added warranty protection over standard warranty coverage, roadside assistance, comprehensive inspection and low mileage. Only registered new car dealerships can offer these manufacturer, used vehicle warranties.
When buying a used car privately, you’ll face significant risks. It’s the buyer’s responsibility to conduct due diligence on the seller and the vehicle.
An underground economy thrives on selling used vehicles. The people who engage in this activity are known as “curbsiders.” They pretend to be legitimate sellers when, in fact, they sell vehicles that may be damaged, stolen, or misrepresented.
People often buy cars from friends or family members. Buyers must always do their homework, regardless of who the seller is. Buyer’s remorse can lead to bad feelings on both sides.
Don’t be shy about having a technician check out a vehicle. A certified technician can identify problems that most car buyers can’t. You may have to pay for this service, but it’s worth the investment.
While pre-owned prices have been steadily rising, I wouldn’t hold my breath waiting for prices to significantly drop any time soon. If you’re in the market for a used vehicle, expect to pay market pricing based on supply and demand. You can also expect to be paid a premium on the vehicle you’re trading in.
Michael Eatson is president of the Trillium Automobile Dealers Association and is president of Peterborough Volkswagen. This column represents the views and values of the TADA. Write to firstname.lastname@example.org or go to tada.ca. For information about automotive trends and careers, visit carsandjobs.com.