Richmond Hill, Ontario – Canadian sales of used vehicles dropped by 0.4 per cent in 2008 from 2007, according to industry analyst Dennis DesRosiers. It was the first time used vehicle sales fell in conjunction with new vehicle sales since the agency started tracking them in 2000.
“The used vehicle market is usually counter-cyclical to the new vehicle market, so it usually heads in the opposite direction of the new vehicle market,” DesRosiers said. “We attribute this anomaly to the extraordinary market at the end of the year, in which all previous trends seemed to be upside down.”
The used vehicle market came in at just under 2.6 million units. DesRosiers does not consider an end-of-lease buyout as a used vehicle sale, adding that there are about 200,000 of these each year. New and used vehicle sales together accounted for 4.22 million units in 2008, or 20.6 per cent of the total vehicles in operation. “Essentially, one in five consumers were in the market for either a new or used vehicle in 2008,” DesRosiers said.
The total used vehicle market has grown from 2.0 million units in 2000 to 2,590,000 in 2008. While most are sold by new-car dealerships, followed by private sale and then by independent used car dealers, used car dealers are gaining ground, with sales by new-car dealers down by 1.8 per cent, and sales by used-car dealers up 6.2 per cent. Sales by private owners dropped by 4.6 per cent from 2007 to 2008. “Many franchised new vehicle dealers backstop or own these (used car) independents,” DesRosiers said. “They are essentially finding it easier and more profitable to operate separate used vehicle dealers, than to try to sell more used units through their franchised stores.”
DesRosiers said he expects the used vehicle market to be up in 2009, and continue that way for at least two to three more years. “There is a record number of off-lease/off-fleet vehicles entering the market, residual values have stabilized, used vehicle prices will also go up a lot less than new vehicle prices, creating a substitute good effect, and the high quality built into new vehicles over the years has resulted in very high-quality used vehicles being available,” he said. “Look for an increase of as much as 150,000 units in 2009.”