Ottawa, Ontario – A number of factors in today’s economy have combined to bring car prices to near-record lows in recent months, according to the Canadian Automobile Dealers Association (CADA), and the best time to buy a car is now, says the group.
“In 2008, car prices declined to a 23-year low as a ratio of personal disposable income,” said Michael Hatch, CADA chief economist. “A vehicle purchased last year cost, on average, just 18.2 weeks of pre-tax income for the typical Canadian family. This is the lowest this ratio has been since 1985.”
Some of the reasons include cars on dealer lots that were purchased earlier last year, when the Canadian dollar was at or near parity with the U.S. dollar, and more buyer incentives offered by manufacturers facing difficult circumstances. Statistics Canada’s consumer price index shows that in January, the price to purchase or lease a car decreased by 8.2 per cent from the previous month.
“What we need to avoid in Canada is a drying-up in consumer credit that is vital to finance car purchases, like we’ve seen happen in the United States,” Hatch said. “The federal government has helped in this regard with the $12 billion credit facility it made available in its latest budget. This should soon start to ease the liquidity concerns facing dealers and consumers alike.”