Why Canada’s used-car world is becoming a buyer’s market

Ian Bickis, The Canadian Press 
Published Sunday, October 21, 2018 10:22AM EDT 

TORONTO — The balance of power in the used car market is shifting towards shoppers as improved data and online offerings create more opportunities to push for the best price.

A fast-evolving online marketplace is providing more intelligence on the fair value of cars, said Cliff Banks, a Detroit-based auto retail expert.

“I don’t know that it can be any more transparent…they all provide intelligence on the pricing and the deal of the vehicle, whether it’s a good deal, a fair deal.”

Kijiji Canada recently announced it will add a standalone auto sales site that will roll out later this year to keep up with shifting expectations. The site will add reviews of dealers as well as market pricing information from Carproof.

“The key feature for us, and one of the biggest, the biggest win for us is what’s called price transparency or price analysis,” said Matt McKenzie, general manager at Kijiji Canada.

The online classified company, owned by eBay, already boasts of being the largest player in the Canadian market with about 500,000 vehicle listings. Autotrader, owned by Etobicoke-based Trader Corp., lists about 444,000 vehicles on its site while there are many other offerings on the market as well.

Listing companies are boosting their online presence as the used vehicle market is set for significant growth, said Dennis DesRosiers, president of DesRosiers Automotive Consultants.

“There’s tremendous opportunity, and that brings in all the different retail players and their approach of, how do I get a piece of that?”

While new vehicle sales are expected to be largely flat at about two million this year, the used vehicle market is set to add half a million more in sales in the next three to five years, on top of the three million that changed hands last year, said DesRosiers.

The rise in the used vehicle market comes as improved quality in the past decade means cars and trucks are lasting much longer, allowing for a potential lifespan of four to six owners from the two or three expected not long ago.

“It takes 23 years to remove the vehicles from the road now, a decade ago it only took about 12, so it’s essentially doubled,” said DesRosiers.

Used vehicles also offer margins that are two to three times higher than for new cars, adding to their appeal, he said.

The quality and information improvements have significantly changed the overall used retail market, said DesRosiers.

“It’s not that far long ago, call it 15 years ago or maybe 10 years ago, where the used car market was largely a culture of deceit…even if the online capacity was there, there was just so much riffraff in the used car market that it was very dangerous. A lot of that has changed.”

The improved access to data means used-car retailers have to be more transparent and competitive about their pricing, said Jamie Tekela, director of pre-owned operations at Pfaff Automotive Partners.

“You need to really justify what you’re asking, why you’re asking it, and you can’t go asking $500 more for the same Honda Civic with the same mileage. It just it doesn’t work any more.”

“It’s night and day, to be perfectly honest. It’s gotten a lot more customer friendly,” he said.

The improved information on crash reports, comparable sales, and other metrics hasn’t done away with potential negotiations but does give more justification, said Jamie.

“There’s always going to be negotiations when trying to buy and sell vehicles, but with so much information available to each and every one of us, it’s a lot easier to explain our rhyme and reason why we’re asking what for a car.”

Discovering the Right Used Cars

Owning your own car can be the ticket to freedom that you have been searching for. Unfortunately, you might also have realized that it is something of a costly endeavor as well. In order for you to be able to make the right choices for your future, it can be an excellent idea to consider used cars for your needs. Here are a few tips to help you discover the right used vehicle.

What You Want

First, you might want to take time to think about what you are hoping to get from your investment. Are you looking for a temporary ride for the next year or so? Do you want an automobile that will stay with you for many years to come? The more you think about what you will use your car for, the easier it will be for what you are looking to get out of your purchase of used cars.

Consider Your Finances

Next, you are going to want to think about how much you can spend. Realistically, you do not want to buy a car if you do not have at least 20 percent of the initial cost in cash. This is true of both new and used cars. Luckily, financing options are available. Since there are lower costs associated with used vehicles, you can typically find short term loans with fair rates. Take time to look into various financing options. Doing this will give you a profound understanding of what to expect from your investment moving forward.

There are many different ways for you to obtain the car that you have been dreaming of. Make sure that you take your time to think about your needs and how much you can afford to spend before you make any decisions. When you take the time to make sure that you do this it will give you the knowledge that you need to find used cars that work best for your life.