A few days ago we were able to read in various media that the average cost of a used car in Quebec has increased by 43% in one year. A message that has generated a lot of conversation and gives the industry “gas” to justify sales at higher prices.
Several media have published this statistic without asking too much about its origin. However, knowing the market, I would not swallow this pill so easily.
In truth, this statistic comes from a press release from Auto Hebdo. A well-known used car sales platform that has been collecting data of all kinds for decades. Using a mathematical formula, we simply calculated an average of the displayed used car offer prices compared to the previous year. And boom, we have THE shock statistics!
Soothes You
Don’t take this to mean that your Toyota Camry is worth 43% more than last year. At best, like some models, it will have appreciated a bit in value. However, it should be clear that Auto Hebdo’s business model has changed in recent years. Because if in the past Mr. and Mrs. Everyone exhibited their used car on this platform, it is different today. Of course, it’s always possible, except that few people think about it. They prefer sites like Kijiji or Marketplace, which are much more efficient.
Of course, if you are looking for a specific model and only select individuals as sellers, you will find a range of vehicles for sale. Pay attention, however, and you will find that the majority of these “individuals” are merchants.
This means that there are fewer and fewer private vehicles and more and more “fake used cars” on this platform. In short, practically new or almost new vehicles, but sold at higher prices by other banners or by used car dealers, which drives prices up. For example, a near-new 2022 Chevrolet Corvette with 420 miles on the odometer sold for $145,995 while its new value is approximately $85,000. A used car you say? Yes OK. Except that in the minds of people checking in with the media, a 2021 or 2022 classic car isn’t really needed. Even less when he shows a few hundred kilometers on the odometer.
So on the one hand you have the cheapest cars that no longer appear on this platform, and on the other hand you have these fake used cars at inflated prices that turn everything upside down. Hence the press release to make buyers understand that they will pay a lot more for their next vehicle.
An increase, but not so drastic
So, some traders could use this to ride the wave and artificially inflate prices. But let’s not be fooled. These programs only last a short time. And while some traders tend to be too strict with the pencil, many will probably tell you that they themselves disagree with that statement. A statement that could serve them well, but also make them look bad.
Finally, it is true that used vehicles are more expensive at auctions. For example, today we pay more for a 2020 Dodge Grand Caravan than we did last year for a vehicle with less mileage. However, depending on the model, the increase is more in the order of 15% to 20%. At least for production vehicles. This is a slightly more realistic number.
In the video: Used car prices are rising