Market Trends of Canada Used Car Industry
Rising Adoption of Digital Technologies Will Foster the Growth of the Target Market
The adoption of advanced technology by tech-savvy young individuals, the emergence of e-commerce marketplaces, and various companies' aggressive strategies to spend on online advertisements are boosting the demand for used cars sold through online platforms. These platforms assist consumers in making informed decisions as end-end information on vehicles is already listed, such as vehicle make, model, kilometers driven, engine capacity, condition, etc.
Moreover, increasing internet penetration rates and optimal urban population across Canada contribute to developing an efficient ecosystem wherein vehicle owners can reach out to buyers from different parts of a region and initiate a smooth online sales process without any need to visit a physical location.
The Internet penetration rate in Canada stood at 92.07% in 2022, an increase from 2021, when the Internet penetration rate stood at 91.5%. Canada boasts one of the highest urbanization rates in the Americas region, with 82% of its overall population residing in urban areas as of 2022. These consumers are highly tech-savvy, and most of them have the financial capability to make an informed decision to purchase a vehicle for their mobility. Owing to these factors, the online used car market in Canada is expected to showcase positive growth in the coming years.
To integrate the growing online used car market, various players across Canada are actively engaging in integrating the online space to diversify their business and offer enhanced online experiences to consumers. For instance, in January 2022, General Motors announced the plan to launch its omnichannel used-car sales platform called CarBravo in the North American region to facilitate sales of pre-owned vehicles from both dealer inventory and a national central stock. Non-GM used vehicles will also be included in the program, which lets consumers shop online, in-store, or a combination of both.
Further, improved offerings such as an enormous number of photos and videos of the used vehicles being sold through online platforms and easy online instant finance, insurance, and warranty service are expected to fuel the demand for used cars in Canada in the coming years.
Sedans to Remain the Preferred Used Vehicle Type in Canada
- Based on vehicle type, sedans remained the preferred choice of consumers willing to purchase used cars in the Canadian market. Although sports utility vehicles (SUVs) were the top choice of consumers willing to purchase new cars in Canada, sedans, on the other hand, were popular among consumers in the pre-owned car market. The demand for used sedans is attributed to the lower prices of these vehicles in the used car market compared to their counterparts. For daily commuting purposes, these vehicles are also financially friendly when compared to high-end SUVs and MPVs.
- Some of the top-selling sedan models in Canada as of 2022 were the Toyota Corolla, Hyundai Elantra, and Honda Civic, among others. The average price of a used Honda Civic Model in the Canadian market in 2021 stood at USD 16,9794, compared to Nissan's used SUV model named Rogue, for which the average price stood at USD 21,013 in the same period.
- Further, various companies offering value-added services such as vehicle financing and insurance options are helping consumers purchase used vehicles with ease. Coupled with that, the rise in the demand for vehicle subscription services in the last few years, which allows consumers to use a vehicle every month by paying monthly fees, which include maintenance, insurance, and roadside assistance, is positively impacting the demand for used sedan cars in Canada. For instance, It is witnessed that consumers prefer long-term loans to finance their used cars in Canada. As of 2023, It is estimated that 45% of used vehicles purchased were under the long-term contract of an 84-month loan period, which provides a lucrative opportunity for Canadian used car dealers to integrate.
- The Canadian automotive industry has witnessed a surge in new sedan sales in recent years. In 2021, the Honda Civic remained the top-selling sedan model in Canada, with sales of 43,553 units, clocking a Y-o-Y growth of 1.3% compared to 2020. Other top-selling sedan models in Canada were the Toyota Corolla, Hyundai Elantra, and Kia Forte, among others. The increasing sedan parc in Canada will positively contribute to expanding the used sedan market during the forecast period, which is expected to witness a rapid surge.
