Sticker prices at dealerships have started to come down and affordability is improving, said Daniel Ross, senior manager of industry insights with Canadian Black Book.
“The new car market is normalizing faster than the used car market,” he said. “You have the inventory, you have the incentives depending on where you’re shopping and if you were a new car shopper from the beginning, it’s the best situation you’ve had in a long time.”
Inventory of new cars has built up across the country as prices for newer models climbed and consumers pulled back on big purchases amid high inflation and rising interest rates. Now, manufacturers and dealerships have launched incentives and rebates as they look to clear that supply.
On new cars, dealerships can offer internal financing from manufacturers and control the rates independently from bank rates, said Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions.
“Instead of offering rebates, they lower interest rates which make deals better for the consumer.”
How availability impacts car loan interest rates
Homeowners are watching the Bank of Canada’s every move as they hope for lower borrowing rates, but a vehicle purchase works somewhat differently, said Shari Prymak, a senior consultant at non-profit Car Help Canada. When financing through a dealership, the interest rate depends on the given make or model.
“The rates that the manufacturer sets are mainly tied to the vehicle availability,” he said.
“If the vehicles have a very good supply, they’ll incentivize the interest rates and bring down the rates,” Prymak said. “But if the vehicle doesn’t have any supply, if it has a long waiting period, because it’s in short supply, the rates won’t be incentivized.”
