The Average Price of a New Vehicle in Canada Topped $40,000 in December

For the first time, the average price of a new vehicle in Canada passed the $40,000 mark last December, according to an analysis by J.D. Power Canada.

Compared to the same month in 2019, the average transaction price this past December was up 13 percent, which is a significant jump. The median was then less than $36,000. This increase represents a “substantial margin”, Robert Karwel, Senior Manager of Automotive at J.D. Power, told Automotive News Canada.

Over the course the past year, the pandemic obviously played havoc with the market and vehicles prices yoyo-ed much more than usual, especially immediately after the first confinement period last spring, and then late in the year when sales rebounded strongly.

Robert Karwel said the coronavirus played a role in the average-price increase. The biggest single factor affecting pricing was the decrease in manufacturers' incentive spending, which last December fell to their lowest rate since 2012, averaging $4,500 per unit. This reduction was due in part to inventory constraints.

Low interest rates, in many cases 0 percent, and ever-longer financing terms mean that vehicles are being offered to consumers at more attractive prices (in terms of monthly payments), allowing manufacturers to reduce their incentives.

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