While switching cars used to be a sign of expense, it’s now possible to make thousands of dollars in profit from a used car.
• Also read: The price of used cars has increased 43% in one year in Quebec
• Also read: Used car prices are skyrocketing
Such is the case of Marc-Antoine Croteau, who made $20,000 by reselling his 2021 Toyota RAV4 Prime after just a year of use.
“Normally I would never have sold it or I would have kept it for a very long time. Except that the situation is extraordinary,” he explains.
Due to the shortage of new cars, used cars are in demand and their value is higher than ever.
“When the pandemic came, the production of new vehicles was stopped. As inventories ran out, dealers had fewer and fewer vehicles to sell. They withheld used vehicles, which they usually give to used car dealers. Production has taken some time to ramp back up in recent months, so it’s created a rarity,” said Steeve De Marchi, director general of the Quebec Used Car Dealers Association.
This phenomenon, which affects rental cars in particular, is unknown to dealers.
“It’s extraordinary, we’ve rarely experienced that. Currently, used cars in Quebec are increasing in value between 30 and 40%. We’ve seen that over the last few months,” says Corporation of Quebec Automobile Dealers President and CEO Robert Poëti, who nonetheless believes the trend will gradually level out.
“Of course we are talking about vehicles that are in high demand. This trend does not exist for older vehicles or even newer vehicles that have an atypical mileage,” explains Hyundai Ste-Foy sales manager Mona Potvin.
She also believes used car valuations will return to normal as dealer inventories return to normal.
It is therefore difficult to estimate how long this situation will last, but the conditions that make this bubble in the used car market possible are gradually unraveling, according to Mr De Marchi.
“The Bank of Canada interest rate announcement, interest rates are rising, stocks in dealer yards are beginning to rise again. All of this puts much less pressure on the used market,” he concludes.