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Why are new cars so expensive in 2021?

Canadian shoppers have noticed a steady increase in new car prices. Read on to find why prices are increasing and how you can still find a good deal on cars.

Emily MacKinnon

Executive Assistant

Why Are New Cars So Expensive In 2021?

Canadian shoppers have noticed a steady increase in new car prices. Read on to find out why prices are increasing and how you can still find a good deal on cars.

Anyone in the market for a new vehicle in 2021, can expect to spend about $40,000 on average for that new ride. Even a quick search for “used cars for sale” brings up an unusually high price tag for a second-hand car.

Like everything as of late, this trend can be laid at the feet of the pandemic. Why? Well, firstly, within the last year, automobile factories have had to shut down due to Covid-19 outbreaks and lockdown measures.

Secondly, layered on top of that are the disruptions in global chain supplies, which delayed the import of computer chips. These chips are the brains in modern cars that allow technology-rich experiences from Bluetooth connectivity to adaptive headlights.

And lastly, throw in the inability of suppliers to match that demand and you have a classic scenario of the price increase.

According to CTV News Toronto, prices of new cars are up eight percent compared to last year, and car inventory across Canada is down 25 percent.

While these numbers may deter some car buyers, surprisingly, the majority of Canadians continue to purchase cars despite the higher price tag. In fact, according to J.D. Power Canada, a consumer insights company, people are not only reportedly buying newer vehicles, but also purchasing expensive trims to suit their lifestyles.

Larger vehicles like SUVs and trucks are most sought after for their towing capacity. This can be attributed to the fact that with summer around the corner, Canadians are looking to venture outdoors in their trailers and boats, or simply drive to nearby jaunts for a much-needed respite.

With a higher rate of savings as a result of working from home and minimal vacation travel expenditure, Canadians certainly have the will and means to buy that new car. Perhaps, it isn’t as surprising that Canadians are motivated car buyers amidst Covid-19.

 

So here’s how to find the best car deals near me:

Firstly, consider trading in your existing car. Since there has been a low supply of cars, dealerships are looking to stock their inventory and crowd their lots. This puts you in a better position to bargain for a fair price as you sell.

On the other hand, living in an automotive seller's market, car dealers are in the driver’s seat when you are buying a vehicle from them. This is why trading in your existing vehicle for a newer one can make your investment go further.

Secondly, ask the dealership about car financing options. Many dealerships are offering comprehensive and competitive financing options with attractive interest rates. For a ballpark figure, you can use the car finance calculator available on every vehicle listed on HeyAuto, to give you the power to plan and budget for your finances well before you speak to a dealership.

Lastly, ask car dealerships about tax credits and incentives that are available on certain car makes and models. For instance, the government of Canada offers point-of-sale incentives of up to $5,000 for purchasing or leasing an electronic vehicle. On top of federal incentives, certain provinces also provide additional incentives for such vehicles.

Furthermore, if you are open to purchasing a used car, have a peek at this informative article on questions to ask dealerships that can help you get a car in good condition. These questions will enable you to navigate the world of used cars and find the right one for you.

Eventually, whether you are looking to purchase a brand new or a used car, it never hurts to shop around from thousands of dealerships, weigh your options, and find your ideal ride. Happy car shopping!

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