Canada Used Car Market

Canada Used Car Market Overview

• The Canada Used Car Market is valued at USD 18 billion, based on a five-year historical analysis. According to recent industry tracking, SUVs account for the largest share of used transactions and online channels now originate a majority of used-car deals, reflecting structurally high demand for value amid elevated new-vehicle prices and constrained late-model supply . Strength in organized dealer channels and digital classifieds further supports transaction growth as consumers prioritize affordability and convenience .
• Key cities dominating the market include Toronto, Vancouver, and Montreal. These metros combine higher population density, diversified demand profiles, and dense dealership/marketplace networks, which facilitate selection and liquidity for used vehicles .
• In 2023, the Canadian regulatory environment continued to emphasize vehicle safety and emissions compliance at the provincial level (e.g., Ontario’s mandatory Drive Clean for heavy-duty diesel, provincial inspection standards) and federal standards for import/safety; however, there was no new nationwide rule that universally added stricter emissions testing for all used cars sold. Inventory tightness and pricing have been more directly shaped by supply-chain impacts from prior production shortfalls and longer ownership cycles, rather than a blanket emissions-testing change specific to used vehicles .

Canada Used Car Market Segmentation

By Vehicle Type:The vehicle type segmentation includes various categories such as Cars (Hatchbacks, Sedans), SUVs & Crossovers, Pickup Trucks, Minivans & Vans, Sports & Performance Cars, Luxury Vehicles, and Others (Wagons, Coupes, Convertibles). Among these, SUVs & Crossovers have gained significant popularity due to their versatility and spaciousness, appealing to families and adventure seekers alike. Industry data indicates SUVs lead used transactions, reflecting consumer preference for utility and safety features, while Pickup Trucks remain resilient given work and lifestyle needs. Certified pre-owned offerings are supporting demand in higher-trim SUVs and luxury segments ; .

By Vehicle Age:The vehicle age segmentation includes categories such as 0–3 Years (Off-lease, Nearly New), 4–7 Years, 8–10 Years, and 11+ Years. The 0–3 Years segment remains highly sought after for modern features and remaining warranty coverage, but market supply of late-model vehicles has been tighter due to pandemic-era production shortages and longer ownership cycles. The 4–7 Years segment also performs well with value-focused buyers balancing price and reliability .

Canada Used Car Market Competitive Landscape

The Canada Used Car Market is characterized by a dynamic mix of regional and international players. Leading participants such as AutoTrader.ca, CarGurus Canada, Kijiji Autos, Canadian Black Book, Carfax Canada, AutoCanada Inc., Dilawri Group of Companies, Pfaff Automotive Partners, Groupe Park Avenue, OpenRoad Auto Group, Drive Savvy by Canada Drives, HGrégoire (HGreg.com), Clutch Technologies Inc. (Canada), Car-On Auto Group, DesRosiers Automotive Consultants (market data provider) contribute to innovation, geographic expansion, and service delivery in this space.

Canada Used Car Market Industry Analysis

Growth Drivers

• Increasing Demand for Affordable Transportation:The demand for affordable transportation options in Canada has surged, with over 1.5 million used cars sold, reflecting a 10% increase from the previous year. This trend is driven by rising living costs and inflation, which reached 3.4%, prompting consumers to seek budget-friendly alternatives. Additionally, the average price of a new vehicle in Canada has exceeded CAD 50,000, making used cars a more attractive option for many buyers.
• Rising Consumer Preference for Used Vehicles:In the current period, approximately 60% of Canadian car buyers opted for used vehicles, a significant increase from 55% previously. This shift is attributed to the growing perception of used cars as reliable and cost-effective. Furthermore, the average age of vehicles on Canadian roads has risen to 12.5 years, indicating a trend towards longer vehicle lifespans and a preference for purchasing pre-owned models, which are often more affordable and readily available.
• Expansion of Online Car Sales Platforms:The rise of digital retailing has transformed the used car market, with online sales platforms experiencing a 25% increase in transactions. Major players like CarGurus and AutoTrader have reported significant growth, with over 2 million vehicles listed online. This shift is supported by the increasing internet penetration rate in Canada, which reached 94%, allowing consumers to browse and purchase vehicles from the comfort of their homes, enhancing convenience and accessibility.

Market Challenges

• Supply Chain Disruptions:The used car market in Canada faces significant challenges due to ongoing supply chain disruptions, which have resulted in a 15% decrease in vehicle availability. Factors such as semiconductor shortages and logistical delays have hindered the flow of used vehicles into the market. As a result, dealers are struggling to maintain inventory levels, leading to increased competition and higher prices for consumers, which could dampen demand in the long run.
• Increasing Competition from New Car Sales:The resurgence of new car sales, which saw a 20% increase, poses a challenge to the used car market. With manufacturers ramping up production and offering attractive financing options, consumers are increasingly drawn to new vehicles. This trend is compounded by the introduction of advanced features and technologies in new models, making them more appealing compared to older used cars, thereby intensifying competition in the automotive sector.

Canada Used Car Market Future Outlook

The future of the Canada used car market appears promising, driven by technological advancements and changing consumer preferences. The integration of enhanced vehicle inspection technologies is expected to improve buyer confidence, while the growing importance of sustainability will influence purchasing decisions. Additionally, the rise of electric and hybrid used vehicles is anticipated to reshape the market landscape, catering to environmentally conscious consumers seeking affordable options. Overall, these trends indicate a dynamic and evolving market environment.

Market Opportunities

• Growth in Electric and Hybrid Used Car Sales:The demand for electric and hybrid used vehicles is on the rise, with sales increasing by 30%. This trend is driven by government incentives and consumer awareness of environmental issues, presenting a significant opportunity for dealerships to expand their inventory and cater to eco-conscious buyers seeking affordable alternatives.
• Expansion of Financing Options for Used Cars:The expansion of financing options for used cars is creating new opportunities in the market. In the current period, the average loan amount for used vehicles reached CAD 25,000, with more lenders offering competitive rates. This trend enables consumers to access financing more easily, thereby increasing the affordability of used cars and stimulating market growth.