Despite global instability, so far this year consumer spending has shown signs of remarkable resilience. ATB Economics has reported retail sales through April as up 5.5% as compared to the same period in 2024. Even after adjusting for population growth, sales were still higher than last year, although the number rises by a more modest 2.6%.
Interestingly, however, there’s one particular market that seems to be driving the gains. Auto sales are way up, with consumers attempting to buy a new (or new-to-them) vehicle before what are anticipated to be large hikes in vehicle prices due to new tariffs imposed by the U.S. government.
Sales at new car and truck dealerships have risen by 10.3% year-to-date. Used car dealerships also saw impressive growth, with sales up 21.8% year-to-date. Used vehicle sales make up less than 10% of total auto sales in the province, however, which limits that market’s overall impact.
Used vehicles versus new vehicles
Choosing between a new or used vehicle often comes down to a combination of personal preference and budget. Each option has its advantages and drawbacks.
New vehicles offer the latest in safety technology, luxury features, and fuel efficiency. They also come with comprehensive manufacturer warranties, providing peace of mind against unexpected repairs early in ownership. However, the downside is depreciation. As the saying goes, a new car loses value the moment you drive it off the lot — and there’s truth to that. According to the Canadian Black Book, a new vehicle typically depreciates by 30% to 40% in its first year. Some models may lose less, others more, but if you were to sell your new car shortly after purchase, you’re likely to take a significant financial hit.
Used vehicles are often much more economical upfront, but they do come with added risks. Because they’ve been previously driven, their reliability can vary, and the likelihood of needing expensive repairs is higher. To reduce that risk, it’s essential to buy from a reputable dealership that performs thorough inspections and can provide a clear picture of the vehicle’s condition. Also, make sure to check for existing liens before purchasing, as a lien stays with the vehicle, not the previous owner.
In many cases, a three-year-old used vehicle can cost less than half the price of a comparable new model. These vehicles can sometimes be formerly leased, which means they have been well maintained. That makes them an appealing option for budget-conscious buyers. With the high cost of new vehicles, buying used is a financially smart choice for many consumers.
Used car buyers must be very careful and do their research, as many don’t realize that buying a used is also more profitable for the dealership. Despite the higher sticker prices, profit margins on new vehicles are relatively slim. Used cars, on the other hand, tend to be more lucrative. Dealerships often acquire them at low cost — either through trade-ins or auto auctions — and are not required to disclose the original purchase price, which lets them charge whatever they want.
Insuring a new vehicle versus insuring a used vehicle
When it comes to insuring a new vehicle versus a used one, cost and coverage needs vary significantly. New vehicles typically cost more to insure due to their higher value and the cost of replacement parts or repairs. However, they often qualify for comprehensive coverage options and manufacturer discounts, and may come with built-in safety features that can reduce premiums.
Used vehicles, on the other hand, are generally less expensive to insure because they’re worth less and may not require full coverage, especially if their value has depreciated. Some drivers of older vehicles opt for liability-only insurance to save money, though this means less protection in the event of damage or theft.
Regardless of the vehicle’s age, it’s important to speak with your insurance broker to determine the right level of coverage. Factors like your driving habits, location, and vehicle type will all influence the best insurance solution for your needs.
Why choose a broker for your vehicle insurance?
When you work with the brokers at Lane’s Insurance, you’re securing the assistance of a specially trained insurance professional who always acts with your best interests in mind. Brokers provide an important buffer between insurance providers and consumers, and getting one on your side is always a wise decision.
Contact us at our Calgary, Banff, Edmonton and greater Alberta offices to see what we can do for you.
