When talking about the Canadian used car industry, a conversation about the Canadian economy must be in accompaniment. The only way to understand the trends and phenomena echoing through this industry is to understand the trends and phenomena occurring in tandem throughout the economy.
The condition of the national currency, credit, and unemployment rate all has ramifications for the Canadian used car industry. The relationship between the economy and this industry is nuanced and multifaceted. The ebb and flow of the economy, at large, propels and inhibits the value and security of every Canadian used car enterprise. This piece will explore the intricacies of this relationship, and hopefully provide some insight into the condition and future of the industry.
One example of how the Canadian economy affects the used car industry is back in early 2016, when the then declining value of the Canadian dollar boosted sales to American auto carpet baggers. Americans, along the Northern border, flocked to Canadian used car dealers and visited Canadian used car sites to try and land a deal.
The declining value of the Canadian dollar meant that Americans could scoop up vehicles, while saving about 30% on the exchange rate. This was excellent news for the Canadian used car industry because it meant that they could charge Americans slightly higher prices. Americans were willing to pay these, somewhat more extensive prices because the exchange rate would equalize that price back down to something more affordable.
This was a pretty interesting phenomenon, as a general decline in the condition of the Canadian economy prompted a general incline in sales for the Canadian used car industry. This demonstrates how complicated and often unpredictable the relationship between the economy and the used car industry can be. The channels that direct the ebbs and flows of both often intersect at unusual cross roads.
Another important concept to grasp, in trying to understand this relationship, is how the Canadian used car industry fits into the broader national “second hand” economy. The second hand economy is the economic undercurrent of Canada. It is the informal national marketplace where every transaction between “owner consumers” and “purchasing consumers” takes place.
Consumer to consumer sales account for a vast quantity of currency transactions throughout Canada, yet its relationship to the formal Canadian economy is loose and complex. In 2016, Canadians spent about $29 Billion in the second hand economy, spread out across the 82% of Canadians who participated in some sort of second hand transaction. Interestingly, Canada’s second hand economy accounts for about 1.4% of the national GDP. So how does this money make its way from the second hand economy into the real one?
Between online resale services, storefront resale locations (such as a used car dealership), and the natural cycle of spending of earning filtering into the national flow of currency, second hand transactions can still help to boon the national economy. When people save money on second hand transactions, they pass their savings into the economy elsewhere. When businesses spring up around second hand transactions, they pass portions of their profits into the national economy as any other business would.
So, let’s get back to the Canadian used car economy. Vehicle purchases are often the biggest consistent purchases Canadians make. Thus, lending is often a necessary reality of this purchase. Debt, amongst consumers, is never a good thing for a national economy.
The more debt distributed among the masses, the less spending power consumers have, and the more dangerous the economic condition becomes should people fail to repay their debt. Thus, the savings consumers can find in the Canadian used car industry, and the second hand economy at large, means less debt throughout the country and a more prosperous economic condition en masse. So, as the Canadian used car industry continues to surpass the new car industry in sales and savings, the economy stands to gain ground and security.
So, the relationship between the Canadian economy and the used car industry could be broadly summed up as a “tit for tat” exchange. When the condition of the economy and currency declines, the appeal of the used car industry booms. As people flock to buy used cars, the residual debt relief that echoes throughout the country spells prosperity for the previously declining economy.
Ridetime is one of Canada’s premiere used car dealers, and that position was cultivated by passing significant savings on to their customers. Ridetime works with a lineup of lenders who know how to get you approved and paying your debt quickly and manageably. If purchasing a reliable car without accruing massive amounts of debt sounds good, then Ridetime is the dealer for you.