New car prices are down; used car prices are up in Canada – that’s the quick recap of AutoTrader’s price index report.

The online vehicle selling website, Canada’s largest automotive marketplace, released its price index for the second quarter of 2025, which uses price data from hundreds of thousands of new and used vehicle listings.

On a year-over-year basis, average used vehicle prices were up 3.6 per cent in June, to an average price of $37,664.

On the new vehicle side, average prices were down 3.5 per cent, showing an average price of $64,445. It’s important to note this downward trend is expected to end soon.

Why are used car prices rising?

Used vehicle shoppers just can’t catch a break, it seems.

Average prices quickly ballooned during the pandemic – up 21.7 per cent in 2021 alone, according to AutoTrader – and they’re again in an upward trajectory.

In a typical year, AutoTrader says, used vehicle prices start the year high and come down through the year, but this year, we’re seeing the opposite. AutoTrader points out average used vehicle prices have increased each month since March.

There are a few factors for rising used vehicle prices.

First, demand is up. AutoTrader recorded 1.8 per cent more used vehicle sales in Q2 of 2025 over the same quarter in 2024. Year-to-date sales are also up two per cent. This high demand is depleting inventory levels, the report says.

The other problem is that there aren’t as many used vehicles available as there would have been in past years.

During the COVID-19 years of 2020 and 2023, Canada experienced approximately 1.5-million fewer vehicle sales than would have been typical for that period.

This is resulting in fewer vehicle trade-ins and lease returns, which has resulted in lower-than-typical inventory levels.

New car prices expected to rise

AutoTrader says it expects some upward movement on average new car prices in the near term.

The price index, which also includes third-party data, shows year-to-date new car sales are up 5.6 per cent, which is resulting in fewer available vehicles.

Additionally, some high-demand vehicle models will be harder to get as they may not reach Canada due to tariffs.

Another problem is that some dealers are underestimating demand or basing their 2025 order volumes on 2024 volumes, resulting in not enough cars being ordered to meet demand.

Lastly, North American vehicle production levels are expected to decrease 6.1 per cent year-over-year.

“With declining inventory levels, we anticipate some upward pressure on new vehicle prices in the near term. However, price movement will depend on availability, demand, and the impact of tariffs at the make and model level,” the report says. “If Canada and the U.S. manage to reach a trade deal by the end of July, as targeted by both governments, the anticipated new car price increases may not materialize. Given the current market fluidity, the outlook remains uncertain.”

EV prices down

The good news for anyone looking for a zero-emission vehicle is that average prices for used and new battery-electric vehicles are way down.

Year-over-year, average new BEV prices were down in June by 9.9 per cent to an average of $66,891, while average used BEV prices were down 7.9 per cent to an average of $44,077.

Statistics Canada paints different picture

Statistics Canada’s most recent consumer price index, for June 2025, shows overall vehicle prices rose 4.1 per cent in June compared to the same month in 2024.

On the new side, prices are said to have increased by 5.2 per cent, while used vehicle prices are said to have increased 1.7 per cent.

A reason why there may be such a large discrepancy between AutoTrader and StatCan on new vehicle prices is that StatCan likely considers EV rebates as part of a vehicle’s final price whereas AutoTrader may not. When the federal government’s Incentives for Zero-Emission Vehicles was suspended earlier this year, that immediately increases the price of some EVs, which no longer received the $5,000 consumer incentive.

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