Why are used vehicles selling with more kilometres on them?
If you’re in the market for a new car or truck, you’ve likely seen how limited inventory is right now. This is largely due to a global shortage of semiconductors, which has caused a major slowdown for auto manufacturers over the last two years. As a result, the demand for used cars is surging to record highs. But with higher demand comes higher prices, and as reported in a recent study by LowestRates.ca and Carpages.ca, higher odometer readings.
Used vehicles are selling with up to 354% more kilometres on them than two years ago
According to the study, used vehicles are selling with more kilometres on them in 2022 than in 2020—but for the same price. This trend was seen across all price categories of used vehicles.
Used cars under $5,000 are now being listed with 40% more kilometres on them in 2022 than in 2020 (an average of 273,065 kilometres). High-end used vehicles over $45,000 saw the biggest shift, with an increase of 354% between 2020 and 2022 (an average of 16,962 kilometres).
The odometer only tells part of the story
While a vehicle’s odometer reading gives you a good indication of the amount of wear the vehicle’s endured over time, it doesn’t give you the full picture. There are other factors beyond the number of kilometres a vehicle has travelled that will impact its lifespan, such as proper maintenance.
When purchasing a pre-owned vehicle, ask for a mechanical inspection and CARFAX report. The mechanical inspection will give you a better understanding of the vehicle’s overall condition, including its brakes, engine, and transmission. This will help ensure you’re aware of any potential issues that could cost you a lot in repair and replacement later.
The CARFAX report – offered for free by many dealerships – gives you important details about the vehicle’s history. This includes former ownership, province(s) in which it’s been registered and any reported collision damage.
The good news: A used vehicle might come with a lower insurance rate
If you’re planning to buy a used vehicle today, it might cost more than you anticipated, and you’ll likely have to settle for a higher odometer reading. There’s good news though; used vehicles are usually cheaper to insure than new vehicles. This is because used vehicles generally cost less to repair or replace than new ones, especially those without the expensive technology many of today’s vehicles are equipped with. Lower costs to repair or replace a vehicle in the event of collision or theft typically lead to lower claims costs and potentially lower insurance premiums. Ask your insurance broker for a quote before purchasing a used vehicle to understand how it fits into your budget.
If you’re getting ready to purchase a used vehicle, reach out to your TW insurance broker at 1-888-338-2685 for a quote and to discuss your coverage options.