The proportion of used-vehicle buyers in Canada who financed their purchase via a dealer-implemented loan increased significantly in 2010, according to a report by the Power Information Network (PIN).
The percentage of transactions in 2010 that included a loan obtained at a dealership increased by more 3 percentage points, from 36.4 percent to 39.8 percent, compared with 2009.
Conversely, ‘cash sales’ (including transactions in which customers obtained loans privately) decreased by nearly 3 percentage points, from 59.1 to 56.4 percent.
This finding is a reflection of both captive and non-captive lenders practicing a more flexible credit purchase policy, according to PIN.
In 2010, the average transaction price for a used vehicle rose to $18,356 (from $17,753), while the total down payment increased to 10.8 percent (from 10.5%) of the customer’s equity in the vehicle (calculated by dividing total down payment by the sum of total down payment and the amount financed).
This incremental boost in total down payment was another sign of the economic recovery taking place last year, PIN says.
In both 2009 and 2010, the average age of all used-vehicles sold was 3.8 years. In 2010, however, the average used vehicle had just over an additional 1,000 kilometres on its odometer (64,796 vs 63,724).
In 2010, the used-vehicle turn rate was 57 days, a 2-day improvement from 2009. This progress can be attributed to stricter inventory management controls employed by dealerships to maximize ROI, according to PIN’s analysis.
