Consumer auto debt down in 2017
New data shows that the amount of automotive debt Canadians are carrying declined slightly in 2017. The decrease took place in the context of an overall higher consumer debt load in other areas, according to a new report from TransUnion.
“This is great news for the Canadian consumer, and for the industry,” said Michael Hatch, CADA’s Chief Economist. “Financing is a huge part of our industry, with some 90 per cent of new car buyers requiring financing of some sort to make the purchase. The fact that real debt levels went down last year is very encouraging. The fact that average loan balances have basically been flat for the past two years is great news for the industry even as we continue to set records every year for overall sales.”
Inflation-adjusted average auto loan balances decreased slightly from $20,291 in 2016 to $20,160 last year, according to the report.
Canadians bought more than two million new vehicles in 2017, setting a new record and making it the fifth year in a row a sales record was achieved.
“Consumers continue to demand record numbers of new cars in Canada,” said Hatch. “The fact that debt has been declining speaks to the affordability factor: new vehicle prices have mostly defied inflationary pressures in the past decade or more, and the product quality gets better every year. While we continue to note that average loan terms continue to increase in excess of 70 months, at today’s levels, Canadians’ auto debt is entirely sustainable and, in fact, on the decline.”