If you’ve even casually shopped around for a new vehicle in the last few years, you’ve likely been struck by the profound and disheartening realization that cars are just too damn expensive

The sticker shock is even after prices dropped from the pandemic-era peak as supply normalized, more automakers offered discounts and interest rates fell.

Vehicle prices have increased by 33 per cent over roughly the last 10 years, according to Canada’s Consumer Price Index (CPI). Leasing prices have risen even higher, up 36 per cent over the same period. The cost of owning a vehicle is also climbing, led by a 49-per-cent increase in auto insurance premiums and higher gas prices.

Income hasn’t quite kept up, with pre-tax average weekly wages rising 29 per cent from 2014 to 2024, according to Statistics Canada data, which is close to the inflation rate.

The financial picture for car buyers gets even uglier when you look at the average transaction price (meaning the actual selling price, excluding tax) for new vehicles. It was $53,100 in 2023, according to DesRosiers Automotive Consultants. That’s up 29 per cent from $41,200 in 2019 and up 59 per cent from $33,400 in 2014. Adjusting for inflation, the increase from 2014 and 2023 is 30 per cent (And no, cars have arguably not become 30 per cent better during that time.)

AutoTrader’s Canadian online data shows average new-vehicle asking prices (meaning advertised prices on AutoTrader) have finally started to soften, dropping to $65,219 at the end of 2024 from a peak of $67,817 in September, 2023. But, let me be clear, $65,219 is still a lot of money for a car.

The average full-time worker earning around $76,000 a year would have to spend more than their entire after-tax annual income to buy the average new vehicle listed on AutoTrader, and that’s a problem. Income is too low and cars are too expensive. (And don’t get me started on those $4 cucumbers at Loblaws.)

Take some popular mainstream SUVs as an example:

Pricing of the base model Honda CR-V climbed 32 per cent to $36,475 in 2025 from $27,690 in 2019. (Note that for consistency all prices are from CarCostCanada.)

The Jeep Wrangler has been on a pricing roller coaster, with the entry-level model rising 31 per cent to $46,220 in 2024 from $35,195 in 2019, before settling back down to a more reasonable $40,700 this year. Thankfully, the brand appears to have seen the error of its high-priced ways; how could it not with falling sales and inventory piling up on dealer lots.

The base model Toyota RAV4 climbed 28 per cent since 2014, while the fully loaded Limited AWD model jumped 36 per cent.

Andrew King, managing director of DesRosiers, noted that new vehicles come with more stuff – whether that’s bigger touch screens (is anybody actually asking for those?) or additional safety equipment such as automatic emergency braking systems and backup cameras – all of which drive up prices.

King also cited the growing market share of more costly types of vehicles such as SUVs, electric vehicles and luxury cars, as factors contributing to the rise in average vehicle prices.

Take Honda’s popular Civic sedan: the base model is a truly excellent car, but it’s 44-per-cent more expensive now than it was in 2014. Still, the more-expensive Honda CR-V SUV handily outsold the Civic sedan last year as drivers overwhelmingly choose larger vehicles.

Prices are truly out of control in the luxury-car market. Putting aside the $65,000 price hike for the revised 2025 Porsche 911 GT3 (because that car will almost surely sell out despite its eye-watering price), the bare-bones Porsche 911 Carrera now starts at $135,600 – and for that much money you don’t even get coloured paint. It’s only black or white. Even silver costs an extra $950. It sounds like a whiney old curmudgeon thing to say, “I remember when a 911 Carrara was under $100k,” but it actually wasn’t that long ago. The 2015 model rang in at $96,200.

Prices in the high-end car market always seem out of touch with reality; but I wasn’t sure whether to laugh or cry recently when test driving the new Mercedes-AMG GT 63 coupe. Sure, it’s the flagship V8-engined sports car from AMG, but at $195,000 to start and $233,005 as-tested (before taxes) the price is outrageous. The 2019 AMG GT – which was a more exciting car with a similar if slightly less-powerful twin-turbo V8 engine – looks like a bargain in hindsight at $165,000.

How high can prices go?

“There are signs that consumers have limits,” King said

Luxury vehicle sales, for example, were down slightly in 2024 over the previous year at a time when the overall new-vehicle market was up 8.2 per cent.

“Affordability concerns pressed down on the luxury side of the market,” King wrote in an e-mail. At the same time, DesRosiers data show compact SUV sales were up a whopping 20.9 per cent, suggesting drivers are seeking more affordable, practical machines.

Canadian new-vehicle sales last year hit 1.86 million units, according to DesRosiers, which is a nice increase over 2023 but still below the peak.

”The market remains approximately 180 thousand units below its 2017 high, despite a Canadian population that has increased from 36.7 to 41.5 million people over that time,” the company pointed out in a January note.

There’s no predicting what prices might do this year with the looming threat of U.S. tariffs, uncertainty around electric vehicle pricing and incentives, as well as a market I think is still oversaturated with overpriced and oversized vehicles. Don’t hold your breath for a sudden influx of smaller more budget-friendly vehicles.