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Posthaste: Canadians hit the brakes on car ownership, say it's too expensive Back to video

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A higher cost of living is keeping many Canadians from entering the housing market, but it also appears to be putting the brakes on their intentions to buy a car.

More people are walking back plans to buy or lease a vehicle this year, with 46 per cent saying they’re not likely to do so thanks to elevated inflation, according to an annual survey from car sharing marketplace Turo Inc. and Leger Marketing Inc. Similarly, high interest rates are stopping 47 per cent from taking the plunge. In comparison, last year 39 per cent said purchasing or leasing a vehicle was off the table.

Buying intentions are even lower among people aged 25 to 34, with more than half saying they’ll likely forego the expense because of inflation. This younger cohort is also more likely to give up the vehicles they already own compared to everyone else, Turo said. As it stands, young people spend more money on their cars, with the average cost clocking in at $6,176 a year versus $5,024 for all age groups.

Overall, car ownership is seen as an expensive undertaking, and among people who don’t yet own a vehicle, 37 per cent said it’s because they cost too much, up 32 per cent from last year and overtaking not knowing how to drive/not having a licence as the main reason why they don’t have a car.

Meanwhile, current vehicle owners aren’t using their wheels as much as one might expect. Though more than three-quarters said they couldn’t live without their cars, 85 per cent let them sit unused for 95 per cent of the year, the survey said.

“As the cost of living continues to rise, Canadians are reconsidering the traditional car ownership model, which can place a high financial burden on the owner,” Cedric Mathieu, head of Turo Canada, said in a release. “Vehicles depreciate in value and have ongoing expenses, which persist even when unused.”

The transition to electric vehicles doesn’t seem to be helping affordability issues. Fewer Canadians this year intend to buy an EV, the survey said, and 29 per cent are avoiding one because they cost too much.

Unfamiliarity with electric models also seems to be holding people back from buying. More than 80 per cent have never driven an EV before, but half said they might consider a purchase if they could test drive one for a few days first.

Still, just over half are planning for their next car to either be hybrid or electric, and 40 per cent point to savings on gas as the main reason behind their decision.

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Canada’s inflation rate slowed in February, putting a potential Bank of Canada interest rate cut on the table for the summer.

The consumer price index rose 2.8 per cent on a year-over-year basis in February, down from 2.9 per cent in January, Statistics Canada said Tuesday. That’s slower than the 3.1 per cent expected by economists.

In a sign of relief for grocery bills, food inflation also decelerated to 2.4 per cent. The reading marks the first time since October 2021 that grocery prices rose at a slower pace than overall inflation.

Economists say the surprise readings could mean the first Bank of Canada interest rate cut will come this June.

Find out more here.

• The Bank of Canada will release deliberations from its March 6 meeting at 1:30 p.m.
• Saskatchewan, Newfoundland and Labrador table respective budgets.
• The United States Federal Reserve releases its latest interest rate decision at 2 p.m. A press conference by chair Jerome Powell follows at 2:30 p.m.
• Earnings: Alimentation Couche-Tard Inc., Power Corp. of Canada, General Mills Inc., Samsung Electronics Co. Ltd., Canadian Solar Inc.

• Ontario to lead national surge in cottage prices, says Royal LePage
• Gildan reviewing several takeover offers as boardroom fight over CEO firing simmers
• What economists say about February’s inflation surprise
• The CRA already has your info, so make automatic tax filing a reality already
• Resentful, financially stressed workers are dreaming of quitting their jobs

A longtime married couple are winding down their successful business with a plan to shift to a two- or three-day workweek and take summers off. But as they enter semi-retirement, they are wondering “where to park their money in order to preserve the principal and earn decent interest.” We asked financial planner Ed Rempel and retirement planner Eliott Einarson to help them out.

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line at aholloway@postmedia.com with your contact info and the general gist of your problem and we’ll try to find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers led by Julie Cazzin or one of our columnists can give it a shot.

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Read them here.

Today’s Posthaste was written by Victoria Wells, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com.

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