Used Vehicle Values Are Falling Faster in 2026: What It Means for Your Lot

Used vehicle values in Canada dropped 10.4% across all vehicles in 2025, and the pace is accelerating. According to the Canadian Black Book and Fitch Ratings' 2026 Vehicle Depreciation Report, the fourth quarter alone saw a 6.2% decline, and the first half of 2026 has already produced 5.1% depreciation, compared to just 1.3% for the same window the prior year.

For a dealer principal, the headline number is less interesting than what it signals about the lot you are sitting on right now. Aging inventory is losing value faster than it did a year ago, which means the cost of holding units too long has gone up. This is not a wholesale-market story you can wait out. It is a floorplan story, a pricing story, and a marketing-prioritization story, and the stores that treat it that way will move units before the next tranche of depreciation shows up in their aging reports.

Which segments are falling fastest

The damage is not spread evenly. Passenger cars are absorbing most of it.

Full-size cars depreciated 24.2% in 2025. Compact vans depreciated 26%. Sub-compact cars depreciated 20.6%.

Those are the categories where an extra 30 days on the lot does real, measurable damage to gross. If your lot is weighted toward those segments and your turn is slowing, the report is telling you exactly where the bleed is.

Light trucks broadly outperformed passenger cars, and a couple of segments held up remarkably well. Compact luxury crossovers depreciated only 5.1%. Small pickups depreciated only 5.4%.

It is not a coincidence that the smallest number of new electric vehicle launches are concentrated in exactly the segments retaining value best. Supply discipline in those categories is doing what supply discipline does, holding price.

Why this matters on your floor, not just at auction

Every unit sitting on your lot is tied-up capital. The faster it depreciates, the higher the effective cost of holding it. When values fall 5.1% in six months instead of 1.3%, the math on a 90-day unit changes. The floorplan interest you are paying is no longer the only carrying cost. The decline in value is a second carrying cost running on top of it, and it is running faster than it did last year.

This is where inventory turn becomes a financial decision, not an operations metric. A unit that turns in 35 days at a modest gross is almost always better than the same unit turning in 75 days at a headline gross, because the 75-day unit has bled value the whole time and has consumed floorplan capacity you could have used for a faster-turning vehicle. When depreciation accelerates, the penalty for slow turn goes up with it.

The practical read is this: the units depreciating 20% to 26% a year are the units you cannot afford to "give it another month." At those rates, waiting is the expensive choice. Price them to move, put marketing behind them, and free the capital for inventory that holds value.

Affordability is the real constraint right now

Depreciation is only half the story. The other half is who can actually buy.

Fitch's report places Canadian household debt-to-income at 179.6% in the first quarter of 2026, and forecasts unemployment to stay elevated around 6.8% through 2026. Both of those numbers pressure what consumers can realistically afford, and they show up on the lot as longer negotiations, more rehash, and tighter approval windows.

The loan-term data tells you where affordability has actually gone. Loans longer than 72 months now make up about 30% of the auto loan ABS pool, and 96-month terms now represent roughly 1 in 10 new car loans in the market. Extended terms are how the market is keeping payments within reach of stretched buyers. They are also why back-end gross and F&I matter more than ever, because the front-end deal is being stretched thinner to get it done.

Fitch's outlook for Canadian auto loan asset-backed securities performance is "deteriorating" for 2026 relative to 2025, though the ratings outlook itself remains stable due to strong underwriting standards. Read that carefully: the paper is sound because the underwriting is disciplined, but the performance trend is moving the wrong way. For a dealership, that means the buyer on the other end of your next deal is more rate-sensitive, more payment-sensitive, and more likely on an extended term than the buyer you worked 18 months ago. Your marketing, your pricing, and your F&I presentation need to reflect that, not the 2024 buyer profile.

What a dealer principal or GM should actually do

Translating the report into action is straightforward.

Start with your own lot, not the report. Pull your aging inventory by segment and match it to the depreciation curve above. If your heaviest aging units are concentrated in full-size cars, compact vans, or sub-compact cars, you are holding the fastest-depreciating inventory in the market. Those units need aggressive pricing and active marketing now, not at the next 30-day review.

Second, protect the segments that hold value. Compact luxury crossovers and small pickups are retaining value for a reason, and they are the units worth keeping in stock and worth spending acquisition budget on. Do not let the depreciation headline scare you off the inventory that is actually working.

Third, stop waiting for the next data pull to confirm what the current aging report already shows. The report says values are falling faster. Your aging report tells you which of your units that applies to. If you have a 60-day full-size sedan, you do not need another report to tell you it is losing value, you need a price move and a campaign.

This is where Dealer Growth Intelligence earns its keep

This is exactly the kind of market and inventory intelligence that should drive where your advertising dollars go, not generic "sell more cars" messaging. If compact crossovers hold value and full-size sedans do not, your paid media, your inventory-based advertising, and your video production should reflect that. Get video on the aging, fast-depreciating units and run inventory-based campaigns aimed at moving them before the next depreciation tranche lands.

Auto Leads Made Easy's Dealer Growth Intelligence approach is built around exactly this connection. Leads are delivered once and never duplicated, and the full marketing stack, inventory-based advertising on Meta and Google, video production for the units that need to move, paid media aimed at in-market shoppers, and CRM and follow-up to keep acquired customers coming back, is tied back to what is actually sitting on your lot and what it is doing to your gross.

Book a call and we will map which segments on your lot are depreciating fastest, where the affordability pressure is hitting your closing floor, and how to point your marketing at the units that need to move before the next data pull does it for you.

Frequently Asked Questions

Q: What does the Canadian Black Book and Fitch Ratings' 2026 Vehicle Depreciation Report actually say? A: Used vehicle values in Canada fell 10.4% in 2025 and another 5.1% in the first half of 2026, a faster pace than the 1.3% drop in the same period a year earlier. Passenger cars led the decline, with full-size cars down 24.2%, compact vans down 26%, and sub-compact cars down 20.6%, while compact luxury crossovers and small pickups held up. Canadian Black Book's Used Vehicle Retention Index is at its lowest level since August 2021, down 7.7% year over year.

Q: Why should a dealership care if it does not sell at wholesale? A: Because faster depreciation raises the effective cost of holding aging inventory. A unit that loses value more quickly while it sits consumes floorplan capacity and eats gross every day it does not turn. The auction number sets the floor; your carrying cost on top of it is what actually erodes the deal.

Q: How does affordability factor in? A: Fitch places household debt-to-income at 179.6% in Q1 2026 and forecasts unemployment around 6.8% for 2026, and loans longer than 72 months now make up about 30% of the auto loan ABS pool with 96-month terms at roughly 1 in 10 new car loans. The buyer is more payment-sensitive, so pricing, presentation, and F&I need to match that reality, not the 2024 buyer profile.

Q: What should I do with this report on my desk? A: Match the depreciation curve to your aging inventory, price and market the fast-depreciating units aggressively, protect capital for the segments holding value, and tie advertising spend to the inventory that actually needs to move. If you want help mapping that for your store, book a call.