Is Now a Good Time to Buy a New Car in 2026?

For the first time in years, car shoppers are finding it easier to get a good deal as the auto industry recovers from supply-chain disruptions. Experts say conditions are improving and could continue to do so, offering better opportunities for buyers.

Sticker prices at many dealerships have begun to ease, improving affordability, according to Daniel Ross, senior manager of industry insights with Canadian Black Book.

“The new car market is normalizing faster than the used car market,” he said. “Inventory is building, incentives are available depending on where you shop, and if you were in the market for a new car, this is the best buying environment you’ve seen in a long time.”

Inventory of new vehicles has risen nationwide after prices climbed and consumers delayed large purchases amid high inflation and rising interest rates. In response, manufacturers and dealerships have introduced incentives and rebates to clear excess supply.

Dealerships can offer manufacturer-backed financing and set rates independently from bank rates, explained Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions. “Rather than providing rebates, they often lower interest rates, which creates better deals for consumers,” he said.

How availability affects car loan interest rates

While homeowners watch the central bank for signs of lower borrowing costs, vehicle purchases behave differently. When you finance through a dealership, the interest rate offered often depends on the specific make and model, according to Shari Prymak, senior consultant at the non-profit Car Help Canada.

“Manufacturer-set rates are mainly tied to vehicle availability,” Prymak said. “If supply is strong, manufacturers will incentivize rates and lower borrowing costs. If a model is scarce and has a long wait, they typically won’t offer incentives.”

Manufacturer financing on new cars may range around 5% to 7% without incentives—lower than typical used-car rates but still above pre-pandemic levels. Used-car interest rates tend to track central bank moves more closely, though used-car prices have remained elevated.

As supply improves, more incentives and competitive offers are appearing, which returns negotiating power to buyers.

Has the car market reached a tipping point?

The market is improving but not yet fully corrected. Analysts expect a gradual path back to normal, and it could take another year for conditions to settle.

One major bank report suggested inventory will keep rising, but demand could be affected by broader economic headwinds—especially in the housing market. Households balancing home purchases or mortgage payments may delay vehicle purchases. That same analysis estimated auto sales will grow this year and reach more typical pre-pandemic levels by 2025.

Prymak recommended patience for buyers who aren’t pressed to purchase immediately. “If you can wait another six months, you might find better deals, particularly on models that currently have limited supply and long wait times,” Prymak said.

Some Asian brands producing hybrid models—such as Toyota, Honda and Hyundai—still face constrained supply in certain regions, which limits incentives on those specific vehicles.

Tips for new car buyers

Many consumers delayed new-vehicle purchases over the past few years, opting to repair aging cars instead. For buyers who now must purchase, Prymak recommends focusing on models with ample supply and available incentives.

North American manufacturers—such as Ford, General Motors and Stellantis—generally have larger inventories and may offer better incentives. Luxury European brands like Mercedes, BMW and Audi also periodically present discounts.

Common offers on well-stocked models include cash incentives that can reach substantial percentages off market retail prices. Leasing discounts are also more common than in recent years. Negotiating add-ons—such as extended warranties, rust protection, or theft deterrent packages—can save significant sums when those items are not needed.

Prymak advises researching specific models, obtaining quotes from several dealerships in advance, and requesting an itemized breakdown to ensure no unnecessary products are included.

“Don’t be afraid to negotiate,” he said. “Supply is improving and buyers are slowly regaining bargaining power—take advantage of that.”

The same approach applies when shopping for financing. For new vehicles, manufacturer financing often offers lower rates than typical bank loans or lines of credit. For used cars, compare offers from banks, credit unions, and other lenders to secure the best interest rate.

While the new-vehicle market is recovering more quickly overall, Ross cautioned that the improvement is relative. “It’s a better scenario than it was, but we were coming from a very poor situation,” he said. His practical advice: if you don’t need to buy immediately, waiting may still pay off.

Read more about buying a car:

• Buying your first car in Canada: Insider tips from a salesperson
• Best used cars in Canada for 2024
• Should you buy a new or used car?
• The real costs of buying a car