Gone are the days when a person could enter a car dealership and leave with the vehicle of his choice on the same day.
With a shortage of new cars, dealers in Nova Scotia see buyers making a deposit for vehicles they haven’t even seen, just to wait months for it to be delivered by the manufacturer.
Currently, the Bruce Hyundai office in New Minas, NS, currently has about 20 new cars. There were about 200 at the time last year.
This is not an isolated case.
“There’s a lot higher demand, a lot lower supply, so I think customers are starting to panic. It’s almost like the housing market,” said Bruce Hyundai general manager Brittany Devo.
Industry experts say the global shortage of microchips used in vehicles, along with the war in Ukraine, which disrupted supplies of neon gas used to make semiconductors, has hit the car industry hard.
Having been in business for 15 years, Deveau said she has never seen a market like this.
Steele Subaru on Kempt Road in Halifax shows new cars located in the batch (Robert Short / CBC)
She said customers can expect to wait eight to 18 weeks for gas vehicles and between 24 and 36 months for electric vehicles, whose popularity increased during the pandemic. The main electric dealership vehicles, Hyundai IONIQ 5 and Hyundai Kona Electric, are already sold out by 2023.
“We had customers who had never seen, maybe, you know, Kona Electric, and they put out a $ 1,000 deposit and bought an unseen sight,” Devo said.
Used cars with a high price
Halifax resident Yezhekiel Eugene is looking for a Mazda CX-30 that is hard to come across. He said he had found an ad on the website AutoTrader, which sells an average car model with about 20,000 kilometers, but it is more than $ 5,000 more than the manufacturer’s recommended retail price.
“It’s like a seller’s market, isn’t it?” “They can greatly increase the prices they want, and people will probably still buy it,” said Eugene. “There are fewer cars at dealerships, wherever I go in the whole city.”
Reddit consumers in Canada are discussing their attempt to buy cars and then turn them over at a higher price, something Eugene considered with the 2018 Mazda3 Sport, which he bought in August 2020.
“I went to a dealership and just asked for an offer for the price of my car. And guess what? I managed to get more for my car than I took, “he said, adding that he eventually decided not to sell it.
Deveau said her dealer also minimizes the use of used cars as inventory due to rising prices for used cars in Canada and the United States.
“It is difficult for us to buy at auction or from an external source because the prices they want are more than the vehicles are brand new,” she said. “So it’s hard for us to pay so much for the best dollar in bulk and then try to retail it on our site without asking an indecent price for a vehicle.”
The City Mazda plot on Robie Street in Halifax shows a lot of empty space. (Robert Short / CBC)
Dealers in Canada saw a drop in sales when the pandemic hit. In the summer of 2021, at the same time, travel bans were lifted and car sales increased.
In the past, customers came in, bought a vehicle and took their car, but now salespeople spend much more time ordering vehicles, Devo said.
Supply chain problems
John Sutherland, executive vice president of the Nova Scotia Car Dealers Association, said he believed it was not demand that increased, but supply chain problems that created complications for customers looking for a new car. The global shortage of microchips during the pandemic disrupted car supplies.
Data analyzing trends for 2021 from AutoTrader revealed that buyers began to expand the demand for cars last year. Approximately 31% of them were willing to travel more than 400 kilometers to find the vehicle of their choice. Twenty-seven percent of buyers surveyed even expressed a willingness to buy used ones instead of new ones.
“We do not have the level of batch inventory that we usually have in normal times. “Unfortunately, these are not normal times,” Sutherland said.
“I think a lot of people before the pandemic were used to entering a car park and there would be almost an abundance of inventory. We certainly don’t see that now. “
The front of the Steele Chrysler shows a lot of empty space. (Robert Short / CBC)
Amanda Dean, vice president of the Canadian Insurance Bureau in Atlantic Canada, said that as inflation rises to 30-year highs, the cost of repairing or replacing vehicles after an accident increases.
“The shortage of parts leads to a longer cycle for vehicle repairs. This in turn leads to longer rents of vehicles for consumers to use while their vehicles are being repaired, and the price of these rents has increased significantly in recent times, “Dean said, adding that market prices dictate the price. of rental cars.
Dean said rental car parks were 30 to 40 percent below pre-COVID levels, and many rental car operators had to sell inactive equipment when travel bans were imposed.
At the time, she said it was unknown when prices would return to normal.
“We have average Canadian Black Book prices, where the average price of a used car in Canada increased by 34 percent between 2021 and 2022. So that’s a clear sign of how low supply is at the moment,” Dean said.
“Right now this is a perfect storm and we are not sure when it will end and this pressure in the wider market will be eased.”
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