It’s been a wild ride for car dealers the last 17 months. Demand is revving up post pandemic, but the supply is running on empty.
At Westlock Motors, there’s just a single truck in the showroom.
“Right now, with our inventory levels, we’re trying to park the lot as best we can, make it look full, hoping people know we’re still in business,” said Colby Ducharme, sales manager at Westlock Motors.
The dealership typically holds as many as 100 new vehicles. On Wednesday, it had just seven.
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This is a wide-spread issue, according to the Motor Dealers’ Association of Alberta.
“It’s really been driven by a microchip issue, from a supply-base perspective,” said president Gerald Wood.
“That’s a global issue. It impacts every manufacturer.”
Several of the world’s largest automakers have been running short on semiconductors, an essential component of electronic devices that have are also vital for new vehicles’ infotainment modules, engines and fuel management systems.
The Motor Dealers’ Association of Alberta says production of domestic brands has been hit especially hard: Ford, General Motors and Stillantus, which makes brands like Chrysler and Jeep.
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“Fortunately, General Motors has taken a stance to idle some lower-volume model lines and slow those plants down to try and produce more trucks and SUVs for us,” Ducharme said.
But it still takes time and that means delays for customers.
“On average, we’ve seen wait times of three to four months,” Ducharme said. “Today, you’re probably going to extend that. We’ve seen customers that have waited closer to a year at times.”
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Used car shortage pushes prices to ‘crazy’ levels
The used vehicle market is also running hot.
“We are seeing lightly used vehicles that are really being sold for almost the same as a new vehicle or in some cases a little bit more than a new vehicle, says Brian Murphy, managing director of Kelley Blue Book and Data Solutions.
Used car prices in Canada, he says, are the highest they’ve ever been, at least as far back as the data goes.
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“The franchise dealers are not getting any new cars, so they’re holding on to their used inventory and that’s where we normally get our supply from,” explained Caeron John, owner of Just Auto.
Just Auto in Edmonton usually has 30 vehicles for sale. For the last year, it’s only been able to carry half that.
“We’ve been going on Facebook Marketplace or Kijiji and we’re looking for private deals,” John said.
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The same squeeze has been hitting rental shops too.
As demand plunged during the pandemic, rental car companies across Canada sold off 30-to-40 per cent of their fleets on average, according to the Associated Canadian Car Rental Operators. But now that domestic travel has rebounded somewhat and the supply of new vehicles remains tight, rental companies are scrambling to meet consumer demand.
Rental car companies hanging on to their existing vehicles and sometimes buying used ones, according to Murphy.
John has noticed the supply shortage changing customer behaviour as well.
“When they see something they like, they actually try to put a deposit down and grab it right away.
“Whereas before a customer would say: ‘I like this car but I want to go look at another two dealerships.’”
While the supply shortage is a headache for buyers, it’s an opportunity for sellers with an extra car for which they don’t have much use, Murphy says.
You can use a website like Kelley Blue Book or Canadian Black Book to consult prices and make sure you list your ride for what current buyers are willing to pay.
“Certainly, if you have a vehicle you’re looking to liquidate, it’s probably as good a time as any,” Wood said.
— With files from Erica Alini, Global News
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