The used-vehicle business can already be a tough one, but add an ongoing national vehicle shortage and the last two years have been even trickier to navigate.
Local dealerships have been struggling to maintain inventory due to a vehicle shortage that those who work in the industry say started about halfway through 2020.
“When COVID first hit, everybody thought that nobody would be buying and it was kind of the exact opposite. All of a sudden there was this huge shortage and had customers that wanted to buy but no stock,” Christian Binus, sales manager at Bayfield Auto Sales on Bradford Street, tells BarrieToday. “Prices on the wholesale end are through the roof.”
The reason behind the shortage, he says, was due to a number of different factors.
“Any new car you wanted to buy you’re looking at a three- to six-month wait or more depending on what you’re looking for,” Binus says. “Manufacturers misjudged the market, too, thinking nobody would be buying, but really people weren’t travelling or spending money on entertainment. … They were buying new cars. They didn’t even need a new car, they just wanted something different in their driveway.”
A shortage of parts, semiconductors and fewer trade-ins of used vehicles have also been a significant contributor, added Bobby Taylor, manager with Smart Wheels Auto Centre on Dunlop Street West near Tiffin Street.
Another big factor impacting dealerships in Canada, Taylor and Binus both noted, is trade-ins at dealer auctions are being scooped up quickly by companies south of the border.
“An article I read said used vehicle prices in the U.S. have risen 40.5 per cent… and now with 25 per cent exchange on the dollar they’re paying retail at Canadian auction and I can’t pay retail. If I pay retail, I won’t be in business for long,” Taylor says. “The Americans are definitely having an impact because they’re buying a lot of Canadian vehicles and shipping them over the border.”
“They have 10 times the population down there,” adds Binus. “That’s a really big part of it, is the Americans drying up the inventory up here.”
Taylor counts himself as one of the “lucky ones,” however, noting while many small used-car dealerships have simply closed their doors until things improve, the Dunlop Street West dealership has managed to maintain its inventory at approximately 70 per cent of what it had pre-pandemic.
“I am still getting vehicles. I am still moving lots of vehicles because I still believe in aggressively pricing vehicles. If someone comes to my lot, the vehicle is going to sell itself — I am just here to help facilitate a deal, that’s it,” he says. “As long as I price my pricing where I am more than competitive with the majority of other dealers, people will come.”
The lack of inventory across the country, and the ability to showcase what they do have online, has also opened up the door significantly to buyers, Taylor acknowledges, noting he’s had buyers travel from as far away as Alberta to purchase a particular vehicle.
“People will travel for a deal. They see a car they like and they will travel a fair distance… because there’s not a lot of choices out there if you’re looking for a particular vehicle," he says.
Taylor says although he's confident the shortage will correct itself eventually, it will take time.
“It’s not going to go away overnight. It’s probably going to be a year to (18 months) before the market starts to correct itself," he says.
Binus has worked in the industry for close to two decades and tells BarrieToday this is the first time he’s seen such a significant shortage.
“There’s been times when there have been shortages, but certainly nowhere near what it is now," he says. "I have been doing this for 17 years and I’ve never seen anything like this. We normally have 40 cars in our inventory and right now we are sitting at 16. We are lucky, I think … (because) some of the other dealers I’ve talked to are even worse.”
