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Vehicle shortage poses challenge for Newmarket auto dealer

'Everything shrunk,' used dealer says of market grappling with impact of parts shortages, pandemic lockdowns
20220729-Baer's auto sales -JQ
Bakers Auto Sales owner Dave Baker said it is a challenging time for the industry.

The impact of the shortage in new car inventory can readily be seen on local used car lots. 

It has been decades since he has seen a car market like the current one, Bakers Auto Sales owner Dave Baker told NewmarketToday.

The Newmarket used auto dealer said it is a difficult market, with demand far outstripping supply. Pandemic lockdowns halting business over the past couple of years, and associated parts shortages have also created challenges that he said will not be quick to fix.

As he starts his work day, Baker is constantly monitoring online auctions for used cars he might be able to add to his inventory. 

“Everything shrunk,” he said. “Little ma and pa stores, they’re all disappearing … They’re all getting bought up. We even see parts stores are all getting bought up.” 

The auto industry has been reeling amidst the pandemic, in significant part due to global shortages of semiconductors and critical computer chips for new vehicles. That has driven down new auto supply and raised pricing on used vehicles.

A decline in used car availability is an extension of new car shortages, Baker said. 

“Long-term, I worry about the quality of those vehicles that have been manufactured in the last two years,” he said. “If you have no new car supply, you have no used car supply. Our cars come from dealerships, trade-ins.” 

The pandemic has also stalled people from selling and trading vehicles, Baker said. He added that he has found some vehicles are in worse shape when he gets them.

“Everybody kept their cars two years longer,” he said. “There's a lot more used cars in the market that have mechanical defects." 

A May Statistics Canada report showed that used car prices have risen approximately 25 per cent between January 2020 and March 2022.

But Baker said costs are also up to repair vehicles and add them to inventory. He added that repairs can often take much longer, with fewer parts around and taking longer to get delivered. 

Vehicles are moving very quickly off his lot.

"This is all basic economy, supply and demand," he said. "Usually the first person that drives it, buys it."

Despite the challenges, Baker said he has been able to hold steady compared to some other dealers, getting by with good mechanical knowledge and contacts. 

“Astute buying. Buying right and selling right,” Bakers sales manager Garry Earle said. “You work a bit and build on it.” 

Without increased parts manufacturing, Baker said he does not see the problem ending quickly.

“Until they correct all of that distribution flow,” he said. “It’s going to be a long, slow process.” 

Having sold automobiles since 1982, Baker said retirement may not be far off in a market with challenges like this.

“A little longer,” he said. "I’ve just about had enough.”

— With files from the Canadian Press