Car prices soar as demand for new and used cars remains high
MONTREAL -- Car dealer Izzy Hutman says the moment he posts a used car on his website, his phone starts ringing.
In all his years in car sales, he’s never seen anything like it.
“I have customers waiting for cars,” he says. “The cars come in, we prepare them and we just phone the clients on the waiting list.”
Cars are a hot commodity as of late — especially used ones.
A global shortage of microchips has led to slowdowns on the assembly line for new cars, increasing the demand for used ones.
The pandemic has also made more people want to get behind the wheel rather than take public transit.
“They don't want to take buses, they don't want to take public transport of any sort, even taxis. They're afraid to go in because somebody may have been in there and sneezed,” says Hutman.
Prices for new cars have gone up almost four per cent in the past year, with used car prices going up 13 per cent, according to auto-trader publication Auto Hebdo.
But even at these prices, there’s no shortage of shoppers — largely because many Canadians increased their savings during the COVID-19 pandemic.
“Bank of Canada estimates there is around a hundred billion dollars of additional money in savings accounts. So what do you do when you have extra money? You spend money on things,” says Baris Akyurek, marketing expert from Autotrader.ca.
The issue is that too many people are in pursuit of the same limited supply of cars. Some car rental companies are even competing for vehicles at auctions. Meanwhile, some American buyers are competing for Canadian cars.
“You have American dealers on the auction lists, and I can see them online bidding and they're totally outbidding Canadian dealers because they have a U.S. dollar exchange,” says Hutman.
Car dealers say you can occasionally find deals, but you need to shop extra hard.
The good news is that production should speed up soon.
“We believe that the worst is almost over. Mid to end 2022, things should go back to somewhat normal levels,” assures Akyurek.
This means that, if you’re price sensitive, you may have to wait a year to find a good deal on some new — or used — wheels.