As the inventory crisis deepens, dealers scramble to find new cars
In an ordinary year, the parking lot of Jim Tubman Chevrolet in Ottawa is full of hundreds of new cars.
There were only 19 on Friday-some had already been sold earlier in the day.
“Obviously, it’s a bit crazy now, not only for us, but everywhere,” said Ted Smith, a senior salesperson at the dealership.
Car sales have shifted from last year’s buyer’s market to a severe shortage in 2021, with people struggling to find popular models before snapping up or waiting for orders for two to four months to arrive.
The problem is that semiconductors are in short supply worldwide. Most modern vehicles now use semiconductors to operate everything from brakes to air conditioners to windshield wipers. Part of the reason for the shortage was production interruptions during the pandemic.
Smith said the slowdown in car production has pushed up the price of used cars so much that a year and a half of used cars can now be sold at a higher price than the owners originally paid.
Greg Leison, the digital and mobile editor of Car News Canada, said that because there are multiple buyers arguing about the new car, no one is arguing about the price.
“The entire inventory situation boils down to Economics 101, supply and demand,” he said.
In his report, Leyson said that he found that the incentives for new cars-used to attract customers in the past-were at the lowest levels in history.
Although there are reports that American customers are paying higher prices than listed prices, Leyson said he has not seen evidence of this in Canada.
However, the supply problem may get worse before it gets better, because there are more than a dozen automakers in North America Slow down or stop production Due to semiconductor shortages in the past few weeks.
Ford’s chief financial officer told investors last week that the shortage may continue until early next year.
Oumar Dicko, chief economist of the Canadian Automobile Dealers Association, said this is bad news for dealers who want to make up for their losses last year, when car sales in Canada fell from 1.9 million in 2019. About 1.5 million vehicles.
“There are a lot of pent-up demands. The pandemic has created new demands. Now we have to find vehicles for these customers,” said Dico, whose organization represents more than 3,200 new car dealers in Canada.
He said that a recent survey of members found that more than 90% of people expect inventory issues to be their biggest problem in the coming months.
Canada considers its own semiconductor supply
Flavio Volpe, chairman of the Toronto-based Auto Parts Manufacturers Association, said: “We are in a once-in-a-lifetime inventory crisis.”
Volp said several manufacturers have been experiencing a series of “blackouts,” manufacturing incomplete cars, parked before the advent of semiconductors.
He said that Canada does not currently produce a large amount of semiconductors. This was the focus of discussions with federal officials and the industry last month. The focus of the conference was how Canada can create its own supply.
“I think COVID tells us that only some commodities must be stocked domestically,” Volpe said. “Not only cars, but all the other things we are doing.”