Why used car prices are locked in high gear — and what government could do about it
CBC
If you're one of thousands of people looking to make the shift to a new, greener vehicle — get ready to wait.
If you're just hoping to buy used instead (it's cheaper, right?) you're in for a surprise. In some cases, used cars can actually be more expensive than new ones.
Billions of dollars are pouring into building the auto industry of the future in Canada. But for many people looking to buy cars right now, a combination of pandemic-era supply chain issues, material shortages and shifting consumer preferences have conspired to create long wait times for new vehicles and, consequently, surging demand for used cars.
And experts say things aren't going back to normal anytime soon.
"Absolutely, it's crazy. It's not something we would have expected," said Daniel Ross, a senior manager with Canadian Black Book, which tracks and analyzes data in the automotive industry.
"We've been saying that it's sort of a perfect storm scenario with the economy, the pandemic coming in and supply basically being obliterated by a stoppage of plant assembly, manufacturer by manufacturer," he told CBC's The House.
Used car prices in Canada peaked around a year ago, but the cost has declined only moderately since then. In late February, the two-week moving average for new used car listings was $36,600.
Bob Armstrong, former president of the Association of International Automobile Manufacturers, said supply chains are still to blame.
"The supply chain backed up worldwide and then what happened is our ports got full ... the railyards were full, every warehouse in the country was full," he said.
"It's all delayed, it's just delayed. And of course, all that's really selling at most dealerships right now are cars you ordered a year ago and you're finally getting them."
That means cars don't stay on the dealership floor for long — if they ever make it there.
Armstrong served on a federal government task force dedicated to supply chain issues. The task force called for the creation of a supply chain office in the federal government to help with the ongoing concerns — and the recent federal budget responded with a $27 million commitment.
While Armstrong and other experts warn that solving the problem of backed-up supply will take time, they're still hoping that things are moving in the right direction, as ports, railways and warehouses work out their issues.
"Maybe it could take as long as two more years. Hopefully, next year it will be where it should be. But it could take longer," he said.
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