Whether you’re interested in buying, renting or repairing, automotive experts are warning Canadians entering the vehicle market to bring extra money — and patience.
Ongoing supply chain issues impacting inventory and pricing have slowed somewhat, but data suggests it could still be a rough ride for prospective car buyers deep into 2023.
BUYING
Buying a new vehicle is a lot more expensive than it used to be, and a large chunk of that can be blamed on a slow supply chain.
The semiconductor chip shortage that has punished the auto sector since 2020 is still around, which is impacting supply and driving prices sky high.
A November report from Statistics Canada says over the first 11 months of 2022, 6.9 per cent fewer new vehicles were sold in Alberta. The same report says the average price rose 10 per cent over the same period.
“The shortages is an ongoing problem,” ATB Financial economist Rob Roach said. “It hasn’t worked itself out yet. I think there’s a light at the end of the tunnel, but it might still take a large portion of this year before supply is really able to bounce back.”
Until then, expect new and used lots to remain half-full, and price tags to remain eye-popping.
Roach tells CTV News he believes it could take until 2024 for the sales market to look somewhat normal once again.
“Higher interest rates and borrowing costs will start to bite into demand because it’ll just be more expensive to finance,” he predicted.
RENTING
Rental agencies are also having a tough time.
In the early months of the pandemic, operators reduced their inventory, anticipating a drop off in demand.
But when travel demand shot back up in the summer of 2021, rental car companies couldn’t get enough vehicles in time to meet the need.
Because of persisting demand problems, many lots are still not replenished. And trying to do so can be costly.
“What’s happening lately is a lot of the fleets are being purchased at much higher cost structures than traditional,” Associated Canadian Car Rental Operators’ Craig Hirota said. “It’s going to really force the industry to try to maintain pricing at higher than historical levels.”
That’s led to a slow winter season for operators, and not a lot in the way of optimism approaching spring.
“I think supplies will be still tight, but they will be better than they were last year and the year before,” Hirota said. “It’s been hard.”
REPAIRING
Many Canadians hoping to avoid the buying and renting markets have decided to upgrade their current vehicles.
But parts aren’t immune from the messy supply chain.
In many places across Canada, the cost to have parts shipped exceeds the price to make the repair.
“Our margins are slim to none,” Mechanigo Auto Repair owner Nav Khiljie said. “And we don’t want to turn around and tell the customers that their price is way up. That’s not fair for them.”
Khiljie says shipment delays have also put him in a tricky spot.
Much of his time is spent explaining to Calgarians that their problems aren’t stemming from anything he’s doing — or anything other local shops are.
“We’re trying to cater to customers, but right now we don’t know when we are going to get supply,” he said. “We’re kind of stuck.”
SOLUTIONS?
Natural solutions could be on the way, but industry experts reiterate 2023 will be a bumpy trip.
Their advice to consumers looking to buy, rent or repair: if possible, shop around.
The market is flush with options, and planning ahead of time should give Canadians the leeway they need to find the right place — and way — to spend their money.
Source: CTV News
