We continue to hear from CarCostCanada® members every day as the work through the new car and light truck purchasing process. Our Recommended Dealers are also sharing their feedback as they strive to help Canadians acquire a new vehicle.
Based on recent data and our analysis of the Canadian automotive market, the industry continues to experience supply and demand challenges. Several factors have combined to continue the shortage of new vehicles in Canada. These include recent parts shipment disruptions, manufacturers focusing on building inventory in their biggest markets (U.S., Europe & China), and the highest Canadian immigration numbers in history (more new Canadians means more demand for passenger vehicles). These factors have caused prices to rise significantly, with some models seeing Canadian price increases of over 10% in the past year alone.
Truck inventories have been the first to rebound. Chevrolet Silverado and GMC Sierra, RAM 1500 and RAM 1500 Classic, and Ford F-150 models are now more available on dealership lots. Meanwhile, small car inventory is still slow to return. Most Subaru and Mazda models and the famous Honda Civic and Toyota Corolla still see back orders, with many of the more popular trims seeing 4-to-12-week factory orders. In the popular Compact SUV segment, virtually all popular models, including the Toyota RAV4, Honda CRV, and Subaru Forrester, are still experiencing backorders. On a brighter note, supply is slowly increasing for these popular sport utility vehicles. The backorder delays today are far shorter than six months ago. PHEV vehicles are the exception, with RAV4 Prime, Kia Niro PHEV, Hyundai’s Santa Fe, and Tucson Plug-In Hybrid models all still experiencing extended wait times.
According to several industry reports and our market study, the shortage of new vehicles caused a surge in demand for used cars, driving prices up significantly in that market. Used car prices in Canada hit a record high in 2021, up 34% from pre-pandemic levels.
A scan of Canadian dealership websites shows that many dealers continue to have limited inventory “in stock” and available for immediate delivery, with several models completely sold out. “Backordered” popular models (especially anything with an EV/PHEV/Hybrid designation) are the norm at many brands. Compared with scans from previous years, we see inventory availability has been decreasing steadily over time. However, just recently, in spring 2023, some signs of inventories are on the rise. One possible reason is consumers are canceling their long-awaited orders more than ever. These order cancellations have created an unusual situation where sometimes a car arrives, the customer doesn’t want it, and suddenly, the dealer has something to sell.
Occasionally, undesirable equipment causes these otherwise popular and back-ordered vehicles to “sit” on the lot, waiting for the “right” buyer. An example is the Ford Lightning all-electric pickup, which many dealers now have in stock because the almost $100,000 vehicle was “de-contented” by the factory and is missing key features, such as a sunroof, heated steering wheel or massaging seats, all of which were standard and available on the older F-150. Some consumers tell us they are holding on to their older vehicles and waiting until the manufacturers can supply the features and equipment they want at a reasonable price.
However, the Canadian automotive market still struggles to keep up with demand, and prices remain broadly elevated. While some analysts predict supply chain disruptions will ease in the coming months, we will see how quickly the industry will recover from the challenges that have plagued it for the past two years.
CarCostCanada® continuously reviews the auto market’s overall (macro) state and more local and specific (micro) supply concerns based on location, make, model, and style. Use a CarCostCanada Report to understand a fair price in today’s market. Contact us anytime to get specific and actionable advice for your situation.