New and used car prices continue to rise with no relief for two years, car analyst says
TORONTO -- The pandemic has been difficult for the automotive sector and with fewer new and used cars to buy it's leading to an increase in vehicle prices and there doesn't appear to be any relief in sight.
A survey by the website CarGurus shows that new car inventory in Canada dropped 8.5 per cent in October compared to September and dropped 52.5 per cent over the year before.
Used car inventory has not been impacted as much, but is still down 1.5 per cent in October compared to September and 14.1 per cent compared to the year before.
According to Kevin Roberts, the Director of Industry Analytics at CarGurus, a shortage of computer microchips is only part of the problem.
"It could be semi-conductors, the foam you need for the car seats, it's almost anything you need to go into a vehicle right now," said Roberts.
With fewer vehicles for sale prices continue to rise with the average new listing price increasing to 9.3 per cent in October over September and almost 17.7 per cent over the year before.
Used car prices increased 4.2 per cent in October over September, but have increased 31.4 per cent over the same period last year making a used car almost a third more expensive then it was just a year ago.
Roberts said anyone buying a new or used car may have to be willing to pay the list price, be more flexible and take a car that is currently on the lot.
“You may need to be a little more opened minded when it comes to what you want and what you need and that includes when it comes to colour and trim options," said Roberts.
James Hancock the Director of OEM Strategy and Analytics at Canadian Black Book said anyone who is considering ordering a new vehicle from a dealership should expect a wait.
“If a buyer is able to source a car (at a dealership) typically they are ordering them and they are waiting six weeks to six months to receive their vehicles," said Hancock.
Even once production ramps back up, it will take a while for supply chain issues to work their way through the system, and Hancock predicts there could be ongoing car shortages for another two years.
“We expect higher prices and limited supply in the market till the end of 2023," said Hancock.
That means car lots with empty spaces and low inventory may remain that way for a while yet.
If you're looking for a new or used car it doesn't mean you shouldn't try and negotiate a lower price just realize it may be harder to do.
You may have to go farther to find the vehicle you want or choose one that may not be your first choice.