If you’re in the market for a new or used car, you could be in for a big surprise.
That’s what many car automotive salespeople are saying after prices underwent a huge increase amid long waits affecting the market.
Both new and used car prices saw a sizeable increase over the past year and a half as several factors including computer chip shortages have delayed new cars from being delivered.
People looking to purchase a new car are having to wait upwards of six months to a year to receive one, which is putting a strain on the used car market.
Used vehicle prices have seen an increase of about 30 per cent year over year, while the desire for trucks has increased exponentially in recent months, with some used trucks going for near brand-new prices.
“The used car market has been like the housing market, the prices have gone up astronomically,” said Chris Keller, a sales manager at Hamburg Honda in Niagara Falls.
With delays on chips for new car computers and other vehicle components, dealerships are seeing delays due to other industries requiring computer chips for their products.
“There are other companies building stuff for cars and they’re quite diverse across the board, not just doing automotive, but also computer systems and medical systems,” said Keller.
He emphasized how difficult the new car situation has become in the past few months. With just a fraction of the desired amount, he is working with few options on the showroom floor.
“Normally I’d have between 100 to 125 new cars sitting in a compound or on my lot I can showcase and sell. As of right now, there’s only three I have and they’re just core units,” he said.
“I don’t have one of every model in our lineup, so sometimes, if they’re looking for a bigger car, like a pair of shoes, they want to try it out before making the purchase.”
People awaiting a new car are turning to the used car market, which is driving up resale prices, said Ian Bosak, a sales consultant for Niagara Auto Trade in St. Catharines.
“The used car market is in such a high demand because people are looking to upgrade, whether they’re looking for a quality used car through the auction, or through private consumers buying,” he said.
“The days of buying a winter beater for $500 to $1,000 and to safety it for $200 are long gone. Minimum safety nowadays for a used car dealer to do a recondition properly is $1,500 to $2,000.”
With limited stock, new and used car dealers are struggling to keep customers in vehicles.
“The used car market, its inventory is low for so many dealers. A few months back, Ford, GM and Chrysler, they had no used cars on their lot,” Bosak said.
“We were running on average 14 to 15 cars on our lot, and we’d turn our inventory over in two weeks. Now, that’s not happening, we’re down to seven or eight cars, and it’s taking a month to turn over inventory.”
When comparing prices in the used car market, there has been a noticeable increase even in base models.
“A common vehicle out there a lot of people wanted was a Chevy Cruze,” said Bosak.
“Chevy Cruze, two years ago the purchase price was probably about $2,500. Today, it’s $7,500 for the same vehicle, same condition, same mileage.”
Bosak attributed the rise in prices not only to the computer chip issue, but also to being closer to the border, presenting issues that include American used car dealers buying up vehicles in Canada.
“With the dollar exchange rate, American dealers can come here, or buy used cars online from the auctions,” he said.
“If the average wholesale price on a car is $10,000, being an American that is about $7,788.”
He said this allows them to overbid if there are features a customer wants.
When looking for a new car, Bosak wants people to do their due diligence when it comes to dealers, the age of the vehicle, financing and its Carfax.