Sue and Norman Glowach were about three hours outside of Edmonton when Norman first heard the whine. It was a low pitched, almost grinding sound, coming from the rear of their 2008 Toyota Highlander. Cautiously, Norm pressed on, anxious to get to the city.
The Glowachs live in Yellowknife, but like many in the north, they were travelling to Edmonton for medical tests. They arrived safely, and a bit noisily, and immediately headed to an auto service centre they had visited before. Unfortunately, it was one piece of bad news after another.
First, the technicians determined that the SUV’s rear differential, the mechanism that connects the car’s wheels to the transmission, was shot. The car wasn’t driveable. Second, it would cost about $2,000 to fix. And third, it would take at least a month to source the parts for replacement.
“I was pissed,” Mr. Glowach says. But what else could they do? They needed a way to get back home. “At that point, we made the decision that, obviously we’re in trouble here with this vehicle. It’s time to move on.” So, the Glowachs began their search.
Ms. Glowach is an artist, and Mr. Glowach is a musician. They went looking for a vehicle, new or used, with enough room for their easels, amplifiers, and all the gear they regularly haul around. Plus, they enjoy camping, so they were also looking for something with enough power to tow their small trailer.
At first, it didn’t seem like too much to ask. But as they searched further, the Glowachs began to get more flexible. Their original $50,000 budget ballooned to $60,000, and then even further. They were more willing to bend on mileage and features. Still, their prospects were bleak.
At each of the dealerships they visited, stock was low, and even the prices of used cars were through the roof. At one, they examined a 2020 model of an SUV with 60,000 kilometers on it. The asking price was more than what it cost new.
They told the sales associate that was out of the question. “And they said, ‘Well, somebody will come along,’ " Mr. Glowach says. But the salesperson had good reason to be confident. That same day, they said the dealership sold a car with 100,000 kilometers on it for nearly $100,000. That floored Mr. Glowach. “I mean, that’s a good down payment on a house, right?”
Many dealerships across the country are currently facing that same supply shortage, leaving customers to take what they can get. Gord Mansfield, the general manager of Saskatoon Motor Products says that many of his customers have had to become quite flexible on what they want, especially when it comes to new vehicles. That might be forgoing some features, or more likely, stepping up to a more equipped ride, just to ensure they could purchase a vehicle.
Any orders put in for new cars come with a minimum of four months wait at this point. And it’s not any better when it comes to the used market. Even considering make, model, and mileage, “every [used] vehicle is worth more now than it was six months ago,” Mr. Mansfield says.
What if you want to get away from traditional gasoline or diesel vehicles and get an electric or a hybrid car? They are out there, but the wait time is even longer. “It’s a minimum year wait. And we don’t know if we can even fulfill that,” said Nick Estephan, sales manager at Ottawa Honda.
Mr. Estephan has been in the car business for over 25 years and says this supply shortage is unprecedented. “We’re facing the impact of [manufacturing shortages] in rubber, or steel, or whether we need technology to be manufactured. None of it is out there,” Mr. Estephan says.
A shortage of computer chips, which control things like navigation systems, backup cameras and even airbags, is also contributing to the long wait. Some estimates say the wait for new chips could stretch into 2023, making new hybrid and electric vehicles even harder to come by.
There are also more buyers than usual. With the supply shortages hitting North American markets particularly hard, Mr. Estephan says he’s seen more U.S. wholesale buyers coming over the border to find cars, outbidding Canadian buyers with their stronger U.S. dollar.
Then, there are the rental car companies. Dan Park, chief executive officer of Clutch, an online dealer of used vehicles, says that rental car companies typically rotate out their cars after about a year of use, and generally with 10,000 to 50,000 kilometers driven. But now, they are putting cars into the market with closer to 100,000 kilometers. Those cars typically go to auction, where dealerships will pick them up to sell to consumers.
“That part of the market has effectively evaporated over the last couple of years,” Mr. Park says. That means the regular influx of stock that dealerships would pass on to customers has dried up. That’s translated to a drop of about 13 per cent auto sales across Canada in April, and an 8.5 per cent decline in May, compared to the year before.
So, Mr. and Ms. Glowach settled. After a few days of looking around, they spotted a 2019 Volkswagen Atlas, and the price was almost right. “Did we overpay in this environment?” Ms. Glowach asks, while Mr. Glowach answers in the affirmative. “Absolutely.” But still, the couple says they are lucky to get the car they did.
“You’re in competition, just like buying a house,” says Mr. Glowach. “There’s the possibility that somebody’s going to come in and pay over the asking price.”
How long this market can continue is anyone’s guess. Mr. Mansfield says he’s prepping his staff to deal with these shortages for at least the next year, while Mr. Park says it could be 18 or 24 months for shortages to work through the system. Mr. Estephan says he wouldn’t be surprised if we see the reverberations echo into 2024 or even 2025.
At this point, only one thing is clear. If you need a new car, be prepared to wait.