Michael Hajjar and his wife Olga chose an unexpectedly odd time to move to Canada after living in Asia for a few years.
Landing on March 1, Hajjar began working in Toronto for a company that distributes pearls to jewelry sellers. For getting around, he planned to take public transit and occasionally rent a car through Turo, the Airbnb-like online service that lets owners lend out their vehicles for a fee. He had no immediate plans to buy a car.
But then the COVID-19 pandemic and subsequent lockdowns hit. Like many Canadians, Hajjar was restricted in where he could go for several weeks. As normalcy started to return in June, he rethought his original transportation strategy and bought himself a used BMW X1.
“After a month of staying locked down in the apartment, we had to find a way of at least getting out sometimes, and we weren’t comfortable taking transit or anything like that,” he says. “I’m not that far from work, but I prefer to be in my car instead of concerned the entire trip.”
The effects of the pandemic – including the continuing shutdown of many urban office centres, as well as health and safety worries – are resulting in dramatic decreases in uses of public transit and other mobility options.
According to data from trip-planning app Transit, public-transportation usage in late March at the height of the lockdown dropped by an average of 83 per cent in Canadian communities.
An April survey by AutoTrader.ca, meanwhile, found that 70 per cent of respondents said they would not go back to using ride-sharing apps such as Uber and Lyft even when physical-distancing measures are no longer required. Forty per cent also said they won’t return to public transit.
The flip side to these sentiments is an increase in the number of first-time car buyers – many of whom, like Hajjar, are rethinking their previous positions on owning a vehicle.
AutoTrader also found that 14 per cent of survey respondents were planning to buy a car as a direct result of the pandemic, citing increased flexibility and control over cleanliness as reasons.
Automotive marketplace CarGurus found similar stats and rationales with a U.S. survey in June, with 22 per cent of respondents who were looking to buy a car saying that they were not planning to do so before the pandemic.
Car sales have generally started to rebound in both Canada and the United States, after record bad months earlier in the spring. Statistics Canada on Tuesday reported that sales of vehicles and car parts increased in May for the first time in three months to nearly $8.5-billion, a 66-per-cent increase over April.
Used cars are likely making up a good portion of that. Canadian Black Book estimates they normally account for about 60 per cent of all sales. First-time buyers are more likely to purchase second-hand than new, a spokesman says.
The Used Car Dealers Association of Ontario doesn’t have concrete numbers on how much of the rebound is being driven by first-time buyers, but the organization says a large-scale pandemic-induced shift is indeed under way.
“I do believe that a significant number of people, particularly in the larger cities, that may not have normally been in the market have purchased a vehicle or are seriously considering it now,” says executive director Warren Barnard. “I would suggest most of these folks would be looking at buying used.”
Clutch, the online used-car marketplace that started in Halifax in 2017 and expanded to Toronto in February, says it has been a major beneficiary of this shift. The company is this week announcing $7-million in new financing led by Real Ventures to continue its Canadian expansion.
Chief executive Dan Park says June revenue was up 40 per cent over February, representing the now-Toronto-based company’s best month yet. He also doesn’t have exact figures on the trend, but also estimates much of the new business is from first-time buyers such as Hajjar, who found his vehicle using Clutch.
“It’s a real phenomenon,” Park says. “Demand is going up in general, and people want the convenience to buy cars online.”
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