About 300,000 vehicles can be shipped from Canada to the United States “in a good year,” Murphy estimated, though he said it was too soon to know whether the rising value of the dollar would change that figure.
INVENTORY PICKED OVER
“Everything seems to be in high demand,” said Jonathan Banks, vice-president of vehicle valuations and analytics at J.D. Power. Canadian “dealers are complaining that they’re not able to get the popular vehicles. The better units are going to the U.S., and the higher-mileage-to-average condition units are staying in Canada.”
Used-vehicle values have soared in recent months as demand has risen and supply has waned. The ongoing microchip shortage, which has depressed new-vehicle inventory nationwide, has had a major effect on the used vehicle market. Customers who might be waiting to purchase their preferred vehicle are holding onto their current vehicles, cutting into the used-vehicle supply.
According to a June 1 Canadian Black Book note, the 14-day moving average of used-vehicle listing prices stood at about $26,300, up from around $25,000 at the beginning of the year. Black Book’s analysis is based off about 140,000 listings on Canadian dealer lots.
PRICES LEVELING OFF?
David Robins, principal automotive analyst at Canadian Black Book, said that while listing prices and wholesale prices have continued to rise throughout the spring, there were indications in late May and early June that the rate of that increase could be leveling off.
“Part of that has to do with a slightly higher dollar value of the Canadian dollar, decreasing some of the American demand,” Robins said.
But demand in the U.S. still remains high, keeping the flow of used vehicles south going, said John Hairabedian, CEO of Quebec-based HGregoire.
“The Canadian market always had a tighter supply than the U.S.,” he said. “In the last few months, we've seen the U.S. market actually be lower in days’ supply than the Canadian one.”
To secure inventory, dealers have had to get creative. Murphy said he spoke with one retailer who, even as long as six months ago, was buying used vehicles not only from auctions and through trade-ins but also from classified ads.
Dave Raymond, dealer principal of Erinwood Ford in Mississauga, Ont., said his dealership has purchased vehicles from customers who do not even end up buying a new vehicle through it, in addition to traditional tradeins and auctioning.
“We could have a lot more trades if we could supply the new cars that we need,” Raymond said. “But with what we’ve got to work with, I’m very happy with the used-car business.”