The combination of recovering sales and shrinking new vehicle supply due to issues like the semiconductor shortage means that American dealers are looking anywhere they can for vehicles. That includes Canada, much to its dealers’ chagrin.
Automotive News Canada reports that dealer supplies north of the border are reaching all-time low, thanks in no small part to America’s dealers.
“Buyers exporting vehicles to the U.S. continue to place pressure on Canadian vehicles, and supply is struggling to keep up with overall demand at auctions,” Canadian Black Book analysts said in an April 20 note. “The Canadian dollar remained constant [the] week [of April 12]; however, this will have little effect on demand, with rising prices on both sides of the border.”
A strong Canadian dollar should result in U.S. dealers shying away from Canada’s used car auctions. With supply suffering, though, the Canadian dollar trading at 81 cents per U.S. dollar, the highest level since 2018, is no deterrent.
Read More: Dealer Profits Grow As Demand Outpaces Supply Because Of Chip Shortage
“This high demand at auctions is expected to continue… as the lack of new vehicle supply continues to increase demand for used vehicles,” the Canadian Black Book states. That means that the supply issue is worse in Canada than in the US, John Hairabedian, CEO of HGregoire, a dealer with locations in both countries, told ANC.
Automakers have been struggling with the supply of semiconductor chips for their new vehicles. The chips have become important for everything from infotainment to engine management and the shortage has led to production delays throughout the industry.
Despite the U.S. government vowing to help, automakers still predict that the problem is likely to worsen before it gets better. The flipside is that, with low volume and customers coming out of lockdown, dealer profits are surging. Whether or not that will be enough to make up for the lost sales, though, remains to be seen.
