Ontario used auto dealers expect tough year ahead, prices already down

Ontario used auto dealers expect tough year ahead, prices already down

TORONTO — Used car dealers in Ontario are starting to recover from the near total shutdown in April, but a survey released Monday suggests they expect sales and prices to be under pressure for the year as economic uncertainty clouds the market.

The sector was, like much of the economy, thrown into turmoil as physical distancing measures forced dealers to close and sales to plummet. Half of the 1,300 dealers who responded found sales had dropped 76 per cent or more.

“Sales were really, really just driven to the bottom during the month of April,” said Warren Barnard, executive director of the Used Car Dealers Association of Ontario, which conducted the survey in mid-May with DesRosiers Automotive Consultants Inc.

Prices dropped along with sales volume. Many of the dealers surveyed had already seen significant price declines in April compared with March, including almost a third who said prices declined between 11 and 20 per cent. About 15 per cent saw prices down at least 21 per cent, and another quarter of respondents saw price declines of between six and 10 per cent.

The decline comes as many would-be buyers are uncertain about their jobs and the economy in general, leading to expected lower sales for the year, said Barnard.

“It certainly will be down for the year, there’s still a lot of doubt among the buying public, a lack of confidence, obviously many individuals are not working themselves right now,” he said. ”They’re not necessarily going to invest a huge amount of money in a expensive car.”

The market could also see increased pressure as a wave of leased vehicles that hadn’t been turned in during the shutdown are returned to reopening dealerships.

Prices could also come under pressure as potentially fewer used vehicles are exported to the U.S., which has see a big increase in recent years on the lower Canadian dollar. Challenges in the rental market, as seen by Hertz Global Holdings Inc. filing for bankruptcy protection on Friday, could also affect the market but may have more implications for new vehicle sales, said Barnard.

For the year ahead, around eight in 10 of Ontario used car dealers expect total sales to decline by at least 26 per cent this year — three in 10 say it will be a drop of more than half.

Declines in sales could also come about from a lack of demand as owners drive their existing vehicles far less while staying close to home, said DesRosiers in a report.

“What is perhaps most striking for this downturn as opposed to previous ones from the aftermarket perspective is the sudden and unprecedented drop in kilometres driven.”

DesRosiers forecast a drop in demand of between 11 and 13 per cent this year, though it could go up to 20 to 25 per cent declines if a severe second wave of the pandemic stalls economic reopening (it noted the difficulty of a definitive prediction amid current uncertainty and volatility).

Dealerships have, however, so far started to see an increase in activity since the provincial government allowed dealerships to operate on an appointment basis starting May 4, though they are still well off business as usual, said Barnard.

“Most members and dealers are right now at least surviving, they’ve been able to adjust and keep things going. That’s not to say some won’t survive this, just like any other business.”

This report by The Canadian Press was first published May 25, 2020.

Ian Bickis, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

robbery
UPDATE: Shooting suspect arrested by Wetaskiwin/Camrose RCMP

Rimbey RCMP had responded to a complaint of an armed robbery at the Bluffton City General Store

Quality Inn & Suites in Rimbey. Photo Submitted
Rimbey hotel gets new lease on life

The Quality Inn & Suites in Rimbey is now open and taking bookings

Leanne Evans, Rimbey Neighbourhood Place Program Coordinator, accepts a donation of $5,000 from Kevin Maxwell manager of Field Support for Telus. (Photo Submitted)
Rimbey Neighbourhood Place making big changes behind the scenes

Rimbey Neighbourhood Place recently recieved a $5,000 donation from Telus

Alberta chief medical officer of health Dr. Deena Hinshaw updates media on the Covid-19 situation in Edmonton on Friday March 20, 2020. nbsp;Alberta is reporting it's highest daily number of COVID-19 cases, with 364 new infections. THE CANADIAN PRESS/Jason Franson
Alberta confirmed 323 COVID-19 cases Tuesday

Central zone active cases at 145

Health Minister Tyler Shandro and Dr. Deena Hinshaw, the chief medical officer of health, receive flu shot. Photo via Government of Alberta
COVID-19: One more death in central zone

Ponoka County on province’s watchlist

Alberta Premier Jason Kenney arrives for an announcement at a news conference in Calgary, Alta., Tuesday, Sept. 15, 2020.	Kenney is isolating at home after one of his ministers tested positive for COVID-19. THE CANADIAN PRESS/Todd Korol
Alberta premier isolating after minister tests positive for COVID-19

Alberta Premier Jason Kenney is isolating at home

RCMP. (Phil McLachlan - Black Press Media)
British Columbia man dies during ski trip near glacier west of Calgary

Kananaskis Public Safety and Alpine Helicopters responded around 2:30 p.m.

Prime Minister Justin Trudeau arrives on Parliament Hill in Ottawa on Monday, Oct. 19, 2020, following a week-long break for the House of Commons. THE CANADIAN PRESS/Sean Kilpatrick
One crisis after another for Trudeau since last federal election one year ago

It has been a year of unprecedented calamity and crisis

Alberta's provincial flag flies on a flag pole in Ottawa, Monday, July 6, 2020. Advisers are reportedly recommending Alberta's kindergarten to Grade 4 arts and social studies curriculum remove all references to residential schools because it's "too sad" for young children. THE CANADIAN PRESS/Adrian Wyld
Advisers suggest Alberta students not learn about residential schools before Grade 4

Documents suggest children younger than Grade 4 are too emotionally vulnerable to learn about residential schools

File photo
RCMP’s response to online discussions about anti-racism demonstrations

Ponoka RCMP Staff Sgt.’s comments misattributed online

Shaelynn Decock and her dog Taco, who has been missing since Aug. 26. Photo Submitted
Sylvan Lake woman looking for closure for her stolen dog

Shaelynn Decock says it has been two months since she last saw her dog Taco

Prime Minister Justin Trudeau is seen during a news conference Tuesday October 20, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Trudeau and his family decide against trick-or-treating this year due to COVID

Adhering to local health authorities, Trudeau urges Canadians to do their part in following those guidelines

Natural Resources Minister Seamus O’Regan responds to a question during Question Period in the House of Commons Tuesday February 4, 2020 in Ottawa. The Alberta government is welcoming news that Ottawa has approved an expansion of the Nova Gas Transmission Ltd. gathering system in Alberta — while condemning federal delays that it says cost this summer’s construction season. THE CANADIAN PRESS/Adrian Wyld
Alberta welcomes federal approval of gas pipeline expansion while criticizing delay

The project is expected to create up to 2,920 direct jobs during construction, the federal release said

Most Read