'Fear factor' fuelling used car crunch, but relief may be on the way

Due to COVID-19 and supply chain issues, those who have shopped for a used car lately could be well aware it's not a buyer's market at the moment.

"The price of cars have gone up about $5,000," Cars R Us owner Gary Shea told CTV News Tuesday, gesturing toward a 2017 Elantra, listed on the lot for $19,995.

It's the same story at dealerships everywhere as pandemic-related issues have driven demand and prices to new heights.

Inventory has gone the other way, leaving buyers with fewer choices.

"They find the amount of cars to look at has gone way down," said Shea. "So you've got to take whatever's available. It's not like the guy down the road has got 20 Civics and you've got one Civic. It's like this everywhere. Everybody's trying to get vehicles."

Shea says his current inventory is less than half of what it used to be, even with a growing number of gas guzzling trucks coming in, because fewer people want those.

Down the road on Sackville Drive, the General Manager of Harvard Auto Sales describes the current market as "volatile," adding a "correction" is likely on the way.

"What we mean when we say correction is we think that, at some point, the prices will get back down to sort of an expected value, and you can usually guess what you think something should be worth," said Mike McMillan.

Harvard also only has about half of its usual inventory in stock.

According to the online market place AutoTrader, used car prices have increased about 37.7 per cent on a year-over-year basis, but relief may be on the way.

"The expectation is that the new car production levels would start going up around now until the end of the year," said Baris Akyurek, AutoTrader's director of Marketing Intelligence from Toronto.

Shea is less certain, saying there doesn't appear to be many easy solutions to the complicated problem, adding he believes some smaller dealers have likely closed down already.

"It's the manufacturers. It's COVID. It's the war. The price of gas. The fear factor - everybody's in fear of the future," he said.