Over the last three years, new and used vehicle supply in Canada dried up — and so did the deals on car sales.
But industry experts say the drought is over and Canadians can expect a better buying experience this summer and fall.
“Supply of new vehicles has improved dramatically over the past year and the shortages seen in 2021-23 are to all extents over,” wrote Andrew King, managing partner at DesRosiers Automotive Consultants in Richmond Hill, Ont., in an email.
“Prices are moderating” and consumers are seeing the “return of vehicle incentives,” he said.
Applewood Nissan in Richmond, B.C., is offering deals they haven’t had in years, such as price cuts, rebates and lower financing rates.
“We already have zero per cent [financing] on some models. They’re not at full capacity, but the deals are coming back,” said general manager Leon Cheliadin.
Leon Cheliadin, general manager of Applewood Nissan in Richmond, B.C., says “the deals are coming back.” (Submitted by Applewood Nissan Richmond)
Subvented loans
So how can a car dealership offer financing well below the Bank of Canada’s 4.75 per cent key interest rate? It’s called a subvented loan.
If a new vehicle model isn’t selling as well as expected, manufacturers may subsidize the cost of borrowing to move more units.
“Three months ago we had a few too many Nissan Rogues,” said Cheliadin. “Then Nissan came up with a low-interest lease and we sold about 30 in one month of that particular model.”
Cheliadin says this is a huge shift from a few years ago when he desperately needed vehicles but couldn’t get them because of supply chain issues and the global microchip shortage. Once car makers could ramp up production again, Cheliadin says they “flooded” dealerships with inventory.
In 2021, when Canadians needed vehicles, interest rates were low. Now they’re high and many other goods are also more expensive, slowing down consumer demand.
“Demand is very tempestuous. We’re very sensitive to interest rates and trends and our own pocketbook issue,” said Thomas Goldsby, a professor of supply chain management at the Haslam College of Business at the University of Tennessee, Knoxville.
“These automakers have to be placing bets months and months and months in advance, and then they cross their fingers and hope that their supply matches demand.”
New cars listed between June 23 to 29 on AutoTrader were up 70.4 per cent from the same period last year, while used vehicle listings were up 26.4 per cent, according to data provided by the company.
Huw Williams, spokesperson for the Canadian Automobile Dealers Association, says that’s good news for consumers.
“What happens in this kind of environment is, to be competitive, manufacturers discount product. They discount interest rates. They find the right levers to attract consumers.”
“You have greater choice, greater selection. You have a greater ability to negotiate.”
In 2022, supply chain issues meant many dealerships across Canada were empty. However, new car listings from June 23 to 29 on AutoTrader were up over 70 per cent from the year before. (Robert Short/CBC)
No deals on popular models
One consumer watchdog says drivers won’t find “any kind of incentives” on new vehicles that are in high demand, such as hybrids, compact cars, hatchbacks and small SUVs built in Japan and Korea.
“Unfortunately, the vehicles that still have very limited supply and long waiting periods are also the most affordable,” said Shari Prymak, executive director of Car Help Canada, a non-profit that helps drivers find cars and negotiate prices.
When it comes to used vehicles, overall sales saw a 2.3 per cent decline in prices in April 2024 compared to the same month in 2023, according to data from Statistics Canada and DesRosiers.
However, Prymak says that hasn’t shifted prices on the “most desirable” used car models either.
“Small, reliable, fuel efficient…. These are the types of used cars where the prices are still extremely high.”
Shari Prymak is the executive director of the non-profit Car Help Canada. (Craig Chivers/CBC)
But if you’re in the market for a higher ticket used vehicle, like a large truck, Baris Akyurek says prices are dropping.
Luxury vehicle prices have had a larger decline, year-over-year, because they’re “not selling as well as their mainstream counterparts,” said Akyurek, vice-president of insights and intelligence for AutoTrader.
‘Bit more of a buyer’s market’
Layne Fyfe says the price of used, 2018 Jeep Cherokee Limited models have dropped since he purchased his in the spring of 2023. At the time, dealerships and private sellers weren’t budging on price — so he ended up spending about $6,000 more than he’d budgeted for.
“I’m, like, kicking myself now,” Fyfe said.
If he could have waited until now to buy, the Calgarian believes he would have found a better deal.
“Vehicles that are a year newer are still about the same prices, if not cheaper. And for a lot less kilometres … 20,000 km less around the same price,” Fyfe said.
“It feels like it’s becoming a bit more of a buyer’s market. There’s hope at the end of the tunnel.”
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
