Windsor·Video

Demand and price for used cars spike amid chip shortage

A microchip shortage in North America has slowed production of new vehicles which has driven up demand for used cars and therefore the price as well.

Average price increases 14 to 25 per cent

The lot at the Automax used car dealership on Tecumseh Road East has several used cars for sale. (Darrin Di Carlo/CBC)

When it comes to used cars it's a seller's market. Mickey Cleroux is seeing it first-hand. 

"Our customer base has gone up. We've started to see a lot more customers, probably, I would say, about a 10 per cent increase," said Mickey Cleroux, Automax sales manager.

The scarcity of new cars due to a microchip shortage has driven more customers to the east-end dealership. The chip shortage has also caused used car prices to spike.

Mickey Cleroux is sales manager at Automax pre-owned vehicle center. (Darrin Di Carlo/CBC)

A survey done by AutoTrader.ca, an online website that carries classified ads for people buying and selling cars, revealed that 27 per cent of people who used to only buy new cars are now willing to buy a used car.

"There's just a lot more demand for both new and used vehicles, which is driving up the prices," said Editor-in-Chief Jodi Lai. "In August 2019, before the pandemic, the average price for a used vehicle in Canada was $25,841. In August of 2021 the average price for a used vehicle jumped to $29,376, that's a 14 percent increase," said Lai.

Automotive journalist Kay Layne says the prices have jumped 25 per cent in the last year. Besides the microchip shortage, Layne points to COVID-19 as another factor driving up the cost of used cars.

Used car prices are way up; auto journalist Kay Layne explains why

8 months ago
Duration 0:52
Auto journalist Kay Layne says used car prices are up 25% and there are a lot of reasons why.

"During COVID, with people not driving as much, they weren't turning in their vehicles and upgrading," said Layne, adding that people who had to commute and were afraid to take transit went out and bought "a bunch of used cars." She predicts the high demand for used cars will continue for "quite a while".

Layne also says that the combination of used cars selling well and fewer trade ins has also led to a reduced inventory of used vehicles to go around.

Jodi Lai is the editor-in-chief of AutoTrader.ca. (Dale Molnar/CBC)

"Dealerships are now paying top dollar to buy used vehicles from regular consumers and while that might seem like a negative it's actually a good thing if you're selling your vehicle, you can get a pretty high trade in value right now," said Lai, adding that there are currently 200,000 used cars available on the market throughout Canada right now.

Cleroux says there are fewer vehicles at auction so he has had to resort to some creative ways to find vehicles.

"We've beefed up our inventory as much as we can. We've been purchasing vehicles off the streets. Any customer, or previous customer or friends of customers that had a vehicle that they're interested in getting rid of, they bring it to us for a free quote," said Cleroux, who has purchased six vehicles in the last week that way.

ABOUT THE AUTHOR

Dale Molnar

Video Journalist

Dale Molnar is an award-winning video journalist at CBC Windsor. He is a graduate of the University of Windsor and has worked in television, radio and print.

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