Buying a car has never been more expensive, assuming you can even find one — here's why

Just as it did for nearly every facet of the global economy, the pandemic plunged Canada's new car market into upheaval, throwing supply and demand completely out of whack.

Factory shutdowns due to COVID-19 made for widespread shortages of parts, filtering down to a historic lack of finished vehicles for sale on dealer lots. And on the demand side, consumers were far less eager to buy what was available, as the economic uncertainty had them holding on to their existing cars far longer than usual.

Three years later, most of the weak links in the supply chain have been fixed, and customers are finally in the mood to buy a new set of wheels again, only to face a new conundrum: prices are higher than they've ever been — and that's if you can even find a car for sale.

Jennifer Nemeth knows this first hand. She was in the market for her dream car, a plug-in Toyota Rav4 Prime, but says she was shocked when her local dealer told her how long she should expect to wait for one.

"'It's an eight-year wait,' he said," the Edmonton resident told CBC News in an interview. "They literally laughed at us."

She eventually settled on putting down a deposit for a non plug-in hybrid version of the same car, but was told it, too, would likely be a year away. 

She and her husband patiently waited for more than 11 months with next-to-no news from their dealer, before deciding last month to poke their head into their local Mitsubishi dealership and ask about a hybrid Outlander, another model that had initially caught their eye.

She thought the best-case scenario was that the Mitsubishi wait list was shorter than the Toyota one she was already on, but was amazed to discover the dealer had several models she could take home that day. "I'm thrilled that we actually got one," she said. "We did not think we would have a vehicle to drive away in — that wasn't even on our minds because nobody has any."

Industry wide, that's been the case. Data from DesRosiers Automotive Consultants shows that in the first quarter of 2023, on average, Canadian new car dealerships only had about 42 per cent of the inventory that they would have had before the pandemic. That's better than the 19 per cent they were at the same time a year earlier, but still less than half of what could be considered normal.

Huw Williams, head of public affairs for the Canadian Automobile Dealers Association (CADA) says that while things are closer to normal than they've been in a while, there are still large gaps in the chain — and they're often company-specific.

"There are auto makers who — for whatever reason, it's not even always clear to us — are doing a better job of managing their supply chain," he said. "But every dealer in the country wants more cars but can't get them."

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In the uneasy equilibrium between supply and demand, suppliers have the upper hand right now, which is a recipe for higher prices, says Rebekah Young, an economist with Scotiabank who covers the auto industry closely.

According to Young, the average price of a Canadian passenger vehicle is just over $45,000 right now. That figure is up by 30 per cent since 2019, "but it would be misleading to suggest that all car prices skyrocketed in the pandemic," she said in an interview.