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Looking to buy a car? Expect to pay more and spend months, even years waiting

Click to play video: '‘Everything’s so expensive’: What’s driving up vehicle prices to record levels?'
‘Everything’s so expensive’: What’s driving up vehicle prices to record levels?
WATCH ABOVE: What's driving up vehicle prices to record levels? – Aug 3, 2023

Calgary father Stefan Takacs put down a deposit for a Toyota Sienna a year and a half ago. He and his wife need a bigger vehicle to accommodate their three children, including a son with cerebral palsy.

“He’s small enough now, I can still pick him up, but eventually we’ll need one of those Siennas with the adapted accessibility ramps,” Takacs told Global News.

But he has no idea if or when the minivan will arrive. Takacs has tried calling other Toyota dealerships across Alberta, but they’re out of stock as well.

“I found another dealership in Calgary, and they actually said the wait for a new Sienna is now four to five years,” Takacs said. “Sure, we can buy something that’s definitely less efficient, but nowadays everything is so expensive.”

Jenni Alton lives in Carrot River, Sask., three hours northeast of Saskatoon, and is also in the market for a vehicle.

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“You can’t even test drive these days. There’s nothing on the lots,” Alton said.

She has spent eight months searching for something basic in her budget.

“I’m not looking to spend $45,000 on a car that I’m going to put 30,000 kilometres on to go back and forth to work with,” Alton said. “I need something to haul my lunch bag.”

What’s driving up prices?

Across the country, Canadians are dealing with historically high prices and frustratingly long wait times.

“Prices for new vehicles are about 60 per cent higher at the retail level relative to pre-pandemic,” according to Scotiabank Economist Rebekah Young, who closely watches the auto industry.

According to data from Auto Trader, the average price of a new vehicle in Canada has topped $60,000.

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“At a very simple level, it’s been an inventory shortage,” Young told Global News. “We just haven’t had enough new or used vehicles over the last three and a half years relative to a very strong demand.”

A shortage of semiconductors is contributing to low inventories. Semiconductors are needed to power electronically controlled systems in vehicles.

Given persistent supply chain issues, some automakers are prioritizing making higher-end vehicles, where profit margins are bigger.

“I don’t believe we’ll go back to 2019 prices. The reason why is that cars are more expensive to make overall,” said Charles Bernard, lead economist with the Canadian Automobile Dealers Association.

Electric vehicles are particularly expensive. “Those vehicles for manufacturers require more electrical components, software elements.”

Canada has mandated 20 per cent of all vehicles sold will need to run on electricity by 2026.

Click to play video: 'Canada’s push to be major electric vehicle player'
Canada’s push to be major electric vehicle player

Cost of used cars also climbing

Peter O’Leary manages a Donnelly Ford Lincoln dealership in Ottawa and has seen prices and demand surge for used vehicles.

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“The cost of a used Civic has probably never been higher,” O’Leary said. “We’re seeing the same on a lot of our popular models like [Ford] Escapes.”

O’Leary doubts he will ever return to his pre-pandemic inventory levels and acknowledges some customers are becoming increasingly desperate.

“The wait is frustrating, especially for those who are in situations where they’re coming out of leases or have had an accident.”

More expensive to lease and finance

High interest rates are also driving up vehicle prices.

“Interest rates are elevated. The cost of financing vehicles is high. The price point is now very high. Consumer confidence is very weak,” Young said.

Leasing is also out of reach for a growing number of consumers, after 10 interest rate hikes in little over a year.

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Economists say prices are beginning to stabilize but warn the supply chain remains delicate.

B.C. ports strike

A labour dispute at Canada’s main international gateway has further complicated things. The strike that lasted through most of July and into August at B.C. ports has meant thousands of vehicles have gone undelivered.

“This prolonged strike has been disastrous for consumers because it’s cutting off supply to a sector already struggling to restore inventory levels,” Huw Williams, director of public affairs for the Canadian Automobile Dealers Association Director of Public Affairs, said in a statement.

Labour upheaval, lingering shortages and looming uncertainty are leaving would-be buyers with few options.

“Everybody still blames it on COVID,” Alton said. But she’s not buying it.

She wants to see more from manufacturers and sellers who she feels “have had lots of time to figure your stuff out and quit blaming the shortages on COVID.”

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