Toronto, Ontario — Since early April, U.S. car dealers have been buying used cars from Canada to combat microchip shortages. However, over the last few months, the U.S. has been gobbling up even more of Canada’s inventory, according to new data from J.D. Power and ALS.
“Everything seems to be in high demand,” Jonathan Banks, vice president, vehicle valuations and analytics at J.D. Power, told Automotive News Canada. “Canadian dealers are complaining that they that they’re not able to get the popular vehicles. The better units are going to the U.S., and the higher-mileage-to-average-condition units are staying in Canada.”
According to Canadian Black Book data, In the first five months of 2021, 151,952 cars were imported into the U.S. from Canada due to the microchip shortages that have been shrinking dealer’s inventory.
It was also estimated that used car sales in Canada are up 38 percent for the January to May period compared with the same period in 2020.
However, Canada is in the same boat as the U.S. dealers when it comes to a lack of inventory. Although it may be profitable to sell used cars to the U.S., many dealers are finding they simply don’t have enough product.
Additionally, the study found a large proportion of new Canadian vehicles are getting shipped to the U.S. to be sold as used vehicles – 25 percent of all pickups sold in the country, 15 percent of SUVs and crossovers, and 10 to 25 percent of small and mid-size cars, according to J.D. Power.