COVID-19 knocked the blocks out from under auto sales in Atlantic Canada but buyers came roaring back in June.
One reason was obvious.
"A lot of pent-up demand," said Kim Day, president and chief operating officer of the Steele Auto Group in Halifax.
“A lot of people wanting to get out again and experience normal life.”
Day told SaltWire that new vehicle sales for the company this month are up three per cent this month over June 2019 used car sales are almost nine per cent.
COVID-19 closed showrooms in New Brunswick, P.E.I. and Newfoundland and Labrador, but those in Nova Scotia were allowed to stay open. The company has 41 dealerships in the four Atlantic Canadian provinces.
Day said vehicle sales dried up in March but they saw a rebound in April, May and June with the help of manufacturer incentives, such as zero per cent financing and offers for first responders.
Statistics Canada figures show Atlantic Canadian car dealerships sold just 6,676 vehicles in March and April this year. That’s down from 16,520 in the same two months last year.
Statistics Canada data is not yet available for new car sales for May or June. Last June dealers sold just over 10,000 new vehicles in the region.
Changing automotive business
Pent up demand accounts for some of the bump. The rest may be because dealers are changing how they do business.
Steele Auto Group, like many others, embraced online technology as an option for doing business. They posted videos on social media letting customers know what to expect when they walk into a showroom with COVID-19 safety measures in place.
The new way to buy a car – our contactless sales process. Steele Hyundai gives us a look inside the process. Visit one of our virtual showrooms today or contact one of 40 dealerships across Atlantic Canada for more details on this new and safe way to buy. www.steeleauto.com Steele Hyundai
Posted by Steele Auto Group on Friday, June 26, 2020
Potential buyers were also able to work on a sale through texting, phone and email. Buyers could view a vehicle online and have it delivered to their home after purchase, said Day.
The company plans to continue these options for customers.
"The ability for somebody to purchase a vehicle from their kitchen table, we've dramatically increased that ability," she said.
"These are all things that we knew needed to be part of the future of buying cars.
“If anything, COVID-19 has simply sped up all of those . . . initiatives. So, we've made it a lot easier for people to just come and buy a car or service their vehicle in a safe manner."
Wide range of buyers
Tammy Roach, general manager and dealer principal of Charlottetown Mitsubishi, said sales so far in June have been "fantastic."
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— Charlottetown Mitsubishi (@MitsubishiPEI) May 21, 2020
The dealership's showroom opened in March 2019, so last June may not be a good reference point since it was only open for a couple of months, she said.
However, Roach expects to outperform the month anyway for both new and used vehicles.
Roach said her customers are usually in the 35-55 age group, but this month she's seeing a broader group, including retirees, families and younger buyers for pre-owned vehicles.
She said she’s been seeing a lot of teachers looking to buy a vehicle.
Roach said P.E.I.'s management of COVID-19 and the fact that the Island hasn't seen a new case in about a month are contributing to sales. Some people are feeling more comfortable about visiting a showroom.
The dealership also has an incentive program for health-care workers and essential workers ($500 below cost) and online buying options with no-contactvehicle delivery.
June sales are also up at Bert Hickman's Newfoundland dealerships.
At some locations, that increase is around 30 per cent in June compared to the same month last year, said Hickman, CEO of the Hickman Automotive Group.
However, he said, the increase in sales in June still doesn't make up for the losses in March, April and May.
Hickman also attributes June's sales to pent-up demand since people who would normally buy vehicles from March to May weren't able to do so in person there at a dealership until June 8.
Hickman also has manufacturer incentives for first responders and health-care workers.
Fewer problems, still problems
Improved sales also pose an interesting problem, though. They are running out of inventory.
"When everything shut down in March, all the suppliers shut down as well," Hickman said.
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Posted by Hickman Automotive Group on Monday, June 22, 2020
"You can only build as many vehicles as you have parts for."
Until suppliers get back up to speed so manufacturers can produce vehicles to meet demand, the industry could be facing a shortage, he said.
"We're going to have this little pocket of low inventory as we wait for the product to get ramped up and get shipped to our lot. It's consistent in every industry, everything from furniture to ovens. I mean, the whole world shut down," said Hickman.
"Suppliers all shut down, and everything gets shipped just in time these days to manufacturing facilities. So, there's really nobody carrying any inventories anymore. That's the way the world's gone."
