Microchip shortage leads to fewer vehicles in northern Ontario dealerships

People in the market for a new or used vehicle can expect a longer wait than normal, according to car dealerships in northern Ontario.

A microchip shortage, which has impacted supply chains around the world, is also affecting dealerships in northern Ontario that say they have lower stocks than ever before.

Sean Wilson, the inventory manager at Sudbury Hyundai, said the dealership would normally have between 90 and 110 new vehicles in its lot in the fall. 

"Right now, a good portion of those are service loaners, demonstrators," he said. "Realistically, we're sitting on about 30 new cars that are available for instant purchase."

For a new vehicle, Wilson said, customers can expect to wait four to five months, depending on the package they want. He said the 2022 Tucson and hybrid Tucson are hot sellers right now and come with longer wait times.

The shortage has also meant prices for used vehicles have escalated in the last year due to greater demand.

"They have been on the rise pretty steadily for the last while," Wilson said. "I have a feeling they might flat line a little bit just because typically going into winter, you're always going to see that regression of pricing."

But despite the shortage in new stock and longer wait times, Wilson said the dealership has managed to hit its sales targets due to high customer demand.

Shortages across the north

The situation has been similar in northwestern Ontario.

Brendan Morris, vice-president at Kenora Chevrolet Buick GMC and Kenora Honda, said his stock of new and used vehicles has dropped drastically.

"Typically, we would carry anywhere from about 80 to 100 new at this time of year and probably somewhere around 25 to 30 pre-owned vehicles," he said. "Currently, we only have two new vehicles on the lot and about 15 pre-owned. So needless to say, it's been a challenge."

Morris said he and his family have been in the car business for many years, and have never seen a shortage like this one.

At his dealerships, he said, there are longer wait times for higher-end vehicles that have more electronics. 

Still, sales are up 40 per cent compared to last year, Morris said.

Rebekah Young, an economist with Scotiabank, told CBC News that Canadian manufacturers are expected to produce 1.2 million vehicles this year, which would be the lowest total since 1982.

Computer chip makers, primarily located in Asia, are around three months behind on production due to COVID-19 lockdowns and the impact of the delta variant.

Young said the vehicle shortage could extend until 2023, without a steady supply of computer chips.