June car sales higher than 2019, says dealerships
June is usually a pretty good month to buy a car.
But some dealerships are surprised to see vehicle sales this month exceeding last June’s numbers, especially given the economic impact of COVID-19 this time around.
“A lot of pent-up demand. A lot of people wanting to get out again and experience normal life,” said Kim Day, president and chief operating officer of the Steele Auto Group in Halifax. “So, we’re trying to capitalize on it, of course, because we just don’t know what could happen in the future.”
The company has a total of 41 dealerships in all four Atlantic Canadian provinces. Day said on Wednesday that new vehicle sales this month is up three per cent and eight to nine per cent for used vehicles compared to June 2019.
COVID-19 closed showrooms in New Brunswick, P.E.I. and Newfoundland and Labrador, but showrooms in Nova Scotia were allowed to stay open.
Day said vehicle sales also dried up in March, but started to rebound in April, May and June with the help of competitive manufacturer incentives, such as zero per cent financing and buying incentives for first responders.
The numbers support what Day has seen in vehicle sales since COVID-19 hit Atlantic Canada in March. Statistics Canada doesn’t have new vehicle sales for May and June of this year. But in March and April (combined), P.E.I. had 546 vehicle sales, Nova Scotia, 3,787, and Newfoundland and Labrador, 2,343. By comparison, in March and April of last year (combined), P.E.I. had 1,467 vehicle sales, Nova Scotia, 9,640, and Newfoundland and Labrador, 5,413.
Last June, 875 new vehicles were sold on P.E.I. compared to 5,952 in Nova Scotia and 3,235 in Newfoundland and Labrador.
The Steele Auto Group has also embraced online technology as an option for doing business. It has posted videos on social media letting customers know what to expect when they walk into a showroom with COVID-19 safety measures in place.
Potential buyers were also able work on a sale through texting, phone and email communications. Buyers could view a vehicle online and have it delivered to their home after purchase, she said.
Online technology as a way to do business is something the company plans to continue into the future.
“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 key initiatives or key objectives. 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.”
Tammy Roach, general manager and dealer principal of Charlottetown Mitsubishi, said sales so far in June have been “fantastic.”
The dealership’s showroom only 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. But Roach expects to outperform June 2019 anyway for both new and used vehicles. Roach’s 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. Interestingly, she’s been seeing a lot of teachers looking to buy a vehicle.
Roach believes that 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 since some people are feeling more comfortable about visiting a showroom. The dealership also has an incentive program for healthcare workers and essential workers ($500 below cost), and online buying options with no contact vehicle delivery.
June sales are also up at Bert Hickman’s Newfoundland dealerships. At some dealerships, that increase is around 30 per cent in June compared to last year, said Hickman, CEO of the Hickman Automotive Group.
Even so, the increase in sales in June still don’t make up for the losses in March, April and May, he said. Hickman also attributes June’s sales to pentup demand since people who would normally buy vehicles from March to May weren’t able to in-person at a dealership until June 8.
Hickman also has manufacturer incentives for first responders and health care workers at the dealerships.
But improved sales during COVID-19 poses an interesting problem - running out of inventory, he said.
“When everything shut down in March, all the suppliers shut down as well,” he said. “You can only build as many vehicles as you have parts for.”
Until suppliers get back up to speed so manufacturers can keep producing 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,” he said. “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.”