Columnist image
Temur Durrani

Multi-Platform Writer


There is a pandemic-fuelled bonanza for used cars in Canada that doesn’t seem to be going away anytime soon — with players in the market, new and old, taking notice.

It’s the kind of lucrative rally that many in the automotive sector saw coming well before the COVID-19 pandemic took hold.

But amidst soaring demand in vehicle-dependent cities, coupled with global shortages for parts like computer chips and a diminishing labour force at various parts of the supply chain, businesses are positioning themselves to cash in on the demand for used vehicles.  

One wholesale auction company went public last week on the Toronto Stock Exchange: E Automotive Inc., which expects to close its initial public offering later in November.

And another company, one of North America’s largest and oldest online car retailers, can’t help but keep increasing its used-car inventory in several provincial markets: Clutch Canada Inc.

If economic forecasts come to fruition, those two companies will likely not be the only ones targeting the used-car sector for growth and profitability. 

Simon MacAdam, senior global economist at Capital Economics, pointed out in a memo to clients last week, there is “evidence that supply disruptions are getting worse, industrial output growth is weakening, and price pressures are intensifying.”

Simply put, MacAdam and others believe, people are increasingly buying used vehicles because the newer ones are becoming too expensive and taking too long to get to sales floors at Canadian dealerships. 

Rebekah Young, a senior fiscal and economics director at Scotiabank, pointed to the latest figures from Statistics Canada to illustrate those trends. This fall, new vehicles dropped 20 per cent from last year in sales and shot up 7.2 per cent in price inflation, ostensibly because of a lack of supply, Young said. 

She added that demand is strong and willingness to pay for vehicles is quite high, which is why some lightly-used vehicles are selling at a higher price point than when they were new. 


In mid-October, Clutch opened its virtual doors to customers in Alberta, becoming one of the only online car-selling companies to operate in Western Canada. “Up until now, Canadians who wanted to purchase a car have had to spend hours of valuable time either travelling between dealerships and haggling with salespeople or combing through listings pages and meeting up with strangers in parking lots,” said Nadim Kassam, general manager of Clutch Alberta.

Then, just a week later, the company tripled its inventory in Atlantic Canada and introduced a new way for customers in surrounding provinces to purchase vehicles from Nova Scotia, New Brunswick and Prince Edward Island — making it the largest pre-owned car dealer on the East Coast. 

“We have always offered an excellent selection of used vehicles, but with the cross-provincial delivery, it will allow car shoppers to reach an entirely different roster of vehicles,” said Mathiew Lobraico, the company’s general manager in Eastern Canada. 

In an interview, Clutch Canada’s Chief Executive Officer Dan Park said there’s a number of mitigating factors that have resulted in this type of recent expansion for his overall business. 

But chief among them, he said, is a shift in the way people are buying their vehicles. 

“When we buy a pair of shoes, a TV or really anything else, we don’t care which province it comes from or whether it’s being bought in person — we care about the product,” Park said. 

“E-commerce obviously proliferated across every industry over the past couple years. But during the pandemic, I think for cars, we’ve finally moved beyond that old mindset of how we needed to see a vehicle physically before we can buy one.”

Navigating the relatively uncharted online space is a facet, Park said, that his company shares with E Automotive — the Toronto firm that expects to close its IPO on Nov. 10.

Over the past year, E Automotive said more than 115,000 vehicles — totalling $1.6 billion — have already been bought or sold through its online platform. The company raised $135.7 million under its IPO, which are proceeds earmarked in part for an expansion into the United States, according to the offering prospectus.

“Yes, they’re in a quite different space than us by being involved in the wholesale part of the market,” Park said. “But I think the important theme here is that they’re a tech company much like us. And right now, I think it’s all about using technology and embracing it in the industry as a whole.”

He said he expects more companies will keep popping up in the Canadian used-car market on various levels — something he welcomes as healthy competition.

“I definitely still see this trend continuing because people will continue to buy used vehicles beyond the pandemic-era of things,” Park said.

“The fact is, it is actually a smaller carbon footprint and that does matter to people. But on top of that, it’s better bucks for your pay and it’s becoming more and more convenient than waiting around for your new vehicle.”