In the Automobiles Fréchette workshop in Laval, detailing specialist Luc Despatie puts the finishing touches to the cleaning of a white Chevrolet Bolt. For this type of vehicle, electric, as well as for small cars with low fuel consumption, the craze is particularly strong.
“I displayed the Bolt on a Tuesday at 7 p.m.,” says company owner Éric Fréchette, in his office overlooking a showroom decorated with bouquets of green balloons. “The next morning at 4:30 a.m., a gentleman from Sherbrooke wrote to tell me that he was interested. We sorted it all out at 7 a.m., over the phone. I buy his Tesla and he buys me my Bolt, which is newer but cheaper. »
The cars leave quickly, and the prices are “crazy”, relates Mr. Fréchette. The used car dealer therefore sells the cars at a higher price, but also loosens the strings of his own purse to acquire them.
“It’s scary to buy a car, because I tell myself that I paid $4,000 or $5,000 less last year for the equivalent. So I wonder if I will sell it. But I’m selling it, ”says the man who has been in business for 22 years, following in the footsteps of his father, owner of a mechanical maintenance garage since 1959.
According to data from Statistics Canada, the purchase price of used motor vehicles jumped 24.5% between March 2021 and March 2022 in the country, compared to 7% for new vehicles. For its part, the AutoHebdo Price Index for April 2022 reports, in Quebec, a 43% increase in one year in the prices of used cars displayed on its very popular online sales platform.
“I sold a Toyota CH-R more expensive than a new one. Normally, a car loses 20% to 30% of its value in the first year. Currently, some vehicles are rather increasing in value,” notes Mr. Fréchette.
In this context, the behavior of buyers has changed, notes sales consultant Vincent Philipps. “They understand the current situation. They are better prepared, they will negotiate less and take their time less. They care less about price and more about availability,” he says at the entrance to the garage, while customers are on the road testing a white Acura.
The car race
The merchant thus experienced its most profitable year since it has been in business. But it is at the cost of considerable effort and many additional hours of work to obtain vehicles for sale. Automobiles Fréchette usually has about forty vehicles in stock, at prices ranging from $5,000 to $60,000. But that number went down to a dozen vehicles this year, which worried the owner.
“The sinews of war is to have stock,” says the businessman, who managed to climb almost the entire slope.
The dealers, who usually supplied him with their customers’ used cars, had serious problems with the supply of new cars. A shortage of certain components in particular hampered the manufacture of many models. To continue to have stock to sell, the dealers then kept the cars for themselves.
“Before, 90% of my cars came from there. I fell to 40%,” says Mr. Fréchette.
He therefore intensified his approaches to individuals, in particular by displaying wholesale, on the front of his business: “We are buying your car. He has also established a partnership with the new online platform Shopicar, on which citizens can buy, sell or exchange cars.
Determine the right price
In any case, the entrepreneur must spend a good part of his days evaluating the purchase and sale price of many vehicles. To ensure that he offers the right price, Mr. Fréchette uses software that compares the value of the latest vehicles sold and for sale by various dealers, depending on the model and the number of kilometers on the odometer.
“The Tesla model I just picked up, which has 100,000 km, it sells for $60,000 with 43,000 km. So I think I can sell it a bit lower, around $53,000. I paid $49,000 for it, but I have about $1,500 in repairs to do. So maybe I have a profit margin of $2,500,” he calculates.
Getting cars is also a challenge for bigger players. At Automobile en Direct, which displays more than 2,000 vehicles in four branches, 30 people work full time to find them.
“We are more active than in the past,” says Chairman and CEO Sébastien Bisaillon. We go to dealerships, which we didn’t do before. We get our supplies everywhere, in other provinces, at auctions, on various platforms. »
Faced with higher demand, his company managed to acquire enough products to sell 18% more than the previous year. Mr. Bisaillon recognizes, however, that the current prices upset certainties. To set prices, Automobile en Direct relies on demand for its own vehicles, given its large volume of sales.
Stabilization in sight
Will prices continue to rise? “We think it’s peaked. It continues to progress slightly, but it should still stop soon, ”said the general manager of the Association of Used Vehicle Dealers of Quebec, Steeve De Marchi.
He notes that the new home market is slowly becoming accessible again, with some builders having started to produce and deliver again. Many merchants are in the process of replenishing their inventory, which should help prices stabilize or even decrease.
In the meantime, it is possible for buyers to find used vehicles, but “surely more expensive than what you want and maybe not the color you want,” Mr. De Marchi warns.
Mr. Fréchette has just left for an adventure in Italy. After two trying years, he is happy to finally be able to take more than a week’s vacation.