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4 Supply concerns plaguing the auto industry in Canada — and how to keep them from impacting the shopping experience

Posted by Meg Bernazzani on April 20, 2021

The COVID-19 pandemic remains top of mind for most Canadians as a third wave of infections surges across the country. However, sales figures indicate that the auto industry is weathering the latest pandemic challenges reasonably well: despite continuing lockdowns and distancing measures, sales were up just over 15 percent year-over-year in the first quarter of 2021, and dealerships across the country remain open as essential businesses.

However, there are several other issues that threaten the stability of the new vehicle market in Canada in the coming months, both imports and those assembled domestically. Since it pays to be prepared, here’s a look at the supply concerns for the Canadian auto industry that are currently making the news.

Microchip shortages are becoming a long-term problem.

The global shortage of microchips has become a serious issue for many industries that depend on integrating computing power into their products, including automotive. As a result, the production of new vehicles has been hampered worldwide, Canada notwithstanding.

According to data from analyst firm AutoForecast Solutions, Ford Motor Company lost 7,000 units of production in a single week in early April from the company’s Oakville assembly plant, which builds the Ford Edge and Lincoln MKX/Nautilus SUVs. Over that same period, 6,000 units were cut from Stellantis’s Brampton assembly plant, which produces the Dodge Charger and Challenger and the Chrysler 300. The General Motors CAMI facility in Ingersoll, Ont., has been out of commission since February 8, and the automaker recently announced that it will stay down until the week of May 10. On top of this, the production of nearly 24,000 Ford F-Series pick-ups for the North American market was lost over the same period. The F-Series has been the top-selling nameplate in Canada for the past 11 years and sold 128,650 units in 2020.

The lost units globally are expected to reach into the millions through 2021, and reverberations from the shortage could take through the rest of the year to resolve, according to industry analysts.

Rubber shortages are beginning to emerge.

As if the chip shortages weren’t enough of a problem, rubber is now reported to be in increasingly short supply. The combination of a devastating leaf disease, stockpiling by China, and recent global shipping delays such as the blockage in the Suez Canal have caused rubber prices to rise and sent North American auto suppliers scrambling to secure shipments, according to reports by Bloomberg.

A strike could be imminent at the Port of Montreal.

Weeks of uncertainty around labour disputes at the Port of Montreal came to a head in mid-April as multiple business organizations and chambers of commerce appealed to the federal government to intervene in an impending strike action. A strike notice has been filed by the CUPE Longshoremen’s Union, Local 375, according to a press release distributed by the business consortium, which includes suspending activities such as training, overtime, and weekend work. The longshoremen walked out for 10 days in August 2020, and the Association of Maritime Employers has been negotiating a collective agreement with them since that time. Approximately 2,500 trucks move through the port daily representing over 2,400 containers, and businesses are already seeing goods diverted to other ports in anticipation of further labour sanctions. Even a partial reduction in service at the port will hinder economic recovery from the pandemic in Quebec and Canada, according to the release.

Canada-U.S. trade is at a critical juncture.

With border closures dragging on and vaccine rollouts signaling a light at the end of the tunnel for the COVID-19 pandemic, focus within Canada is returning to shaping and improving North American trade policy going forward. The Canadian Chamber of Commerce kicked off a new lobbying effort in mid-April to bolster the trade relationship between Canada and the United States going forward. Among the issues on the table, according to a Canadian Press report: lobbying for a plan to reopen the Canada-U.S. border that is driven by clear metrics and dates, ensuring “Buy American” rules don’t block Canadian exporters and suppliers from proposed infrastructure and stimulus spending, preserving intercontinental defence and security supply chains, establishing a common approach to shared environmental challenges and energy infrastructure – including supply chains for mineral development, which are required for electric vehicle batteries – and increasing efforts on regulatory co-operation.

Focus on what you can control: the customer experience.

Though supply issues might make stocking your lot a challenge, for the time being, a shopper’s experience at your dealership is still within your control. Here are some tips to ensure shoppers choose your dealership:

  • Make sure the inventory you’re showing online matches what you have on your lot. There’s nothing more frustrating for a shopper than visiting the dealership only to find the information online was out of date.
  • Be transparent about pricing at all points along the consumer’s shopping journey. That might mean communicating more with OEMs to make sure you have up-to-date offers on rebates and incentives or investing in technology that ties all pertinent pricing data together.
  • Shorten the transaction time for shoppers. Whether that means letting shoppers complete more of the process online, minimizing time spent in-store, or a combination of both, people don’t want to spend all day at the dealership. In fact, total time spent at the dealership is one of shoppers’ biggest pain points, so make sure you’re not contributing to that pain.

At a time when shoppers might be frustrated by having fewer choices, following these three tips could not only help you increase efficiency at your dealership, but also streamline the buying process and elevate customer satisfaction.

Topics: chip shortage, industry insights, supply