Why the new and used vehicle market is so hot on P.E.I.

Car dealerships are setting new sales records on P.E.I. this year.

A number of factors have come together to create the hot market. There is still a pent-up demand from a down period in sales during the early months of the pandemic, and a shortage of new cars due to a continent-wide supply problem has also created a shortage of used cars.

"A lot of people that have leases want to get out, but they can't get out because there is nothing new to get," said Roger Long of Long's Auto Centre.

"They have a four-year lease, four years is up now. They would go and lease a new one. There are no new ones, so their option is walk or buy out the lease."

People turning in their vehicles at the end of a four-year lease make up a big portion of the used car market on the Island, said Long.

With people having no option but to buy those leases out, the used vehicle supply has dried up.

'Fantastic trade-in values'

For people who are willing to wait the months it might take to receive delivery of a new vehicle, now is a great time to sell, said Lisa Doyle-MacBain, executive director of the P.E.I. Automobile Dealers Association.

"The used-vehicle market is really hot right now, so customers have a lot of equity built into their vehicles," said Doyle-MacBain.

"They're getting fantastic trade-in values, so they're able to purchase a newer vehicle for the same or even a lower payment."

A used truck could be worth $5,000 more now than it was a year ago, Long estimated.

The continent-wide shortage of vehicles also means Islanders are not just competing with other Islanders when looking for new wheels.

"Americans are in our market buying everything and shipping it south," said Long.

"If I put them on the internet, then an American would be phoning me tomorrow."

Record-breaking months

Despite the lack of choice and the long waits for delivery, people are buying.

Dealers set a new record for sales in April this year at $38.7 million, topping the previous best of $33.5M in September 2016 even when inflation is factored in.

That 2016 record was also exceeded in June and July.

For the year so far, from January to July, new vehicle sales are up 18 per cent over 2019, according to Statistics Canada.

Doyle-MacBain said part of the buying spree is connected to people in the pandemic deciding not to delay getting the things they want.

"I think a lot of people had more time on their hands at home, and kind of rethinking life and making some decisions to live life," she said.

"'I always wanted to buy such and such a vehicle, so, by golly, I'm going to do it.'"

A provincial rebate program encouraging people to buy electric vehicles, a relatively expensive option, may also have been a factor in the increased dollar value of sale.

The province had originally set the budget for the program at $500,000 in the spring. Doyle-MacBain said it has since tripled to $1.5 million, and at last count had been applied to 233 vehicles.

The provincial government sent a statement to CBCNews on Wednesday sayinganother six rebate applications are now under consideration.

"Since the launch of the P.E.I. Universal Electric Vehicle Incentive program in March, the amount of electric vehicles on Island roads has more than doubled," the statement said.

"The department will continue to look at increasing the funding as needed to ensure the cost barrier to owning an electric vehicle is lessened for all Islanders."