A new report from Dunsky calls the remarkably sparse inventory of zero-emission vehicles at auto dealerships in Canada in survey period last year “concerning.” Yet overall EV adoption rates are climbing. Would more EVs mean even more sales?
The lack of a sufficient inventory of zero-emission vehicles (ZEVs) at dealerships and long wait times continue to challenge Canadians looking to buy vehicles with no emissions.
This was one of the main findings from the Zero Emission Vehicles Availability report, commissioned by Transport Canada and released by its author, Dunsky Energy and Climate Advisors, last month.
The report is a periodic update and cross-country analysis of the nation’s ZEV inventory at dealerships. The data is based on a review of inventory databases from the automakers’ websites and individual dealership phone surveys.
Dunsky has previously released ZEV availability reports in February 2021, November 2020, February 2020, November 2019, and December 2018.
This latest data, collected in March 2022, found dealership inventory levels dropped by 72 per cent to 1,758 vehicles. In the previous survey, by comparison, there were over 6,000 ZEVs in inventory across Canada in February 2021.
According to the report, out of the 3,208 dealerships that were studied, there were no ZEVs in stock at 82 per cent of dealerships in March 2022, compared to 54 per cent in 2021.
Of the 18 per cent of dealerships with ZEV inventory, half had just one car on their lot.
“The decrease in ZEVs is concerning because their availability was already uneven and limited, while demand is continuing to grow relative to other vehicles,” said Jeff Turner, Dunsky Director of Clean Mobility in a press note.
“Canada has ambitious GHG reduction targets and although we know that inventory is down for both ZEVs and internal combustion engine vehicles, the decreased ZEV inventory likely made it even tougher for Canadians in most provinces to purchase or lease an electric vehicle.”
With the majority of dealers having little to no ZEVs in stock, the report also revealed availability for vehicles influences whether a customer chooses to buy a ZEV or not.
“Wait time is another important consideration for consumers looking to purchase a new vehicle, especially in the case of automakers that do not have significant inventory. For example, a low inventory may be acceptable for some shoppers if a ZEV can be ordered and received promptly,” reads the report.
According to the report, 38 per cent of dealers without any ZEVs found that the wait period for new orders was over six months. This is up slightly from 2021, when 31 per cent of car dealers reported an over six-month wait time.
Supply chain disruption a factor
The primary takeaway from the Dunsky report is there is a serious shortage of ZEV inventory.
But Huw Williams, director of public affairs at the Canadian Automotive Dealership Association, says the findings can be “incredibly misleading” if the timeframe and context of when the study was done are not properly considered.
“We’re in the midst of coming out of an extraordinary, historic, once-in-a-century disruption of the supply chain with a pandemic,” explains Williams in an interview with Electric Autonomy.
“We’re in such an anomaly. We went from having full dealerships with four to five hundred cars on them to dealerships with one car.”
The findings of the Dunsky report also notes that the global supply chain issues have not only had a serious effect on magnifying the ZEV inventory problems in Canada, but on the automobile sector as a whole.
“The Canadian ZEV market was not isolated from the impact of global semiconductor chip shortage which resulted in a shortage of production, as reflected in inventory levels across automakers Canada-wide, ZEV and otherwise,” says the report.
“One study of dealership inventory levels of all vehicle types across Canada saw an average reduction of 79 per cent in inventory levels.”
The Dunsky report suggests some auto manufacturers were more negatively impacted by the ongoing supply chain problems than others.
“The top four spots for ZEV inventory [in Canada] were all held by North American automakers, suggesting that their supply chains may have been less vulnerable or more adaptive to global disruptions than other automakers with more production overseas,” reads the report.
In the findings from the March 2022 study, 75 per cent of the available ZEV inventory in Canada consisted of vehicles from only three manufacturers: Chevrolet, Chrysler and Ford.
“Stellantis’ Chrysler and Jeep brands now offer among the highest ZEV inventory levels in Canada. Meanwhile, while Hyundai and Toyota had among the highest inventory levels observed in 2021, the current study found almost no ZEV availability at all for these two automakers,” says the report.
Chrysler was the only automaker with ZEVs at its dealerships in all 10 provinces. And Ford was able to retain a similar level of inventory in 2022 compared to the previous year — despite concentrating its ZEV inventory to only three provinces — when last year it had inventory in five provinces.
Inventory — less relevant than sales?
Statistics Canada and S&P Global Mobility each compile quarterly ZEV sales data for Canada. The numbers paint a more positive picture of ZEV availability in Canada based on the fact that, for the most part, registrations have been hitting record highs.
Statistics Canada data from Q1 2022 (the same time period as the Dunsky analysis) showed ZEV registrations (battery electric and plug-in hybrid vehicles combined) recorded a significant increase to 7.7 per cent market share. That included the highest number of battery-electric vehicles registered in a single quarter to date.
In Q2 2022, on the other hand, the share of ZEV registrations did fall back to 6.9 per cent.
Williams says that inventories across the whole auto sector have started to return to levels consumers are used to. But, overall, he believes that EV sales figures are a much more important statistic to consider because they reflect the availability of ZEVs in the country and consumer interests.
“As consumer demand increases for electric vehicles, we’re seeing consumers are pre-ordering, which necessarily means that the car — even if the consumer is buying it — didn’t spend any time in inventory. Inventory, I think, is a much less relevant marker of sales than actual sales,” says Williams.
Shift to an online sales model
The Dunsky report acknowledges that ZEV registration numbers have increased compared to previous years. But inventory levels in dealerships have gone down across the country and across most manufacturers, too.
The report notes that online vehicle purchasing could be impacting the number of vehicles in inventory and available on dealer lots.
Tesla, which has relied more on factory orders and showroom operations than “brick and mortar” dealerships, saw some of the highest rates of ZEV vehicle registrations in 2021 despite having low inventory.
“New automotive retail models, such as the increasing shift towards online retailing, which is happening in parallel to the transitions to electrification, may be a sign that ZEV shoppers are less interested in the more traditional approach of buying a vehicle directly from a dealership lot,” says the report.
“This could suggest that vehicle inventory may not be as important for someone who is willing to order a vehicle to their desired specifications, provided wait times are reasonable.”
Williams agrees, stating that he believes the online sales model has significantly changed the dynamic between consumers and dealerships. Now, consumers can educate themselves about vehicles online. A dealership is then more of a place where they can “get that extra information that they might need or feel the vehicle,” says Williams.
“I think that [online sales] model is still constantly evolving, as all manufacturers and dealers try to educate the consumer or give the consumer as much information as they can across all platforms, whether it’s online or in person.”
The full Dunsky report can be read here.