Are you looking to buy a new or used vehicle this year? You may be in for a long wait. In this edition of Disruptors: The 10-Minute Take, co-host Trinh Theresa Do dives into how global chip shortages, rising fuel costs and the summer travel season have upended the market. She’s joined by Cody Green, founder & CEO at Canadadrives.ca, who describes the challenges today’s consumers face when buying or selling vehicles and how tech is helping address them.
To learn more about Canadadrives.ca, visit their website.
This is disruptors, The ten minute take where we dive into the latest innovation, tech and economic buzz. This week’s take is on the automotive market in Canada. What does the landscape look like amid these global challenges, and how are tech platforms helping consumers with the buying and selling process? To offer his insights. We’re joined by Cody Green, founder and CEO of Canada Drives dot ca, the country’s largest 100% online car shopping and to your door delivery platform. Cody, welcome to the ten minute take.
Speaker 2 [00:01:06] Thanks for having me.
Speaker 1 [00:01:07] So we’ve been seeing supply chain woes and chip shortages affect the vehicle market for a while now. But what are the biggest issues that Canadians who are looking to buy or sell? What are they grappling with these days?
Speaker 2 [00:01:19] The biggest issue is we’re still just not making as many new vehicles as Canadians want. So recent numbers. May 2022, we had 140,000 new vehicles sold, which sounds like a lot, except when you compare it to 200,000 that we had in 2019. So roughly 70% of the output that we used to have. New vehicle prices are going up. So there’s a few things at play here. There’s a definite rise at the cost of the inputs. Those manufacturing bottlenecks that you referenced and really just this supply and demand imbalance. And when manufacturers have the limited capacity, they’re going to be focusing on those more expensive models, those more expensive trims. So you see that on that new car side. If you’ve walked into a dealership hoping to leave with a new car, you may find that you’re waiting three months, six months or longer. They might just say, you know what? I don’t even know if I’ll be able to get you this model. Good luck next year. And that and that really just sort of flows over to the used vehicles because used vehicles are really a reflection of new vehicle pricing. And so what we saw last year as those new vehicle prices went up, the used vehicle prices sort of rose along with them. At this point, it’s relatively stable. We’re not seeing big swings either way, but there’s just less vehicles out there and so makes it a bit more challenging for shopping.
Speaker 1 [00:02:45] Are you seeing any particular types or makes or models of vehicles that are most affected or is it kind of uniform across the board?
Speaker 2 [00:02:51] It’s really across the board. I think recently and this has been exasperated by our fuel prices shooting up and staying up. Getting your hands on a new EV or a hybrid vehicle. That’s definitely challenging. And Tesla is a good example. Like those ones, you take a long time, you put in your deposit and then you just sit and wait and hope.
Speaker 1 [00:03:13] Let’s actually let’s stay on EVs for a second there, on our show we’re very interested in the transition to a net zero economy, and EVs are a huge part of that. But as you said, you know, prices are going up, wait times are super high. But I read that you mentioned in another interview that monthly searches for EVs on Canada drives have doubled between January and June. Are those searches translating into sales?
Speaker 2 [00:03:36] They definitely are. We have to have the vehicle for someone in order to actually purchase it from us. So a big focus for our team is making sure that we’re sourcing quality used vehicles that Canadians wants. And Canadians definitely want electric vehicles right now. And what we’re really seeing is there is this tight correlation on our platform for those searches of electric vehicles. Along with those fuel prices. We see this overall demand just is growing. But when fuel jumps by 30% in a month, we see it almost 1 to 1 with the searches on our platform.
Speaker 1 [00:04:13] That’s wild. My partner and I, we got an electric vehicle fall of 2020. So we feel very lucky that we got in just before all this craziness. But let’s talk about your platform for a moment and generally how you think about the customer experience of buying or selling a vehicle. How does Canada drive enable car buyers and sellers in this particular environment, especially in contrast to the dealership model?
Speaker 2 [00:04:38] One of the challenges that people have right now is actually understanding what vehicles are available. So that’s one of the things that we kind of answer for customers right off the top. You go on our platform, you can see this vehicle is here today, you can buy it. This vehicle’s coming soon or there’s potentially a sale pending on it so you can get notified of. Someone changes their mind, but you actually have a good understanding. If I want a car, I can buy this car. The experience for the customer. We really try to take the best parts of buying a car and put them online and then take away all the things that people don’t love about shopping for a car. So some of those things are time and convenience. So going into a dealership, spending multiple hours and this is an hour’s really discovering if it’s the right car, it’s a lot of time just waiting, whether it’s waiting to do the test drive, waiting to figure out the price, waiting to figure out the financing. You’re getting a 50 minute test drive. That’s where the actual discovery of the product is on our platform. Everything’s available for you. So no haggle pricing. If you need financing, we’re going to facilitate that. It’s going to be all there. It’s going to be transparent. This is the rate. This is the payment. The control is all the way back to the consumer. So if you don’t like the offer we have for the financing, you don’t like the price of the vehicle, you close your browser, you’re not captive to the shopping experience. The other big part of it, too, is people have gotten used to buying everything online and really vehicles were sort of that next step. Tesla pioneered it with that direct to consumer for the new vehicles. They had to have the single pricing, no negotiation dropped off at your door. People loved it. They didn’t miss that part of the shopping experience. Same thing with Canada drives. When you say, yes, I want to purchase, it’s going to be dropped off at your door. And the biggest thing that people said like, well, if I’m buying a car online, what if I don’t like it because it’s a big purchase and totally empathize people with that? We have a seven day leave it to return it guarantee, drive it for seven days, take it to work, drop your kids off at school. If there’s anything you don’t like about her, maybe it’s just the color you like. I want a different blue. We’re going to come pick that vehicle up. And so we really say that this is superior to the standard 15 minute test drive, and that’s been the sentiment we’ve been hearing from customers to that.
Speaker 1 [00:07:00] So while that goes against all of the orthodox of, oh, you know, the moment you buy a car and drive it off the lot, it loses 30% of its value. And here you are like, actually, I can return it after seven days. So that’s a crazy look. Mind shift to.
Speaker 2 [00:07:13] Me. Yeah, it’s something people really love and they’re like, Really? They’ll do that. Yeah.
Speaker 1 [00:07:17] Yeah. So it’s a great time to sell your vehicle if you’re looking to sell it. Actually, if we want to sell our car today, we could sell it for more than we bought it. And that’s the thing, the same from a lot of folks. But what advice would you have for people who are looking to buy right now and feeling, you know, overwhelmed and frustrated with the high costs and low inventory?
Speaker 2 [00:07:35] I don’t think and myself as a driver of cars as well as the seller of cars, I can’t really say there’s a crystal ball like prices aren’t going to fall off. I don’t think that’s what anybody’s saying. So if you need a vehicle, you need to buy a vehicle. If you’re trading in a vehicle, as you said, you’re going to get top dollar for that trade in vehicle as well. And so it’s really about doing your research and making sure that you’re getting a vehicle that fits for your lifestyle. Because the only way that it doesn’t really work out is if you’re having to switch cars every couple months and sort of that friction there, but buy one of the vehicles, see if it works for your life. If it does, awesome, if not, return it. And it’s probably worth touching on too, because on our platform you don’t need to be a buyer of a vehicle to sell us a vehicle. So something that’s been really popular is you can go and can drive, so you can input the information of your current vehicle, the kilometers, the condition you’re going to get an instant online quote. You can say, yeah, I want to accept this and we’re going to come pick up your vehicle and transfer money to your account. And this is awesome, especially for families that said, hey, we needed three cars. Now two’s fine. Or maybe we’re at two, we need one. So it’s just a really good opportunity to have that information. Even if you’re choosing to buy a vehicle from somebody else, you know, hey, can you drives will pay me this for the car.
Speaker 1 [00:08:55] Cody As we wrap up, looking at all the flux in the market and projected shortages going into next year, possibly the year after, how do you see business models for car purchasing sales changing for the future? And what’s the role of technology as we move forward.
Speaker 2 [00:09:11] The next decade and even the next year or two? I think it’s going to be really exciting for car shoppers. Platforms like ours really force everyone to take notice. If people want to transact this way, well, everyone’s got to say, okay, well, am I going to lose out on those customers? Are we going to make some adjustments? What we really see is technology taking a lot of the friction out of there, bringing transparency, allowing people to trade in their cars more easily, not spend that time. And I think it’s going to be a win for all consumers.
Speaker 1 [00:09:40] That’s a really good note to end on. Thanks so much for being on the 10 minute take, Cody.
Speaker 2 [00:09:43] Hey, thanks for having me. Theresa.
Speaker 1 [00:09:46] So, as we heard from Cody, the vehicle market is going through a transformational phase right now fueled by high demand, high gas prices, and Canadians desire for cleaner transportation and with global shortages, not really showing any signs. Signs of lessening. Canadians can probably expect to wait a little while longer for that new car smell. That’s it for this week’s ten minute take. Join us again next week for another ten minute take on carbon offsets. What are they and what should Canadians know before purchasing them? Until then, I’m Teresa Do. Talk to you soon.
Speaker 3 [00:10:20] Disruptors, The ten minute take is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by Jar Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit our RBC dot com, slash disruptors.
Jennifer Marron produces "Disruptors, an RBC podcast". Prior to joining RBC, Jennifer spent five years as Community Manager at MaRS Discovery District and cultivated a large network of industry leaders, entrepreneurs and partners to support the Canadian startup ecosystem. Her writing has appeared in The National Post, Financial Post, Techvibes, IT Business, CWTA Magazine and Procter & Gamble’s magazine, Rouge. Follow her on Twitter @J_Marron.
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